Brief Overview:
The Securities and Exchange Board of India (“SEBI”) has issued a consultation paper to set out certain amendments to ease and simplify the regulatory requirements around the issue of non-convertible debentures in order to deepen the corporate bond market and encourage investor interest in the debt capital market space. SEBI is also proposing to reduce the timeline and fast track the public issue of non-convertible debentures (“NCDs”).
Technical Details:
Key highlights of the propositions made by SEBI are as follows:
1) Reduction in face value of the privately placed NCDs to INR 10,000/- after getting a due diligence done by a merchant banker as against the current norms requiring the face value to be INR 1,00,000/-. In order to ensure uniformity, securitised debt instruments which are privately placed and listed, shall also have a face value of INR 10,000/- or INR 1,00,000/- after getting a due diligence done by a merchant banker.
2) Reducing the disclosure burden by annexing the financial statements of the company in the form of a QR code in the offer document which redirects to the financial statements as disclosed to the stock exchange rather than replicating the same in the offer document.
3) Disclosure of the details (in relation to capital, directors, auditors, defaults, frauds, related party transactions, etc.) as of the latest financial quarter vis-à-vis the current requirement of disclosure of such parameters as of the date of the offer document.
4) Standardization of record date to 15 (fifteen) calendar days before the relevant due date of payment of interest / redemption vis-à-vis such number of days that the issuer is permitted to decide as per its commercial requirements.
5) Aligning the format of the due diligence certificates to be issued by the debenture trustee to ensure parity between the different formats as set out in the SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021 and the SEBI’s Master Circular for Debenture Trustees.
6) Make it optional for listed entities to disclose their financial statements in at least 1 (one) English newspaper within 2 (two) days of conclusion of their board meeting.
7) Introduction of concept of fast track public issuance of NCDs where the listing shall be done on a T+3 basis vis-à-vis the current timeline of T+6 basis, where T refers to the issue closing date.
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 NCDs. By way of this consultation paper, the SEBI has proposed to address the operational challenges faced by the companies issuing NCDs and proposes to amend the same while building on its goal of financial inclusion by way of reducing the face value of bonds and opening the doors of a relatively safer financial investment avenue for retail investors. Simultaneously, it is also proposing to reduce the listing timelines for public NCDs to encourage public issuances of NCDs as well in this market.
The comments shall be accepted by SEBI until 30th December 2023.
For further details, please see:
SEBI | Consultation Paper | Ease of doing business
For any queries / clarifications, please feel free to ping us and we will be happy to chat
● Ms. Apurva Kanvinde (apurva.kanvinde@jclex.com)
● Mr. Smit Parekh (smit.parekh@jclex.com )
● Mr. Mannan Gala (mannan.gala@jclex.com )
