Between Creditor Primacy And Investor Protection: Are Minority Shareholders The Forgotten Stakeholders In Insolvency-Driven Delisting Under The IBC?
Shanya Mishra, Institute of Law, Nirma University
ABSTRACT
The increasing incidence of listed companies undergoing the Corporate Insolvency Resolution Process under the Insolvency Bankruptcy Code, 2016 (IBC) has brought into sharp focus, the intersection between insolvency law and securities regulation. While the IBC is founded upon principles of creditor primacy, value maximization and timely resolution, securities regulation seeks to protect investor interests through procedural safeguards governing corporate restructuring and delisting. The regulatory exemptions introduced by the Securities Exchange Board of India for delisting pursuant to approved resolution plans reflect an attempt to reconcile these exemptions also result in dilution of traditional shareholder protections, including meaningful participation in decision-making and market based pre-discovery mechanisms.
The article examines whether the existing IBC-SEBI framework strikes an appropriate balance between efficient corporate rescue and the protection of minority shareholders in listed entities undergoing insolvency resolution. Through a doctrinal analysis of the statutory framework, judicial precedents and selected insolvency-driven delisting transactions, the article evaluates the extent to which minority shareholders are accommodated with the contemporary resolution process. It argues that although creditor primacy remains indispensable to the effectiveness of the insolvency regime , the present framework leaves important gaps in procedural protection of minority shareholders. The article concludes by exploring whether targeted safeguards can be incorporated without undermining the objectives of timely and value-maximizing resolution.
Keywords: Insolvency and Bankruptcy code, Delisting, Minority Shareholders, CIRP, SEBI, Creditor Primacy.
