Securities And Exchange Board Of India (Debenture Trustees) Regulations, 1993

Published vide Notification Gazette of India, Extra, Part 3, Section 4, dated 29.12.1993

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Noti. No. SEBI/LE/12/93, dated 29.12.1993.- In exercise of the powers conferred by section 30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Board with the previous approval of the Central Government hereby makes the following regulations, namely:-

CHAPTER I

Preliminary

Short title and commencement.-(1) These regulations may be called the Securities and Exchange Board of India (Debenture Trustees) Regulations, 1993.

(2) They shall come into force on the date of their publication in the Official Gazette.

Definitions.-In these regulations, unless the context otherwise requires,-

(a) "Act" means the Securities and Exchange Board of India Act, 1992 (15 of 1992)

[(aa) "associate" shall mean any entity which is an associate under sub-section (6) of Section 2 of the Companies Act, 2013 or under the applicable accounting standards and shall include a person whose director, is also a director of the debenture trustee or the body corporate as the case may be].

[[(ab) "body corporate" shall have the meaning assigned to it in or under sub-section (11) of section 2 of the Companies Act, 2013 and for the purpose of these regulation, includes a public financial institution as defined under sub-section (72) of Section 2 of the Companies Act, 2013, a non-banking financial company, public section undertaking established under any Central or State enactment which has its debt securities listed or which seeks to list its debt securities or a recognized stock exchange in accordance with the Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulation, 2008, or any other issuer of debt securities in accordance with any Regulation issued by the Board].

(ac) "certificate" means a certificate of registration granted or renewed by the Board under these regulations;

(ad) "change of status or constitution" in relation to a debenture trustee-

(i) means any change in its status or constitution of whatsoever nature; and

(ii) without prejudice to generality of sub-clause (i), includes-

(A) amalgamation, demerger, consolidation or any other kind of corporate restructuring falling within the scope of section 391 of the Companies Act, 1956 (1 of 1956) or the corresponding provision of any other law for the time being in force;

(B) change in its managing director or whole-time director; and

(ae) "change in control", in relation to a debenture trustee, means :-

[(i) if its shares are listed on any recognised stock exchange, change in control as per the provisions of Regulation 4 of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeover) Regulation, 2011;].

(ii) in any other case, change in the controlling interest in the body corporate;

Explanation:- For the purpose of sub-clause (ii), the expression "controlling interest" means an interest, whether direct or indirect, to the extent of at least fifty one per cent of voting rights in the body corporate;]

[(b) "Companies Act" means the Companies Act, 2013 (Act 18 of 2013)];

[(ba) "debenture" means a debenture within the meaning of sub-section (30) of section 2 of the Companies Act, 2013;];

[(bb) "debenture trustee" means a trustee appointed in respect of any issue of debenture of a body corporate;];

(b1) "enquiry officer" means any officer of the Board, or any other person, having experience in dealing with the problems relating to the securities market, who is appointed by the Board under Chapter V;

(d) "Inspecting authority" means one or more persons appointed by the Board to exercise powers conferred under Chapter IV;

[(e) "insurance company" has the same meaning assigned to it under sub-section (7A) of section 2 of the Insurance Act, 1938;];

[(ea) "issue" means an offer of debentures by a body corporate to the public or the holders of securities of such body corporate and includes a private placement of debentures made by a body corporate, which seeks to list its debt securities on a recognized exchange;];

[(ee) "networth" means aggregate of value of the paid up equity capital and for reserves (excluding reserves created out of revaluation) reduced by the aggregate value of accumulated losses and deferred expenditure not written off (including miscellaneous expenses not written off) as per the latest audited balance sheet.]

[(f) "principal officer" means,-

a key managerial personnel as defined under sub-section (51) of section 2 of the Companies Act, 2013, and shall include any person connected with the management or administration of the body corporate upon whom the Board has served notice of its intention of treating him as the principal officer thereof];

(g) "regulations" means Securities and Exchange Board of India (Debenture Trustees) Regulations, 1993;

(h) [* * *]

(i) "scheduled bank" means a scheduled bank as defined in clause (e) of section 2 of the Reserve Bank of India Act, 1934 (2 of 1934);

[(ia) "trust deed" means a deed executed by the body corporate in favour of the trustees named therein for the benefit of the debenture holders;]

[(ib) "recognised stock exchange" shall have the same meaning assigned to it under sub-section (f) of section 2 of the Securities Contracts (Regulation) Act, 1956.];

(j)all other words and expressions used in these regulations but not defined, and defined in the Act and the rules shall have the meanings respectively assigned to them in the Act [* * *].

2-A. Power of the Board to issue clarifications.- In order to remove any difficulties in respect of the application or interpretation of these regulations, the Board may issue clarifications or guidelines in the form of circulars.]

CHAPTER II

Registration Of Debenture Trustees

Application for grant of certificate.-(1) An application by a debenture trustee for grant of a certificate shall be made to the Board in Form A.

[(1A) An application for registration made under sub-regulation (1) shall be accompanied by a non-refundable application fee as specified in Schedule II.]

(2) Notwithstanding anything contained in sub-regulation (1), any application made by a debenture trustee prior to coming into force of these regulations containing such particulars as near thereto as mentioned in Form A shall be treated as an application made in pursuance of sub-regulation (1) and dealt with accordingly.

Furnishing of further information, clarification, etc.-(1) The Board may require the applicant to furnish further information or clarification regarding matters which are relevant to a debenture trustee to consider the application for a grant of a certificate.

(2) The applicant or, its principal officer shall, if so required, appear before the Board for personal representation.

Application to conform to the requirements.-Subject to the provisions of sub-regulation (2) of regulation 3, any application, which is not complete in all respects and does not conform to the instructions specified in the form, shall be rejected:

Provided that, before rejecting any such application, the applicant shall be given an opportunity to remove within the time specified such objections as may be indicated by the Board.

Consideration of application.-The Board shall take into account for considering the grant of a certificate, all matters which are relevant to a debenture trustee and in particular the following, namely, whether the applicant,-

(a) has the necessary infrastructure like adequate office space, equipments, and manpower to effectively discharge his activities;

(b) has any past experience as a debenture trustee or has in his employment minimum two persons who had the experience in matters which are relevant to a debenture trustee;

(c) or any person, directly or indirectly connected with the applicant has not been granted registration by the Board under the Act;

[(d) has in his employment at least one person who possesses the professional qualification in law from an institution recognised by the Government;]

(e) or any of its director or principal officer is or has at any time been convicted for any offence involving moral turpitude or has been found guilty of any economic offence;

[(f) is a fit and proper person;]

[(g) fulfills the capital adequacy requirements specified in regulation 7A.]

[7. Eligibility for being debenture trustee. - No person shall be entitled to act as a debenture trustee unless it is-

(a) a scheduled bank carrying on commercial activity; or

(b) a public financial institution as defined (sic in) sub-section (72) of Section 2 of the Companies Act, 2013; or

(d) body corporate as defined under sub-section (11) of Section 2 of the Companies Act, 2013.].

[7A. Capital Adequacy Requirement.- The capital adequacy requirement referred to in clause (g) of regulation 6 shall not be less than the networth of one crore rupees:

Provided that a debenture trustee holding certificate of registration as on the date of commencement of the Securities and Exchange Board of India (Debenture Trustees) (Amendment) Regulations, 2003 shall fulfill the networth requirements within two years from the date of such commencement.]

Procedure for registration.-The Board on being satisfied that the applicant is eligible, shall send an intimation to the applicant mentioning that he has been found eligible for the grant of certificate and grant a certificate in Form B, subject to the payment of fees as specified in regulation 12.
Renewal of certificate.-(1) A debenture trustee may, if he so desires, make an application in Form A for renewal of certificate before three months of the expiry of the period of certificate.

[(1A) An application for renewal made under sub-regulation (1) shall be accompanied by a non-refundable application fee as specified in Schedule II.]

(2) The application for renewal of certificate under sub-regulation (1) shall be dealt with in the same manner as if it were an application for grant of a certificate made under regulation 3.

9-A. [Conditions of registration.- (1) Any registration granted under regulation 8 or any renewal granted under regulation 9 shall be subject to the following conditions, namely :-

(a) where debenture trustee proposes to change its status or constitution, it shall obtain prior approval of the Board for continuing to act as such after the change;

(b) it shall pay the fees for registration or renewal, as the case may be, in the manner provided in these regulations;

(c) it shall take adequate steps for redressal of grievances of the investors within one month of the date of the receipt of the complaint and keep the Board informed about the number, nature and other particulars of the complaints received and the manner in which such complaints have been redressed;

(d) it shall maintain capital adequacy requirements specified in regulation 7A at all times during the period of the certificate or renewal thereof;

(e) it shall abide by the regulations made under the Act in respect of the activities carried on by it as a debenture trustee.

(2) Nothing contained in clause (a) of sub-regulation (1) shall affect the obligation to obtain a fresh registration under section 12 of the Act in cases where it is applicable.

9B. Time period for disposal of application and period of validity of certificate.- (1) The Board shall within three months of receipt of all information for considering the application for grant of registration made under regulation 8, or for its renewal made under regulation 9, take a decision thereon and send intimation to the applicant.

(2) The certificate of registration granted under regulation 8 and its renewal granted under regulation 9, shall be valid for a period of three years from the date of its issue.]

Procedure where registration is not granted.-(1) Where an application for grant of a certificate under regulation 3 or of renewal under regulation 9 does not fulfil the requirements set out in regulation 6, the Board may reject the application, after giving a reasonable opportunity of being heard.

(2) The refusal to grant or renew the certificate shall be communicated by the Board within thirty days of such refusal to the applicant stating therein the grounds on which the application has been rejected.

(3) Any applicant may, being aggrieved by the decision of the Board under sub-regulation (2), apply within a period of thirty days from the date of receipt of such intimation, to the Board for, reconsideration of its decision.

(4) On receipt of the application made under sub-regulation (3), the Board shall reconsider its decision and communicate its findings thereon as soon as possible in writing to the applicant.

Effect of refusal to grant certificate or renew certificate.-Any debenture trustee whose application for grant or renewal of a certificate has been refused by the Board shall on and from the date of the receipt of the communication under sub-regulation (2) of regulation 10 cease to act as a debenture trustee.
Payment of fees, and the consequences of failure to pay fees.-(1) Every applicant eligible for grant or renewal of a certificate shall pay the fees in such manner and within the period specified in Schedule II:

Provided that Board may, on sufficient cause being shown, permit the debenture trustee to pay such fees at any time before the expiry of six months from the date on which such fees become due.

(2) Where the debenture trustee fails to pay the fees as provided in sub-regulation (1), the Board may suspend the certificate, whereupon the debenture trustee shall forthwith cease to act as a debenture trustee.

CHAPTER III

Responsibilities And Obligations Of Debenture Trustees

Obligation before appointment as debenture trustees.-No debenture trustee who has been granted a certificate under regulation 8 shall act as such in respect of each issue of debenture unless-

[(a) he enters into a written agreement with the body corporate before the opening of the subscription list for issue of debentures;

(b) the agreement under clause (a) shall inter alia contain:

[(i) an undertaking by the body corporate to comply with all regulation/provisions of Companies Act, 2013, guidelines of other regulatory authorities in respect of allotment of debentures till redemption.];

[(ii) the time limit within which the security for the debentures shall be created or the agreement shall be executed in accordance with the Companies Act, 2013 or provisions as prescribed by any regulatory authority as applicable.]]

[[13A. A person shall not be appointed as a debentures trustee, in case-

(a) the debenture trustee,-

(i) is an associate of the body corporate;

(ii) beneficially hols shares in the company;

(iii) is a promoter, director or key managerial personnel or any other officer or an employee of the company or its holding, subsidiary or associate company;

(iv) is beneficially entitled to moneys which are to be paid by the company otherwise than as remuneration payable to the debenture trustee;

(v) is indebted to the company or its subsidiary or its holding or associate company or a subsidiary of such holding company;

(vi) has furnished any guarantee in respect of the principal debts secured by the debentures or interest thereon;

(vii) has any pecuniary relationship with the company amounting to 2% or more of its gross turnover or total income or Rs. 50 lakh or such higher amount as may be prescribed, whichever is lower during the two immediately preceding financial years or during the current financial year;

(viii) is relative of any promoter or any person who is in the employment of the company as a director or key managerial personnel;

(ix) is likely to have conflict of interest in any other manner:

Provided that this requirement shall not be applicable in respect of debentures issued:

(i) wherever there is gurantee by the state/central government for the debentures issued.]

(b) it has lent and the loan is not yet fully repaid or is proposing to lend money to the body corporate:

Provided that this requirement shall not be applicable in respect of debentures issued prior to the commencement of the Companies (Amendment) Act, 2000, where-

(i) recovery proceedings in respect of the assets charged against security has been initiated, or

(ii) the body corporate has been referred to Board for Industrial and Financial Reconstruction under the Sick Industrial Companies (Special Provisions) Act, 1985, prior to commencement of the Securities and Exchange Board of India (Debenture Trustees) (Amendment) Regulations, 2003.]

[14. Obligation of the debenture trustees. - Every debenture trustee shall amongst other matters accept the trust deeds which contain the matters specified in Section 71 of Companies Act, 2013 and Form No. SH. 12 specified under the Companies (Share Capital and Debentures) Rules, 2014.]

Duties of the debenture trustees.- [(1) It shall be the duty of every debenture trustee to-

(a) satisfy itself that the prospectus or letter of offer does not contain any matter which is inconsistent with the terms of the issue of debentures or with the trust deed;

(b) satisfy itself that the covenants in the trust deed are not prejudicial to the interest of the debenture holders;

(c) call for periodical status/performance reports from the issuer company within 7 days of the relevant board meeting or within 45 days of the respective quarter whichever is earlier;

(d) communicate promptly to the debenture holders defaults, if any, with regard to payment of interest or redemption of debentures and action taken by the trustee therefor;

(e) appoint a nominee director on the Board of the company in the event of :

(i) two consecutive defaults in payment of interest to the debenture holders;or

(ii) default in creation of security for debentures;or

(iii) default in redemption of debentures.

(f) ensure that the company does not commit any breach of the terms of issue of debentures or covenants of the trust deed and take such reasonable steps as may be necessary to remedy any such breach;

(g) inform the debenture holder immediately of any breach of the terms of issue of debentures or covenants of the trust deed;

(h) ensure the implementation of the condition regarding creation of security for the debentures, if any, and debentures redemption reserve;

(i) ensure that the assets of the company issuing debentures and of the guarantors, if any, are sufficient to discharge the interest and principal amount at all times and that such assets are free from any other encumbrances except those which are specifically agreed to by the debenture holders;

(j) do such acts as are necessary in the event the security becomes enforceable;

(k) call for reports on the utilization of funds raised by the issue of debentures;

(l) take steps to convene a meeting of the holders of debentures as and when such meeting is required to be held;

(m) ensure that the debentures have been converted or redeemed in accordance with the terms of the issue of debentures;

(n) perform such acts as are necessary for the protection of the interest of the debenture holders and do all the other acts as are necessary in order to resolve the grievances of the debenture holder;

(o) take possession of trust property in accordance with the provisions of the trust deed;

(p) to take appropriate measures for protecting the interest of the debenture holders as soon as any breach of the trust deed or law comes to his notice;

(q) ascertain and satisfy itself that :-

(i) in case where the allotment letter has been issued and debenture certificate is to be issued after registration of charge the debenture certificates have been dispatched by the body corporate to the debenture holder within 30 days of the registration of the charge with the Register of Companies;

(ii) debentures certificates have been dispatched to the debenture holder or debenture have been credited in the demat accounts of the debentures holder in accordance with the provisions of the Securities and Exchange Board of India (Debenture Trustee) Regulation, 1993, Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulation, 2008, Securities and Exchange Board of India (Listing Obligation and Disclosure Requirements) Regulations, 2015 and any other regulation issued by the Board;

(iii) interest warrants for interest due on the debentures have been dispatched to the debenture holders on or before the due dates;

(iv) debenture holders have been paid the monies due to them on the date of redemption of the debentures;

(r) inform the Board immediately of any breach of trust deed or provision of any law, which comes to the knowledge of the trustee.

Explanation. - The communication to the debenture holders by the debentures trustee as mentioned in these regulation may be made by electronic media, press-release and placing notice on its website;

(s) exercise due diligence to ensure compliance by the body corporate with the provisions of the Companies Act, Securities and Exchange Board of India (Listing Obligation and Disclosure Requirement), Regulation, 2015 the listing agreement of the stock exchange or the trust deed or any other regulation issued by the Board pertaining to debt issue;

(t) In case where listed debt securities are secured by way of receivables/ book debts it shall obtain the following-

(i) In Quarterly basis-

(a) Certificate from the Director/ Managing Director of the issuer company certifying the value of the book debts/ receivables;

(b) Certificate from an independent chartered accountant giving the value of book debts/ receivables.

(ii) On Yearly basis-

(a) Certificate from the statutory auditor giving the value of book debts/ receivables.]

[(1A) The debenture trustee shall:

(a) obtain reports from the lead bank regarding progress of the project;

(b) monitor utilisation of funds raised in the issue;

[(c) obtain a certificate from the issuer' Statutory Auditor:

(i) in respect of utilisation of fund during the implementation period of the project; and

(ii) in the case of debentures issued for financing working capital at the end of each accounting years.]]

(2) A debenture trustee shall call or cause to be called by the body corporate a meeting of all the debenture holders on-

(a) a requisition in writing signed by at least one-tenth of the debenture holders in value for the time being outstanding; or

(b) the happening of any event, which constitutes a default or which in the opinion of the debenture trustees affects the interest of the debenture holders.

[(3) No debenture trustee shall relinquish its assignments as debenture trustee in respect of the debenture issue of any body corporate, unless and until another debenture trustee is appointed in its place by the body corporate.

(4) A debenture trustee shall maintain the networth requirements as specified in these regulations on a continuous basis and shall inform the Board immediately in respect of any shortfall in the networth and in such a case it shall not be entitled to undertake new assignments until it restores the networth to the level of specified requirement within the time specified by the Board.

(5) A debenture trustee may inspect books of account, records, registers of the body corporate and the trust property to the extent necessary for discharging its obligations.]

Code of Conduct.-Every debenture trustee shall abide by the Code of Conduct as specified in Schedule III.
Maintenance of books of account, records, documents, etc. - [(1) Subject to the provisions of any law every debenture trustee shall keep and maintain proper books of account record and documents relating to the trusteeship functions for a period of not less than five financial year from the date of redemption of debentures.]

(2) Every debenture trustee shall intimate to the Board, the place where the books of account, records and documents are maintained.

[17A. Appointment of compliance officer. - (1) Every debenture trustee shall appoint a compliance officer who shall be responsible for monitoring the compliance of the Act, rules and regulations, notifications, guidelines, instructions, etc., issued by the Board or the Central Government and for redressal of investors’ grievances.

(2) The compliance officer shall immediately and independently report to the Board any non-compliance observed by him.]

[(3) The compliance officer shall report any non-compliance, of the requirements specified in the listing agreement with respect to debenture issues and debenture holders, by the body corporate to the Board.]

[(4) The Compliance Officer so appointed shall obtain certification in terms of the Securities and Exchange Board of India (Certification of Associated Person in the Securities Markets) Regulation, 2007 or as may be specified by the Board.]

Information to the Board.-(1) Every debenture trustee shall as and when required by the Board submit the following information and documents, namely:-

(a) the number and nature of the grievances of the debenture holders received and resolved;

(b) copies of the trust deed;

(c) non-payment or delayed payment of interest to debenture holders, if any, in respect of each issue of debentures of a body corporate;

(d) details of despatch and transfer of debenture certificates giving therein the dates, mode, etc.;

(e) any other particular or document which is relevant to debenture trustee.

(2) Where any information is called for under sub-regulation (1) it shall be the duty of the debenture trustees to furnish such information.

CHAPTER IV

Inspection And Disciplinary Proceedings

Board's right to inspect.-(1) Where it appears to the Board so to do, it may appoint one or more persons as inspecting authority to undertake the inspection of the books of account, other records and documents of the debenture trustee for any of the purposes specified in sub-regulation (2).

(2) The purposes referred to in sub-regulation (1) shall be as follows, namely:-

(a) to ensure that the records and documents which are relevant to debenture trustees are being maintained in the manner required by the Board;

[(b) that the provision of the Companies Act, 2013 Circular, rules and regulation are being complied with;]

(c) to ascertain as to whether there exist any circumstances which would render the debenture trustee ineligible for grant of registration or continuance thereof;

(d) to investigate into the complaints received from investors, other debenture trustees or any other person on any matter having a bearing on the activities of the debenture trustee; and

(e) to investigate suo moto in the interest of securities business or investors interest into the affairs of the debenture trustee.

Procedure for inspection.-(1) Before undertaking an inspection under regulation 19, the Board shall give a reasonable notice to the debenture trustee for that purpose.

(2) Notwithstanding anything contained in sub-regulation (1), where the Board is satisfied that in the interest of the investors or in public interest no such notice should be given, it may by an order in writing direct that the inspection of the affairs of the debenture trustee be taken up without such notice.

(3) On being empowered by the Board the inspecting authority shall undertake inspection and the debenture trustee against whom an inspection is being carried out shall be bound to discharge his obligations as provided under regulation 21.

Obligations of debenture trustee on inspection by the Board.-(1) It shall be the duty of every director, officer and employee of the debenture trustee who is being inspected, to produce to the inspecting authority such books and other documents in his custody or control and furnish him with the statements and information relating to the debenture trustee within such time as the inspecting authority may require.

(2) The debenture trustee shall allow the inspecting authority to have a reasonable access to the premises occupied by the debenture trustee or by any other person, on his behalf and also extend reasonable facility for examining any books, records, documents and computer data in the possession of the debenture trustee or any such other person on their behalf and also provide copies of documents or other materials which in the opinion of the inspecting authority, are relevant for the purposes of the inspection.

(3) The inspecting authority shall in the course of inspection, be entitled to examine or record statements of any officer, director or employee of the debenture trustee.

(4) It shall be the duty of every director, officer or employee of the debenture trustee to give to the inspecting authority all assistance in connection with the inspection, which the debenture trustee may reasonably be expected to give.

Submission of report to the Board.-The inspecting authority shall, as soon as may be possible, submit an inspection report to the Board.
Communication of findings etc.-(1) The Board shall after consideration of the inspection report communicate the findings to the debenture trustee to give it an opportunity of being heard before action is taken by the Board on the findings of the inspecting authority.

(2) On receipt of the explanation if any from the debenture trustee the Board may call upon the debenture trustee to take such measures as the Board may deem fit in the interest of the securities market and for due compliance with the provisions of the Act, rules and regulations and give such directions as it deems fit for all or any of the following purposes, namely-

(a) directing the debenture trustee not to act as debenture trustee for any issue of debenture by a body corporate;

(b) directing the debenture trustee to act as such as per the covenants of the trust deed;

(d) appointing a qualified auditor to investigate into the affairs of the debenture trustee.

Appointment of Auditor.-Notwithstanding anything contained above the Board may appoint a qualified auditor to investigate into the records of, or the affairs of, the debenture trustee:

Provided that the auditor so appointed shall have the same powers of the inspecting authority as mentioned in regulation 19 and the obligation of the debenture trustee in regulation 21 shall be applicable to the investigation under this regulation.

Explanation:- For the purposes of this regulation, the expression "qualified auditor" shall have the same meaning as given to it in section 226 of the Companies Act, 1956 (1 of 1956).

CHAPTER V

Procedure For Action In Case Of Default

Liability for action in case of default.- A debenture trustee which-

(a) fails to comply with any condition subject to which certificate has been granted;

(b) contravenes any of the provision of the Act or these regulation;

(d) fails to furnish any information relating to its activity as a debenture trustee as required by the Board;

(e) furnishes to the Board information which is false or misleading in any material particular;

(f) does not submit periodic returns or reports as required by the Board;

(g) does not co-operate in any enquiry, inspection or investigation conducted by the Board;

(h) fails to resolve the complaints of investors or fails to give a satisfactory reply to the Board in this behalf.

shall be dealt with in the manner provided under the Securities and Exchange Board of India (Intermediaries) Regulation, 2008.

(2) Nothing contained in sub-regulation (1) shall prejudice the power of the Board to issue direction or measures under section 11, 11B, 11D, sub section (3) of section 12 or section 23 or Chapter VI-A of the Act or under any other law for the time being in force.]

Suspension, cancellation of certificate.-A penalty of suspension of certificated granted to a debenture trustee may be imposed where a debenture trustee-

(i) violates the provisions of the Act, rules and regulations;

(ii) does not follow the code of conduct specified at Schedule III;

(iii) fails to furnish information relating to his business as debenture trustee as required by the Board;

(iv) furnishes wrong or false information;

(v) does not submit reports as required by the Board;

(vi) does not cooperate in any enquiry conducted by the Board;

(vii) indulges in manipulating or price rigging or cornering activities;

(viii) is guilty of misconduct or improper or unbusinesslike or unprofessional conduct;

(ix) fails to pay the fees as specified in Regulation 12;

(x) violates the conditions subject to which certificate has been granted;

(xi) fails to fulfil the obligations under the trust deed:

Provided that the Board for reason to be recorded in writing may in case of repeated defaults of the type mentioned above impose a penalty of cancellation of certificate on the debenture trustee.

(2) A penalty of cancellation of certificate granted to a debenture trustee may be imposed if the debenture trustee-

(i) indulges in deliberate manipulation or price rigging or cornering activities affecting the securities market and the investors' interests;

(ii) is guilty of fraud, or is convicted of a criminal offence;

(iii) violates any provision of insider trading regulations;

(iv) fails to fulfil the obligations under the trust deed or has been discharged from its office under any of the circumstances mentioned in Section 71 of the Indian Trust Act, 1882 (2 of 1882);

(v) violates the provisions of the Act, rules and regulations;

(vi) violates the provisions of Companies Act and the rules made thereunder;

(vii) has been removed by the debenture holders by a resolution passed by not less than 75 per cent of the debenture holders.

Manner of order of suspension and cancellation of certificate.-No order of penalty of suspension or cancellation shall be imposed except after holding an enquiry in accordance with the procedure specified in Regulation 28.
Manner of holding inquiry.-(1) For the purpose of holding an inquiry under Regulation 27, the Board may appoint an enquiry officer.

(2) The enquiry officer shall issue to the debenture trustee a notice at the registered office or the principal place of business of the debenture trustee.

(3) The debenture trustee may, within thirty days from the date of receipt of such notice, furnish to the enquiry officer a reply together with copies of documentary or other evidence relied on by him or sought by the Board from the debenture trustee.

(4) The enquiry officer shall, give a reasonable opportunity of hearing to the debenture trustee to enable him to take submissions in support of his reply made under sub-regulation (3).

(5) Before the enquiry officer, the debenture trustee may either appear in person or through any person duly authorised by the debenture trustee: Provided that no lawyer or advocate shall be permitted to represent the debenture trustee at the enquiry:

Provided further that where a lawyer or an advocate has been appointed by the Board as a presenting officer under sub-regulation (6), it shall be lawful for the debenture trustee to present its case through a lawyer or advocate.

(6) If it is considered necessary, the enquiry officer may require the Board to appoint a presenting officer to represent its case.

(7) The enquiry officer shall, after taking into account all relevant facts and submissions made by the debenture trustee, submit a report to the Board and recommend the penalty to be awarded as also the justification of the penalty proposed.

Show cause notice and order.-(1) On receipt of the report from the enquiry officer, the Board shall consider the same and issue a show cause notice as to why the penalty as it considers appropriate should not be imposed.

(2) The debenture trustee shall within twenty-one days of the dates of the receipt of the show cause notice sent a reply to the Board.

(3) The Board after considering the reply to the show cause notice if received, shall as soon as possible but not later than thirty days from the receipt of the reply, if any, pass such orders as it thinks fit.

(4) Every order passed under sub-regulation (3) shall be self-contained and give reasons for the conclusions stated therein including justification of the penalty imposed by that order.

(5) The Board shall send a copy of the order under sub-regulation (3) to the debenture trustee.

Effect of suspension and cancellation of certificate of debenture trustee.-(1) On the from the date of the suspension of the certificate the debenture trustee shall cease to act as a debenture trustee during the period of suspension.

(2) On and from the date of cancellation, of the certificate the debenture trustee shall with immediate effect cease to act as debenture trustee.

Publication of order of suspension or cancellation.-The order of suspension or cancellation of certificate passed under sub-regulation (3) of Regulation 29, shall be published in at least two daily newspapers by the Board.
Appeal to the Central Government.-Any person aggrieved by an order of the Board under the regulations may prefer an appeal to the Central Government under the Securities and Exchange Board of India (Appeal to the Central Government) Rules, 1993.

Schedule I

Form A

Securities and Exchange Board of India (Debenture Trustees) Regulations, 1993

(Regulation 3)

Application For Registration As Debenture Trustee

NAME OF APPLICANT AND ITS STATUS

(For status see regulation 7)

Name And Designation Of Principal Officer

Designation

Telephone No.

E-Mail

Instruction:-

Applicants must submit a completed application form together with supporting documents to the Securities and Exchange Board of India.
All columns of the application should be filled in. In case a column is not relevant then "not applicable" should be specified.
Information which needs to be supplied in more detail may be written on separate sheets which should be attached to the application form.
Original copy of form duly signed should be submitted for registration.

PART I

General Information

Applicant's Details

1.1 Name of the applicant:

1.2 Address of the applicant:

Pin code:

Telephone No.:

Telex No.:

Fax No.:

E-mail:

1.3 Address of the applicant for correspondence:

Pin code:

Telephone No.:

Telex No:

Fax No.:

E-mail:

Name of the Compliance Officer:

Designation:

Telephone:

1.4 Address of branch offices (in India) of the applicant, if any:

1.5 Whether any other application under the Securities and Exchange Board of India Act, 1992, has been made for grant of certificate, if so, details thereof:

1.5(a) Whether the applicant or its Director/s or partner/s is a partner or proprietor or promoter/s or director/s in any of its associate/group company/concern or any company/concern which is also registered with SEBI under any of its Regulations, and if so, details thereof:

Name of the company/ concern	Category registered SEBI Regn. No.	Any warning given/penal action taken/investigation/enquiry initiated/pending

1.6 In case the applicant is a Bank or an NBFC, any warning/action taken by RBI.

Organisation Structure:

2.1 Objects of the organisation of the applicant. (Attach extracts from relevant documents like, charter/memorandum of association/articles of association, etc.) in support of objects of the organisation.

2.2 Date and place of incorporation/establishment of the organisation of the applicant.

Day	Month	Year	Place

2.3 Organisation chart stating the functional responsibilities at various levels.

2.4 Particulars of all directors.

[Name, qualification, experience, date of appointment, other directorship, (Name & date of appointment), previous positions held.]

2.5 Number of employees (mention separately the employees in the debenture trusteeship activity).

2.6 Name and activities of associate companies/concerns.

Name/Address/Phone Nos./Type of activity/Ownership details/Nature and quantum of financial trading.

2.7 List of major shareholders (holding 5% or more voting rights) and percentage of their shareholdings.

Details Of Infrastructural Facilities:

3.1 Office space (mention the extent of area and ownership details available).

3.2 Office equipment (mention the details of electronic office equipment, typewriters, telecommunication equipment, furniture and fixtures, other communication facilities, etc.)

(For point Nos. 3.1 and 3.2, please mention the infrastructure for debenture trustee activity separately)

Business Plan (For Three Years)

(a) History, major achievements and present activity

Financial Information:

5.1 Capital structure
	Year prior to the Preceding year of current year	preceding year	Current year
(a) Paid-up capital
(b) Free reserves (excluding revaluation reserves)
(c) Total (a) + (b)
(d) Loans (details)
(e) Net profit: (i) General (ii) Specific
5.2 Deployment of resources
(a) Fixed assets
(b) Plant and machinery and office equipment
(c) Investments (Details should be given separately)
(d) Others

Other Information:

6.1 Name and address of the principal bankers

6.2 Name and Address of the auditors (internal, external and tax auditor, if any, as applicable).

6.3 Indicate involvement in any offence relating to economic offences (including those concerned with the securities market) in the last three years, if any.

6.4 Any significant awards or recognition, collective grievances against the services rendered by the applicant.

6.5 Any other information considered relevant to the nature of services rendered by the applicant.

PART II

Business Information

7.1 Describe proposed activity.

7.2 Details of key legal personnel:

Name of the person
Responsibility
Experience

7.3 Existing/proposed facilities for redressal of investor grievances.

(Furnish number and type of complaints received, follow-up with the companies, average time taken in resolving the complaints and overall system of handling complaints).

7.4 Details of any personnel experience in the activity of debenture trusteeship.

Experience

8.1 Experience as debenture trustee (Name of the body corporate, on whose behalf the applicant has acted as debenture trustee, particulars of debenture issue, size of debenture issue, when trust deed is signed, remuneration/fee received.)

8.2 Details where applicant has resigned as debenture trustee or have discharged therefrom, give full details and reasons therefor.

8.3 In case of resignation or discharge as the case may be whether the applicant has vacated the office before the appointment of successor. If so, give reasons and full details.

8.4 Whether the applicant has ensured that security has been created in the stipulated time in respect of debentures it acted as debenture trustee.

8.5 Whether the applicant has taken steps like appointment of nominee directors in case of the debenture issue of any company.

DECLARATION THIS DECLARATION MUST BE SIGNED BY PRINCIPAL OFFICER/S

I/We hereby apply for grant of certificate of registration by the Board. I/We warrant that I/we will carry out my/our duties in accordance with the Act, Rules and Regulations.

I/We state that I/we have truthfully and fully answered the questions above and provided all the information which might reasonably be considered relevant for the purposes of my/our grant of certificate for registration and I/we will promptly notify the Board of any changes in the information during the period that my/our registration is being considered and if my/our registration is accepted, thereafter.

I/We understand that misleading or attempting to mislead the Board shall render the applicant liable to disciplinary proceedings.

I/We certify that the above information and information supplied in the application form is true, complete and correct.

"We hereby declare and undertake that-

(a) the applicant-company, its directors or Principal Officers is/or has not at any time been convicted for any offence involving moral turpitude or been found guilty of any economic offence (including those concerned with the securities market),

(b) no person directly or indirectly connected with the applicant has applied or been granted registration by the Securities and Exchange Board of India to act as Debenture Trustee."

For and on behalf of

Name of applicant

Place:

Date:

Additional Information Sheet:(in case of application for renewal of registration)

Whether the applicant has complied with the terms and conditions mentioned in the registration letter?
Whether the applicant has complied with the SEBI (Debenture Trustees) Rules and Regulations and the guidelines issued by SEBI from time to time.
Whether any associate/group company of the applicant is also registered with SEBI under any Regulations, and if so the following details are to be furnished:

Name of the company/ concern	Category registered SEBI Regn. No.	Any warning given/penal action taken/investigation/enquiry initiated/pending

Whether any investigation/enquiry has been initiated/is pending against the applicant.
Whether the applicant has submitted all the quarterly reports.
Any warning given/penal action taken against the applicant.
Whether the applicant has paid the fees due to SEBI in the last 3 years. Give details of payment.
Details of public/rights issue for which the applicant acted as trustees in the last 3 years.
In case of any defaults, specifically state the action the applicant has taken to protect the interest of the debenture holders and whether penal interest has been paid to the debenture holders.

(a) List of debenture issues for which the applicant was acting as debenture trustees under earlier registration where defaults by the issuers in terms of delays/non-payment of interest/principal have occurred.

Whether the applicant has obtained auditors certificate for end-use of funds for all public/rights issues.
Investor grievances relating to the debentures of companies for which the applicant acted as debenture trustees.

Schedule I-Forms

Form B

Securities and Exchange Board of India (Debenture Trustees) Regulations, 1993

(Regulation 8)

Certificate of Registration

In exercise of the powers conferred by sub-section (1) of section 12 of the Securities and Exchange Board of India Act, 1992, read with the Rules and Regulations made thereunder for the debenture trustee, the Board hereby grants a certificate of registration to......as a debenture trustee, subject to the conditions in the Rules and in accordance with the Regulations.
Registration Code for the debenture trustee is........

III. Unless renewed, the certificate of registration is valid from....to....

Place

Date

By Order

For and on behalf of

Securities and Exchange Board of India.

Authorised Signatory.

SCHEDULE II

Securities and Exchange Board of India (Debenture Trustees) Regulations, 1993

(Regulation 12)

FEES

[1. Every debenture trustee shall pay a sum of [ten lakh rupees] as registration fees at the time of the grant of certificate by the Board.

Every debenture trustee to keep registration in force shall pay renewal fee of [five lakh rupees]every three years from the fourth year from the date of initial registration.
(a) The fee referred to in paragraph 1 shall be paid by the debenture trustees within fifteen days from the date of receipt of intimation from the Board under regulation 8.

(b) The fee referred to in paragraph 2 shall be paid by the debenture trustee within fifteen days of receipt of intimation from the Board disposing of the application for renewal made under sub-regulation (1) of regulation 9.

[3A. The non-refundable fee payable along with an application for registration under sub-regulation (1A) of regulation 3 or an application for renewal of registration under sub-regulation (1A) of regulation 9 shall be a sum of twenty five thousand rupees.]

The fees specified in [paragraphs 1, 2 and 3A]shall be payable by the Debenture Trustees by a demand draft in favour of "The Securities and Exchange Board of India" payable at Mumbai or at the respective regional office.]

SCHEDULE III

Code of Conduct

(Regulation 16)

Every debenture trustee shall maintain high standards of dignity and fairness in discharge his funtions as debenture trustee.
Every debenture trustee shall fulfil his obligation in an ethical manner.
Every debenture trustee shall at all times exercise due diligence, ensure proper care and exercise independence professional judgment.
Every debenture trustee shall disclose to the Issuer Company his possible source or potential areas of conflict of duties and interest while acting as debenture trustee.
Debenture trustee shall not indulge in any unfair competition, which is likely to be harmful to the interest of other debenture trustees or debenture holders.
No debenture shall make any statement, either oral or written, which would mispresent the services that the debenture trustee is capable of performing for the, or has rendered to other Issuer Company subject to the secrecy he is expected to keep about Issuer Company's affairs;
No debenture trustee shall wilfully make untrue statement or suppress any material fact in any document reports, paper or information furnished to the Board.

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