Reliance Infra seeks review of surveillance norms for IBC firms
What's the story
Reliance Infrastructure has urged the Securities and Exchange Board of India (SEBI), National Stock Exchange (NSE), and Bombay Stock Exchange (BSE) to review the surveillance framework for companies involved in Insolvency and Bankruptcy Code (IBC) cases. The company has requested a reassessment of the Additional Surveillance Measure (ASM) framework and trading restrictions on its shares.
Shareholder concerns
Disproportionate impact on public shareholders
Reliance Infrastructure has expressed that the ASM framework has a disproportionate impact on its public shareholders, especially retail investors. The company said during lower-circuit periods, shareholders often struggle to exit their investments at reasonable market prices. It also noted that their holdings could lose value by a nearly fixed percentage every week due to this restricted trading mechanism.
Proposal details
Proposed alternatives for effective price discovery
Reliance Infrastructure has suggested a calibrated approach that keeps safeguards such as gross settlement, 100% margin requirements, Additional Surveillance Deposit (ASD), and price-band protections while enabling more effective price discovery. The company proposed alternatives like a periodic call-auction mechanism or wider and graded price bands to facilitate genuine two-sided trading.
Legal context
Reliance Infra challenges trigger of ASM framework
Reliance Infrastructure has also pointed out that the ASM framework was triggered despite the National Company Law Appellate Tribunal (NCLAT) staying both the insolvency admission order and Corporate Insolvency Resolution Process (CIRP) against it. The company said no Resolution Professional has taken control of its operations, and its affairs are being managed by its Board of Directors in the normal course of business.