Regulatory developments in   Insolvency and bankruptcy law in 2022 – a quick round-up

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– Sikha Bansal, Partner & Barsha Dikshit, Partner | resolution@vinodkothari.com

IBC, in a very short span of its life, has undergone multifarious amendments. In 2022, there were no amendments in the Code, but almost all regulations were amended.   Majority of the amendments aimed at compressing the timelines. Few other amendments filled the gaps in law and provided clarity.

A quick snapshot of the key changes introduced in the CIRP regulations, Liquidation regulations, voluntary liquidation regulations and IP regulations, in the year 2022 is provided below. A brief discussion can also be referred to in our video on the same.

Key Amendments in IBBI (Insolvency Resolution Process For Corporate Persons) Regulations, 2016[1]

IBBI introduced several changes in the IRPCP Regulations vide Notifications dated 9th February, 2022, 14th June, 2022, 13th September, 2022,  16th September, 2022, and 20th September, 2022. The amendments mostly focused on reducing the timeline of corporate insolvency resolution process, removing ambiguities, facilitating IPs thereby increasing value and realisation for stakeholders.

Resolution Professionals have been empowered to invite EOI for resolution plans for one or more assets of CD with approval of CoC,  if no resolution plan for CD is received within the given timeline. Resolution plan shall  also provide for the manner of pursuing  avoidance transaction application and distribution of realisation therefrom, if any. Timelines for certain activities during CIRP have been reduced.

Further, the regulations now also provide for payment of a regulatory fee at the rate of 0.25% of the realisable value  under approved resolution plan to the Board w.e.f 1st October, 2022 which will form part of CIRP cost.

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2022 Wrapped Up: Regulatory review of corporate law developments

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– Payal Agarwal, Assistant Manager (payal@vinodkothari.com)

2022 has been a relatively stable year when it comes to Companies Act, save changes in the forms and filing procedures with increasing online processes, there has been significant traction on the part of SEBI. While Structured Digital Database (SDD) remained the buzzword for the listed entities with the stock exchanges requiring them to submit quarterly compliance certificates, the stress for proper controls on insider trading remained the focal point. For social enterprises, a landmark development was the introduction of the concept of Social Stock Exchanges, which seems to be shortly getting into operational mode.

We have tried to briefly cover the major developments in corporate laws during the year 2022. You may also refer to our brief discussion of the same in this youtube video. For updates relevant to the financial sector including the overseas investment norms, refer 2022 in retrospect: Regulatory activity in the financial sector. You may also refer to our quick round-up of regulatory developments in IBC in the year 2022.

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2022 in retrospect: Regulatory activity in the financial sector

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– Vinod Kothari | finserv@vinodkothari.com

It has been a brisk year in terms of activity – a busy regulator kept  all regulated entities busier. This year marked the initiation of a new SBR framework for NBFCs – hence there was a lot of buzz in terms of understanding the new regulatory framework. The names of 16 Upper layer entities were declared by the RBI – consisting of 5 HFCs, 10 NBFC-ICCs, one CIC[1]. As is the design, UL entities are treated at par with banks in terms of regulatory intensity –hence, there is a LEF (large exposure framework), differential provisioning norms in case of  standard assets, CET-1 capital requirement, mandatory listing etc.

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IRDAI does comprehensive liberalisation of insurance regulations

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– Neha Malu, Senior Executive | corplaw@vinodkothari.com

Admittedly with the ambition to develop an economy where every citizen has appropriate life, health and property insurance cover and every enterprise is supported by appropriate insurance solutions, and also to make Indian insurance sector globally attractive, Insurance Regulatory and Development Authority of India (‘IRDAI’) has made comprehensive changes in insurance regulations. IRDAI in its 120th meeting held on 25th November, 2022 had discussed at length the reason behind notifying such changes in IRDAI regulations and the same is expressed to fulfil its objective of achieving ‘Insurance for all by 2047’[1]. All the below discussed amendments were notified vide gazette notification dated 5th December, 2022.

The amendments notified are applicable with immediate effect and are generally speaking in the nature of liberalisation measures.  Among the changes, a noteworthy amendment is doing away with obtaining prior approval of IRDAI every time an Insurance company goes for raising money by way of issuance of ‘Other forms of Capital’. Further, the maximum limit of money that can be raised through this route has also been increased which will provide for an easy flow of money into an insurance company. Additionally, allowing a subsidiary company to be a promoter in an insurance company subject to the specified compliances is another significant amendment that has been notified.     

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Regulatory framework for Online Bond Platform

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– Abhirup Ghosh, Principal Advisor | abhirup@vinodkothari.com

Regulatory Framework for Online Bond Platform

Securities and Exchange Board of India (‘SEBI’) on November 14, 2022, notified the circular, ‘Registration and regulatory framework for Online Bond Platform Providers’[1] (‘Circular’) for regulating online bond trading platforms, applicable immediately. The notification comes in the backdrop of several unregulated online platforms offering services relating to dealing and transfer of listed/ unlisted securities between investors (mostly non-institutional). On the path to introduce the regulatory framework, the SEBI first issued Consultation Paper on Online Bond Trading Platforms – Proposed Regulatory Framework on July 21, 2022[2] (‘Consultation Paper’), a detailed write up on which can be found in another article named, ‘SEBI proposes to regulate private debt platforms’.[3] After gathering comments from public, the SEBI issued a couple of notifications – the first one is SEBI (Issue and Listing of Non-Convertible Securities) (Second Amendment) Regulations, 2022 (‘Amendment Regulation’) on November 09, 2022[4] to bar the intermediaries from facilitating transactions in listed debt securities without a stock broker license, and second one is the aforementioned Circular, which is the subject matter of discussion in this case.

This write-up tries to discuss the implications of the Circular, but before getting into that discussion, it is important to first understand the meaning and scope of the term, “online bond trading platform”.

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Workshop on Large Corporate Borrowers

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Click here to register for the workshop- https://forms.gle/mmRSswBTjX79SR8c7
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CERSAI beyond SARFAESI – The multi-faceted effects of security interest registration

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– Sikha Bansal and Anirudh Grover | finserv@vinodkothari.com

Introduction

The rights of secured creditors are spread across various laws: common law, Companies Act, Insolvency and Bankruptcy Code (IBC) and the SARFAESI Act. In equal measure, the preconditions which are requisite to assert these rights are also spread over those very laws. 

It is lamentable that the security interest registration regime in India is fragmented, without any obvious sense of purpose or direction. This was discussed in our previous article Fragmented Framework for Perfection of Security Interest[1].

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Full Day Workshop on Partnering in lending (Mumbai)

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Loan sourcing, co-lending, transfer of loans, securitisation

Please note that registration for the workshop is closed, thank you for the overwhelming support! Do express your interests by filling this form: https://forms.gle/qoUwx99aV1acELSp6
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Details of our workshop in Bengaluru: https://vinodkothari.com/2022/12/full-day-workshop-on-partnering-in-lending/

Our recent write-ups on the topic:

Financial Services- https://vinodkothari.com/category/financial-services

Digital Lending- https://vinodkothari.com/?s=digital+lending