The Bombay High Court ruled that SEBI’s delisting regulations do not apply to the delisting of equity shares under a resolution plan.

the Bombay High Court recently ruled that the Securities and Exchange Board of India (SEBI) delisting regulations do not apply to the delisting of equity shares under a resolution plan under the Insolvency and Bankruptcy Code (IBC).

This judgment came in the case of Kailash Auto Finance Limited (the petitioner), where the court held that the regulatory framework governing delisting, as set by SEBI, doesn’t have jurisdiction over cases where the delisting is part of a resolution plan approved by the National Company Law Tribunal (NCLT) under the IBC.

The key takeaway from the ruling is that delisting under a resolution plan, which is a mechanism used to resolve a distressed company’s issues through a legal process, falls outside SEBI’s delisting guidelines. This clarification is significant as it allows resolution plans that involve delisting to move forward without being bound by the procedural and compliance requirements typically applicable to public company delisting as set out by SEBI.

This decision could have broader implications for other companies involved in the insolvency process where delisting forms part of the resolution strategy. It ensures that the focus stays on achieving a viable resolution, rather than getting bogged down in SEBI’s delisting regulations.