Retail Investors In Alok Industries Petition NCLAT Against Reliance Industries Ltd Move To Delist The Textile Company

Retail investors in Alok Industries have approached the National Company Law Appellate Tribunal (NCLAT) opposing Reliance Industries Ltd's (RIL) move to delist the textile firm.

RIL is the new owner of Alok Industries and the retail investors have claimed that delisting the latter company would erode the value of their stake in the company.

It may be recalled that RIL had bought out Alok Industries as the result of a bankruptcy in a Rs 5,050-crore deal in March. The resolution professional (RP) who managed Alok Industries through bankruptcy had set a five-year moratorium on delisting its shares while calling for expressions of interest in the company.

However, RIL had sought an exemption on this condition to delist Alok Industries’ which the Ahmedabad bench of the National Company Law Tribunal (NCLT) did not consider while approving the resolution proposal.

Thereafter, RIL approached the NCLAT arguing on the basis of a Securities and Exchange Board of India (SEBI) notification that relaxed the listing conditions for companies facing insolvency proceedings.

The SEBI made exemptions applicable when the resolution plan clearly specified delisting of shares and provided for an exit option to public shareholders.

The petition filed by retail investors has argued that the resolution professional had initiated the resolution proceedings stating that the successful resolution applicant would not be permitted to delist the stock for five years after acquisition.

According to the petition, Reliance was well aware of the lock-in period of five years when its offer was accepted in March 2019.

They stated that Reliance did not seek amendments to the condition based on the regulator's notification and that they would stand to lose if the delisting is permitted.