Latest Blogs from SBS and Company LLP

    The recent judgment of Hon’ble National Company Law Appellate Tribunal (NCLAT), New Delhi in the case of Binani Industries Limited v Bank of Baroda, has made significant observations on certain aspects pertaining to Insolvency & Bankruptcy Code, 2016 (IBC).  Though the judgement contains various aspects, decided by the Hon’ble NCLAT, in this article, we wish to deliberate on the aspect which is deliberated by Hon’ble NCLAT with respect to discriminatory or differential treatment among similarly placed creditors while submission of resolution plan by resolution applicant(s). The Hon’ble NCLAT has stated that differential or discriminatory treatment among similarly placed creditors is not what is envisaged under the IBC or its regulations. Before proceeding to further examine, let’s get the facts in place to appreciate the judgment.

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    DEMATERIALISATION OF SECURITIES BY UNLISTED PUBLIC COMPANIES AND FILING OF RECONCILIATION OF SHARE CAPITAL AUDIT REPORT 

    This article is an attempt to list out the provisions/compliances of the rules notified in connection with the Dematerialization of Securities by Unlisted Public Companies. 

    Vide the Companies (Prospectus and Allotment of Securities) Third Amendment Rules, 2018, Dt: 10.09.2018, notified to be effective from 02.10.2018, the Ministry has mandated that an Unlisted Public Company shall: 

    • issue of Securities in Dematerialised form only; and 
    • facilitate dematerialisation of all its existing Securities. 

    in accordance with the provisions of Depositories Act, 1996 and Regulations made there under. 

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    A PEAK INTO ALTERNATIVE INVESTMENT FUNDS - SEBI AND FEMA PERSPECTIVE 

    Background: 

    Till 2012 Investment Management regulations of SEBI were limited only to Mutual Funds (MF), Collective Investment Schemes (CIS), Venture Capital Funds (VCF) and Portfolio Managers, and were well regulated.  In the absence of dedicated regulations, other private pools of capital and investment vehicles like PE Funds (Private Equity), Real Estate Funds, etc used VCF route for investments. This defeated the basic purpose of VCF which was promotion of early stage companies.  As the concessions and other benefits generally available to VCFs cannot be extended to other funds, the need was felt to recognize such other funds as “Alternative Investment Funds” as a distinct asset class apart from promoter holdings, creditors and public investors. 

    Accordingly, SEBI has released a concept paper in August 2011 followed by issuing SEBI (Alternative Investment Funds) Regulations (herein after referred as ‘AIF Regulations’) in May 2012 and were amended time to time. SEBI (Venture Capital Funds) Regulations, 1996 were repealed and related provisions were subsumed in to AIF Regulations. However, SEBI (Foreign Venture Capital Investor) Regulations are not subsumed and are still governed separately.  

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    In this edition, we bring to you certain important articles. The article on ‘Alternative Investment Funds – SEBI and FEMA Regulations’ will make you understand the other venues for raising funds to carry the business much efficiently. The article on ‘NFRA – Will they apply to Body Corporate’ is thought provoking and it is important that Ministry of Corporate Affairs release a clarification as to which body corporates the provisions of NFRA rules will apply.

    The article on ‘Differential Treatment Inter- se Creditors’ deals with the recent judgment of Hon’ble NCLAT in the matters of Binani Industries Limited, wherein the Hon’ble NCLAT rejected the resolution plan which discriminated the creditors who are placed similarly. This is an important contribution to the jurisprudence on IBC and it will have significant effect in upcoming resolutions. The journal also deals with key recommendations by Insolvency Committee on Cross Border Insolvency which is to be adopted by India to tackle the issues in cross border insolvency matters.

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