The Notice Requirement
In a scheme involving a company regulated by a sectoral regulator such as the RBI, SEBI, IRDAI, PFRDA, TRAI/DoT, or a power regulator, notice of the scheme must be issued to the regulator. The NCLT’s rules require the notice, and the regulator’s representation is considered before the scheme is sanctioned.
The Approval Precedence
Where the sectoral law requires the regulator’s approval, the approval must precede the NCLT sanction. The examples include RBI (banks, NBFCs), IRDAI (insurance), and TRAI/DoT (telecom). A scheme that is sanctioned without the sectoral approval is vulnerable to being set aside or rendered ineffective.
The Power Sector
For a company in the power sector, the scheme may require approval from the Central Electricity Regulatory Commission or the State Electricity Regulatory Commission, depending on the nature of the business and the assets transferred. The NCLT will require the regulator’s no-objection before sanctioning the scheme.
The Documentation
The scheme file should contain: the regulator’s notice; the regulator’s response or no-objection; the conditions imposed by the regulator; and the NCLT’s order recording the regulator’s approval. A scheme that treats the sectoral regulator as a post-sanction formality is exposed to regulatory challenge.
Call to Action: For sectoral regulator mapping, NCLT–regulator sequencing, or scheme condition compliance, contact office@anujdesaiassociates.com or 9619456656. Website: https://anujdesaiassociates.com. LinkedIn: linkedin.com/in/ca-anuj-desai-122547230.