MUMBAI: Unpaid listing fees by a publicly traded company to a stock exchange is a ‘regulatory due’ and not an ‘operational debt’ under insolvency proceedings, the National Company Law Appellate Tribunal (NCLAT) said recently. The appellate body’s order came in a case between the BSE and Gujarat-based KCCL Plastic, which had not paid listing fees to the bourse since fiscal 2014.
Listing fees come under the ambit of ‘regulatory dues’, which markets regulator Myself is entitled to recover. The defaulting company, being an entity registered under Sebi, has an obligation to follow the norms prescribed by the regulator for the recovery of its dues, the NCLAT said in its order.
“The Insolvency Law Committee suggests that regulatory dues are not to be recovered under ‘operational debt’,” a two-member NCLAT bench said. The appellate body also upheld the order passed by the National Company Law Tribunal (NCLT) on December 31, 2020, which had dismissed BSE’s plea to initiate insolvency proceedings against KCCL Plastic.
“We have carefully examined the pleadings of the case and came to the conclusion that no interference is required in the impugned order. Hence, the impugned order dated December 31, 2020, passed by NCLT – Ahmedabad bench, is hereby affirmed. The appeal is dismissed,” said the NCLAT.
Ahmedabad-based KCCL Plastic was listed on the BSE on October 27, 1993 and, according to the listing agreement, it had to pay an annual listing fee (ALF) on or before April 30 every year. After KCCL Plastic failed to pay listing fee since FY14, the exchange had sent several reminders to the company to clear its arrears, but it did not pay up.
On March 15, 2019, the BSE sent a demand note of Rs 10.7 lakh to the company but it was returned undelivered.
Listing fees come under the ambit of ‘regulatory dues’, which markets regulator Myself is entitled to recover. The defaulting company, being an entity registered under Sebi, has an obligation to follow the norms prescribed by the regulator for the recovery of its dues, the NCLAT said in its order.
“The Insolvency Law Committee suggests that regulatory dues are not to be recovered under ‘operational debt’,” a two-member NCLAT bench said. The appellate body also upheld the order passed by the National Company Law Tribunal (NCLT) on December 31, 2020, which had dismissed BSE’s plea to initiate insolvency proceedings against KCCL Plastic.
“We have carefully examined the pleadings of the case and came to the conclusion that no interference is required in the impugned order. Hence, the impugned order dated December 31, 2020, passed by NCLT – Ahmedabad bench, is hereby affirmed. The appeal is dismissed,” said the NCLAT.
Ahmedabad-based KCCL Plastic was listed on the BSE on October 27, 1993 and, according to the listing agreement, it had to pay an annual listing fee (ALF) on or before April 30 every year. After KCCL Plastic failed to pay listing fee since FY14, the exchange had sent several reminders to the company to clear its arrears, but it did not pay up.
On March 15, 2019, the BSE sent a demand note of Rs 10.7 lakh to the company but it was returned undelivered.
.