Debt securities with smaller face value: T&Cs apply!

Debt securities with smaller face value: T&Cs apply!

Brief Overview:

Listed non convertible debt securities (“NCDs”) including non-convertible redeemable preference shares (“NCRPS”) can be issued at a reduced face value of INR 10,000/-. Previously, it was permitted to issue listed NCDs and NCRPS with a face value of INR 1,00,000/- only.

Technical Details:

The issue of listed NCDs and NCRPS at such lower face value of INR 10,000/- is permitted subject to certain restrictions as regards structuring of such lower face value debt securities i.e. (i) such securities shall be interest/dividend bearing paying coupon/ dividend at regular intervals with a fixed maturity without any structured obligations; and (ii) credit enhancements can only be in the form and nature as set out in the circular. Further, the above is facilitated only pursuant to a condition that at least 1 a merchant banker is appointed.

JC takeaway:

The step towards lowering the ticket size of debt securities is with a view to encourage more non-institutional investors to participate in the Indian bond markets and this in turn may also enhance liquidity in the Indian bond markets.

For further details, please see:

SEBI | Circular | Face Value

For any queries/clarifications, please feel free to ping us and we will be happy to chat:

Smit Parekh & Apurva Kanvinde

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