- SEBI has prescribed continuous disclosure norms for issuers of listed NonConvertible Debt Securities, Non-Convertible Redeemable Preference Shares (NCRPS) and Commercial Papers, which are as follows:
(a) Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“SEBI LODR Regulations”) for issuers of listed Non-Convertible Debt Securities and/or NCRPS.
(b) SEBI circular nos. SEBI/HO/DDHS/DDHS/CIR/P/2019/115 dated October
22, 2019 and SEBI/HO/DDHS/DDHS/CIR/P/2019/167 dated December 24,
2019 for issuers of listed Commercial Papers.
- Further, the following provisions provide for monitoring of compliance and imposition of fines by stock exchanges:
(a) Sub regulation (1) of Regulation 97 of SEBI LODR Regulations, provides for monitoring of compliance by listed entities with the provisions of the regulation by recognized Stock Exchanges. Further, sub regulation (1)(a) of Regulation 98 of SEBI LODR Regulations provides for imposition of fines by Stock Exchanges for contravention of provisions of the regulation by listed entities.
(b) SEBI circular no. SEBI/HO/DDHS/DDHS/CIR/P/2019/115 dated October 22, 2019 provides for a framework for imposition of fine to be put in place by stock exchanges in cases of non-compliance and/ or inappropriate disclosures by issuers of listed Commercial Papers.
- In respect of listed specified securities (i.e. equity shares and convertible
securities), SEBI issued circular no. SEBI/HO/CFD/CMD/CIR/P/2020/12, dated January 22, 2020, specifying a uniform structure for imposing fines for issuers not in compliance with certain provisions of SEBI LODR Regulations.
- Accordingly, in order to ensure effective enforcement of continuous disclosure obligations by issuers of listed Non-Convertible Debt Securities or NCRPS or Commercial Papers, it has been decided to lay down a similar uniform structure for imposing fines for non-compliance with continuous disclosure requirements after discussion with market participants.
- In view of the above, in the interests of investors and the securities market, the Stock Exchanges shall levy fine and take action in case of non-compliances with continuous disclosure requirements by issuers of listed Non-Convertible Debt Securities and/ or NCRPS and/ or Commercial Papers as specified in Annexure I and Annexure II of this circular respectively. Stock Exchanges may deviate from the above, if found necessary, only after recording reasons in writing.
- In case a non-compliant entity is listed on more than one recognized stock exchange, the concerned recognized stock exchanges shall take uniform action under this circular in consultation with each other.
- The recognized stock exchanges shall take necessary steps to implement this circular and shall disclose on their website the action(s) taken against the entities for non-compliance(s); including the details of the respective requirement, amount of fine levied/ action taken etc.
- The amount of fine realized as per the structure provided in Annexure I of this circular shall be credited to the “Investor Protection Fund” of the concerned recognized stock exchange.
- The fines specified in Annexure I of this circular shall continue to accrue till the time of rectification of the non-compliance and to the satisfaction of the concerned recognized stock exchange. Such accrual shall be irrespective of any other disciplinary/enforcement action(s) initiated by recognized stock exchange(s)/SEBI.
10.The recognized stock exchanges may keep in abeyance the action or withdraw the action in specific cases where specific exemption from compliance with the requirements for continuous disclosures /moratorium on enforcement proceedings has been provided for under any Act, Court/Tribunal Orders etc.
11.The above provisions are without prejudice to the power of SEBI to take action under the securities laws.
12.The recognized stock exchanges are advised to bring the provisions of this circular to the notice of issuers of listed Non-Convertible Debt Securities, NCRPS, Commercial Papers.
13.This provisions mentioned in this circular shall come into force for compliance period ending on or after December 31, 2020.
Tag Archives: preference shares
SEBI circular dated 6th October, 2020, which is self explanatory
Issuance, listing and trading of Perpetual Non-Cumulative Preference
Shares (PNCPS) and Innovative Perpetual Debt Instruments (IPDIs)/
Perpetual Debt Instruments (PDIs) (commonly referred to as Additional
Tier 1 (AT 1) instruments)
- Perpetual Non-Cumulative Preference Shares (PNCPS’) and Innovative Perpetual Debt Instruments (IPDIs) / Perpetual Debt Instruments (PDIs) (commonly referred to as AT 1 instruments) are essentially non-equity regulatory instruments, forming part of a bank’s capital, governed by Reserve Bank of India (RBI) guidelines and issued under the issuance and listing framework given under Chapter VI of the SEBI (Issue and
Listing of Non-Convertible Redeemable Preference Shares) Regulations, 2013 (“NCRPS Regulations”).
- These instruments have certain unique features which, inter-alia, grant the issuer (i.e. banks, in consultation with RBI) a discretion in terms of writing down the principal / interest, to skip interest payments, to make an early recall etc. without commensurate right for investors to legal recourse, even if such actions of the issuer might result in potential loss to investors.
- Given the nature and contingency impact of these AT 1 instruments and the fact that full import of the discretion is available to an issuer, may not be understood in the truest form by retail individual investors, the matter was discussed in SEBI’s advisory committee on the development of corporate bond market in India viz. Corporate Bonds and Securitization Advisory Committee (CoBoSAC). Based on the recommendations of the CoBoSAC, the following shall be the additional framework related to issuance, listing and trading of PNCPS and IPDIs which are proposed to be listed :
a. Manner of Issuance:
i. The issuance of AT1 instruments shall be done mandatorily on the Electronic Book Provider (EBP) platform irrespective of the issue size in terms of SEBI circulars SEBI/HO/DDHS/CIR/P/2018/05 dated January 05, 2018 and SEBI/HO/DDHS/CIR/P/2018/122 dated August 16, 2018.
ii. “Securities” as defined in clause 1.1.8 of Schedule A of SEBI circular
SEBI/HO/DDHS/CIR/P/2018/05 dated January 05, 2018, shall include:
i) Perpetual non-cumulative preference shares (PNCPS)
ii) Innovative perpetual debt instruments (IPDIs) and
iii) Perpetual debt instruments (PDIs)
Issuers and Stock Exchanges shall ensure that only QIBs are allowed to
participate in the issuance of AT1 instruments.
c. Allotment size
The minimum allotment of AT1 instruments shall not be less than Rs.1 crore.
d. Trading lot size
The minimum trading lot size for AT1 instruments shall be Rs.1 crore.
e. Other requirements:
Issuers, in addition to making disclosures as per Schedule I of the SEBI NCRPS Regulations, shall comply with the following:
i. Disclosures as specified in Annex I.
ii. Provisions of circulars as specified in Annex II.
iii. Specific disclosures about:
a) Details of all the conditions upon which the call option will be exercised by them for AT1 instruments, in the Information /Private Placement Memorandum.
b) Risk factors, to include all the inherent features of these AT1 instruments highlighted at para 2 above.
c) Point of Non Viability (PONV) clause: The absolute right, given to the RBI, to direct a bank to write down the entire value of its outstanding AT1 instruments/bonds, if it thinks the bank has passed the Point of Non
Viability (PONV), or requires a public sector capital infusion to remain a
- This circular shall come into force with effect from October 12, 2020.
Gist of SEBI circular standardising the timeline for listing of securities on private placement basis on the bourses.
- SEBI has been receiving requests from various market participants for clarification on the time period within which securities issued on private placement basis under SEBI ILDS, SEBI NCPRS, SEBI SDI and SEBI ILDM Regulations need to be listed after completion of allotment in respect of
i. SEBI (Issue and Listing of Debt Securities) Regulations, 2008 (SEBI ILDS),
ii. SEBI (Issue and Listing of Non-Convertible Redeemable Preference Shares) Regulations, 2013 (SEBI NCRPS),
iii. SEBI (Public Offer and Listing of Securitised Debt Instruments and Security Receipts) Regulations, 2008 (SEBI SDI) and
iv. SEBI (Issue and Listing of Municipal Debt Securities) Regulations, 2015
- After discussions and taking feedback from market participants, it has been decided to stipulate the following timelines:
Depositories shall activate the ISINs of debt securities issued on private placement basis only after the Stock Exchange(s) have accorded approval for listing of such securities.
Further, in order to facilitate re-issuances of new debt securities in an existing ISIN, Depositories are advised to allot such new debt securities under a new temporary ISIN which shall be kept frozen. Upon receipt of listing approval from Stock Exchange(s) for such new debt securities, the debt securities credited in the new temporary ISIN shall be debited and the same shall be credited in the pre-existing ISIN of the existing debt securities, before they become available for trading.
Stock Exchange(s) are advised to inform the listing approval details to the
Depositories whenever listing permission is given to debt securities issued on private placement basis.
- In case of delay in listing of securities issued on privately placement basis beyond the timelines specified in para 2 above, the issuer shall;
4.1. pay penal interest of 1% p.a. over the coupon rate for the period of delay to the investor (i.e. from date of allotment to the date of listing)
4.2. be permitted to utilise the issue proceeds of its subsequent two privately placed issuances of securities only after receiving final listing approval from Stock Exchanges.
- Clause 4(a) (ii) of the SEBI Circular No. SEBI/ HO/ MIRSD/ DOS3/ CIR/P/2019/68 dated May 27, 2019 stands deleted.
- The circular shall come into force with effect from December 01, 2020.
SEBI has vide its circular dated 15th July, 2020 given relaxations in respect of debt listing, listing of non convertible redeemable preference shares and commercial papers to use unaudited financials with limited review provided that these unaudited financials are not more than 6 months old.
It has also extended the timelines for submission of quarterly/ half-yearly/ yearly financial accounts as on 31st march, 2020 to 31st July, 2020.
Those issuers who propose to list their debentures/ preference shares/ commercial papers during the month of July, 2020 can use the available financial statements as on 31st December, 2019.
Copy of SEBI circular can be found here
SEBI has issued a circular dated 8th June, 2020 wherein they have relaxed some compliance deadlines due to the ongoing covid pandemic.
Issuers who intend/ propose to list their non-convertible debentures, non convertible redeemable preference shares or commercial papers have been given one more months for disclosure of their financial results. So now they need to submit their financial results on or before 30th June, 2020.