SEBI has vide its circular dated 28th October, 2022, reduced the denomination of debt securities and non convertible redeemable preference shares issued on private placement basis from Rs.10 lakh face value to Rs.1 lakh face value.
Operative part of SEBI circular follows:
Chapter V of the Operational Circular no. SEBI/HO/DDHS/P/CIR/2021/613 dated August 10, 2021, issued by SEBI, prescribes provisions pertaining to denomination of issuance and trading of Non-convertible Securities. The said circular, inter alia, mandates that the face value of each debt security or nonconvertible redeemable preference share issued on private placement basis shall be Rs. Ten lakh and the trading lot shall be equal to the face value.
SEBI has received representations from various market participants, including issuers, requesting for review of the said denominations. In particular, non-institutional investors consider the high ticket size as a deterrent which restricts their ability to access the market for corporate bonds. If the face value and trading lot is reduced, more investors can participate, which in turn will enhance the liquidity in the corporate bond market.
Accordingly, the following amendments are being made in Chapter V (Denomination of issuance and trading of Non-convertible Securities) of the Operational Circular:
Paragraph 1.1. shall be replaced with the following:
1.1. The face value of each debt security or non-convertible redeemable preference share issued on private placement basis shall be Rs. One lakh.
Paragraph 2.1. shall be replaced with the following:
2.1. The face value of the listed debt security and non-convertible redeemable preference share issued on private placement basis traded on a stock exchange or OTC basis shall be Rs. One lakh.
The provisions of this circular shall be applicable to all issues of debt securities and nonconvertible redeemable preference shares, on private placement basis, through new ISINs, on or after January 1, 2023.
You can view SEBI circular here