GST of decisions taken at the SEBI board meeting held on 28th june, 2023
Introduction of provisions in respect of (a) listing of non-convertible debt securities and (b) voluntary delisting of non-convertible debt securities
The Board approved the amendment to SEBI (Listing Obligations and Disclosure requirements) Regulations, 2015 requiring listed entities having outstanding listed NCDs (as on December 31, 2023) to list their subsequent issuances of NCDs at the stock exchange(s).
This new requirement which will come into effect from January 01, 2024, is aimed at,
i. facilitating transparency in price discovery of non-convertible debt securities,
ii. better disclosures to investors and the market, and
iii. avoiding ISIN level confusion and possible mis-selling of unlisted bonds.
Based on feedback during the consultation process, the following types of issuances are exempted from the applicability of the aforesaid requirement:
i. Capital Gains Tax debt securities issued under section 54 EC of the Income Tax Act, 1961;
ii. Non-convertible securities issued pursuant to an agreement entered into between the listed entity of such securities and multilateral institutions, subject to the condition that such non-convertible debt securities shall be locked-in and held till maturity and accordingly shall be unencumbered.
iii. Non-convertible debt securities 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.
The Board also approved the proposal for enabling entities having listed debt securities to delist such securities, subject to compliance with 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% 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.
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.
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