The Securities and Exchange Board of India (SEBI) released a consultation paper on listing regulations for certain instruments. Regulations governing the issue of securities include the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021 (NCS Regulations). These regulations primarily govern the listing of various equity and debt securities. The consultation paper proposes amendments to these regulations. Key proposals include:
Reduction in denomination for issuance of certain instruments: The Regulations require the minimum denomination for privately placed debt securities (securities offered to a select group of investors) and non-convertible redeemable preference shares (which cannot be converted to equity shares) to be at least one lakh rupees. The consultation paper proposes that the minimum denomination be reduced to Rs 10,000. In such cases, the issuer will have to appoint a merchant banker to carry out due diligence of such instruments and include them in the placement memorandum. Such instruments must be interest or dividend bearing instruments with a simple structure (no structured obligations).
Fast-track issues of certain debt securities: SEBI is considering allowing a fast-track mechanism for the listing of debt securities. Eligibility criteria includes: (i) having specified instruments listed for three consecutive years, (ii) debt securities to be issued have a credit rating equal to ‘AA-’ or above, and (iii) no regulatory action must be pending against the issuer. Some of changes proposed for fast-tracking of issue of debt securities include: (i) reducing the time taken for listing such securities from six days to three days, and (ii) reducing the time for comments on public issue of debt securities from seven to two days.
Disclosure of material events: The NCS Regulations requires certain information to be disclosed while issuing instruments. These disclosures include: (i) changes in the capital structure, directors, or auditors, (ii) details of any defaults or delayed payments on any debt, and (iii) related party transactions. These details have to be provided for the current financial year (as on date) and the three preceding financial years. It has been proposed to allow issuers to provide such details as of the latest quarter of the current financial year instead of as on date of the issue.
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