No need for shareholder nod if NCLT clears resolution plan

According to the IBC, once the resolution professional places the approved plan before the NCLT, a call is taken on whether it can be implemented or not

In a letter to stakeholders, the Ministry of Corporate Affairs has said for the resolution plan to be approved, shareholders’ approval need not be sought separately. The ministry’s letter is in response to stakeholders, including lawyers asking for clarification on the issue. 

Any resolution plan, which is executed as part of the Insolvency & Bankruptcy Code with the National Company Law Tribunal’s (NCLT) nod, will not require the shareholders in the debtor company to approve it, according to the circular. 

The confusion arose because under the Companies Act, transactions such as transfer of assets or shares usually require shareholders’ approval. Sources said