BSE issued direction on Disclosure of Default / Inter Creditor Agreement (ICA) by listed companies

The Bombay Stock Exchange issued a circular in consultation with SEBI on September 24, 2019 to the listed companies in response to RBI Circular dated June 07, 2019. The RBI Circular directs the lenders to conduct a review of all defaulting borrowers and decide a resolution strategy. It mandates that if a resolution plan is been implemented, the lenders shall enter into an inter-creditor agreement with the borrowers.

It is observed by the BSE in consultation with SEBI that for a listed company, the review by a lender for default in payment of loan or entering into an inter-creditor agreement for implementing a resolution plan constitute as ‘material development’ under SEBI (LODR) Regulations 2019, as it may impact on the ownership and governance of the Company. It is also observed that it constitutes as ‘insider and confidential information’ under the SEBI (PIT) Regulations, 2015 as it is likely to have a significant impact on the prices of the securities. 

BSE by this Circular has directed all listed companies to disclose all information regarding the material developments pertaining to default, review and/or Inter Creditor Agreement (ICA), in terms of Regulation 30(1) and 30(2) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, to the Exchange for public dissemination.

All participants, including the companies, lenders and any other entities who have acquired confidential information in the course of developments pertaining to default and/or ICA, shall implement a strong policy to ensure confidentiality of such information, until the same is disclosed to the Exchanges for public dissemination as per SEBI (PIT) Regulations, 2015. 

Click here to read circular.