The Securities and Exchange Board of India (SEBI) has introduced amendments to its regulations for the issue and listing of debt securities.
Key changes in the Securities and Exchange Board of India (Issue and Listing of Debt Securities) (Amendment) Regulations, 2020, include:
- Private placement definition update. The definition of “private placement” under regulation 2(1)(h) has been revised to align with the Companies Act, 2013;
- Regulation modifications. Several regulations have been amended, referencing the Companies Act, 2013, for clarifications on disclosures, debenture trustee obligations, meeting intervals, default events and recovery expense funds;
- Asset charge undertaking. Information memorandums now require a confirmation that assets on which a charge is created are free from encumbrances. Permission or consent to create a second charge on already charged assets should be obtained from the earlier creditor; and
- Recovery expense fund and security disclosure. Issuers must create a recovery expense fund as specified by the SEBI and inform the debenture trustee. Schedules I and II have been updated for detailed disclosures on security, risk factors and breach conditions.
The amendments aim to streamline and enhance the regulation of debt securities, ensuring robust governance and compliance in financial markets. The amendments are set to be effective on their publication in the Official Gazette, but are subject to public feedback and regulatory approval.
