SEBI BRINGS IN PROVISIONS FOR LISTING, VOLUNTARY DELISTING OF NCD

#1 · July 3, 2023, 7:55 am

Quote from Gouri Pedhabudhi on July 3, 2023, 7:55 am
The Board of Securities and Exchange Board of India (Sebi) on June 28 approved an amendment to the Sebi (Listing Obligations and Disclosure requirements) Regulations, 2015, requiring listed entities having outstanding listed non-convertible debt (NCDs) securities to list their subsequent issuances of NCDs at the stock exchanges.

This will come into effect from January 1, 2024.

The regulation is aimed at facilitating transparency in price discovery of non-convertible debt securities, providing better disclosures to investors and the market, and avoiding ISIN-level confusion and possible mis-selling of unlisted bonds.

Sebi clarified that Capital Gains Tax debt securities issued under section 54 EC of the Income Tax Act, 1961; those NCDs where parties have agreed to hold the securities till maturity and accordingly shall be unencumbered; and NCDs issued pursuant to an order of any Court or Tribunal or regulatory requirement as stipulated by a financial sector regulator namely, SEBI, RBI, IRDA, PFRDA or IBBI.

“If an entity with listed debt securities has outstanding unlisted NCDs as on December 31, 2023, the entity will have the option to list them, but it would not be mandatory to do so,” Sebi said in a release.

Sebi said its board also approved the proposal for enabling delisting of listed debt securities subject to certain requirements including approval from all holders of debt securities, suitable disclosures to the stock exchanges, etc.
“Unlike equity, wherein approval by a threshold majority is sufficient for approval of delisting, approval of 100 percent of the debt security holders is mandated for delisting of debt securities. This is because, unlike equity which is a perpetual instrument, listed debt securities have a finite term to maturity,” Sebi said.

Entities having privately placed, listed debt securities wherein the number of debt security holders is less than 200, shall be eligible to delist their debt securities under this framework as well.

Team- Intellex Strategic Consulting Private Limited

www.startupstreets.com, www.economiclawpractice.com, www.intellexcfo.com

The Board of Securities and Exchange Board of India (Sebi) on June 28 approved an amendment to the Sebi (Listing Obligations and Disclosure requirements) Regulations, 2015, requiring listed entities having outstanding listed non-convertible debt (NCDs) securities to list their subsequent issuances of NCDs at the stock exchanges.

This will come into effect from January 1, 2024.

The regulation is aimed at facilitating transparency in price discovery of non-convertible debt securities, providing better disclosures to investors and the market, and avoiding ISIN-level confusion and possible mis-selling of unlisted bonds.

Sebi clarified that Capital Gains Tax debt securities issued under section 54 EC of the Income Tax Act, 1961; those NCDs where parties have agreed to hold the securities till maturity and accordingly shall be unencumbered; and NCDs issued pursuant to an order of any Court or Tribunal or regulatory requirement as stipulated by a financial sector regulator namely, SEBI, RBI, IRDA, PFRDA or IBBI.

“If an entity with listed debt securities has outstanding unlisted NCDs as on December 31, 2023, the entity will have the option to list them, but it would not be mandatory to do so,” Sebi said in a release.

Sebi said its board also approved the proposal for enabling delisting of listed debt securities subject to certain requirements including approval from all holders of debt securities, suitable disclosures to the stock exchanges, etc.
“Unlike equity, wherein approval by a threshold majority is sufficient for approval of delisting, approval of 100 percent of the debt security holders is mandated for delisting of debt securities. This is because, unlike equity which is a perpetual instrument, listed debt securities have a finite term to maturity,” Sebi said.

Entities having privately placed, listed debt securities wherein the number of debt security holders is less than 200, shall be eligible to delist their debt securities under this framework as well.

Team- Intellex Strategic Consulting Private Limited

http://www.startupstreets.com, http://www.economiclawpractice.com, http://www.intellexcfo.com