The National Stock Exchange and BSE said that they will separately implement a system under which they will be able to provide alerts to investors who are investing in stocks of companies that are under IBC.
NSE said that it will identify and tag securities under insolvency in a manner that makes it easier for market participants to identify them.
“The Exchange will continue to provide an alert at the time of order entry informing the market participants that the scrip is undergoing CIRP. Members shall also be advised to incorporate this alert promptly in their front-end systems,” NSE said. BSE said it will also implement a similar system.
In a crucial steps, stock exchanges said that they will suspend trading in stocks where the resolution plan explicitly states that the equity in the company will be extinguished or written down to zero once the oral order of the National Company Law Tribunal is notified by the resolution officer or the company.
In recent years, several stocks that saw their equity shares written down to zero after the resolution plan continued to be traded on the stock exchanges till their eventual delisting from the bourses. Such instances have seen many investors lose money due to lack of proper information.
The most recent examples of such instances on the stock exchanges were the continued trading in shares of Dewan Housing Finance Corporation and Jet Airways even when their equity capital was extinguished as part of the resolution plan.
