Brief Overview:

The Securities and Exchange Board of India (“SEBI”) has issued a consultation paper to propose certain amendments to ease and simplify the regulatory requirements around the issue of non-convertible debentures in order to promote ease of doing business and ease the disclosure burden on the issuers.

Technical Details:

Key highlights of the propositions made by SEBI are as follows:

1) Deletion of disclosures regarding permanent account number and personal address of promoters of the issuers in the offer document;

2) Align the period for disclosure of key operational and financial parameters on a consolidated and standalone basis with the period for disclosure of financial information in the offer document;

3) Disclosure by way of QR code and web-link regarding the details of branches or units of the issuer. This tech driven proposal helps in reducing the file size of the offer documents making them more investor friendly such that they are easy to read and comprehend;

4) In addition to the current requirements under the ‘Security and Covenant Monitoring System’, where the debenture trustee monitors the compliance of the issuer of NCDs with covenants and terms of the issue, the debenture trustee will also be responsible to regarding the information about branches/ units of the Issuer;

5) End use disclosures pertaining to project cost financing for the issue of equity and debt securities to be aligned under the NCS Regulations and SEBI (Issue of Capital and Disclosure Requirements) Regulations 2018);

6) Relaxation in the requirement of providing certain business and commercial details in case of purchase or acquisition of immoveable property in the offer document; and

7)  Align the timeline for intimating to stock exchanges regarding the status of payment of interest/ repayment of principal for listed commercial paper with Regulation 57 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, i.e. within one working day of the payment being due, in order to ensure consistency.

JC takeaway:

The Securities and Exchange Board of India (“SEBI”) is proposing to simplify the norms for making it easier for companies to raise capital through non-convertible debentures (“NCDs”). By way of this consultation paper, SEBI has proposed to address the operational challenges faced by the companies issuing NCDs and proposes to amend the same in order to promote ease of doing business and reduce the disclosure burden on the issuers.

The comments shall be accepted by SEBI until May 30, 2024.

For further details, please see:  

SEBI | Consultation paper on measures towards Ease of Doing Business for Non-Convertible securities

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