Sebi Can't Initiate Proceedings Against Companies under IBC, Says Panel

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The Insolvency Law Committee has recommended against giving any special dispensation to the Securities and Exchange Board of India (Sebi) from the moratorium clause under the Insolvency and Bankruptcy Code (IBC), the Economic Times of India reported. According to the rules, once a company is admitted into insolvency under the code, a blanket moratorium kicks in barring regulators from initiating any fresh proceedings against the company. Sebi has made representations to the central government, seeking an exemption from this rule and the matter was referred to the Insolvency Law Committee. In its report to the government, the committee opined that any exemptions on moratorium could hinder the IBC process. Under the law, the central government has powers to exempt any regulator or financial arrangement from the ambit of moratorium. "The exemption under Section 14(3)(a) (exemption from moratorium) should be exercised only in exceptional circumstances, which may not hinder the smooth conduct of the CIRP and hence, should not be relaxed until found necessary from the implementation experience of the code," said the report, submitted to the finance ministry last week. Read more.
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