Enhanced Disclosure Requirements for Listed Debt Securities

By its circular dated May 27, 2019, SEBI has enhanced disclosure requirements in relation to listed debt securities, which include inter alia the following: (i) disclosure by DTs on their websites of the nature of their compensation arrangements with their clients, including the minimum fee to be charged and factors determining the same, and (ii) DTs should now display on their website, details of interest / redemption due to debenture holders, and the status of payment against issuers (including a remark in case of any delay), within specified timelines.

Further, the SEBI (Issue and Listing Debt Securities) (Amendment) Regulations, 2019, omitted the additional covenants which were required to be included as part of issue details for privately placed issues, with effect from May 7, 2019. The aforesaid circular now provides for two new additional covenants to be included in all summary term sheets / agreements executed on or after May 7, 2019: (i) in case of default in payment of interest and/or principal redemption, additional interest of at least @ 2% per annum over the coupon rate shall be payable by the issuer for the defaulting period; and (ii) in case of delay in listing of the debt securities beyond 20 days from the deemed date of allotment, the issuer must pay penal interest of at least @ 1 % per annum over the coupon rate from the expiry of 30 days from the deemed date of allotment till the listing of such debt securities.

Published In:Inter Alia - Quarterly Edition - July 2019 [ English Chinese japanese ]
Date: July 31, 2019