Sebi introduces guidelines for listing debt securities

Market regulator Sebi has introduced guidelines which allows companies to file a document for listing of debt securities issued through private placement.

The shelf disclosure documents would have a validity of 180 days, according to Sebi notification on October 12. In its board meeting in August, Sebi (Securities and Exchange Board of India) had said that a clause for a shelf placement document with a validity of 180 days would be provided for frequent issues through private placement.

As per the norms, “an issuer making a private placement of debt securities and seeking listing thereof on a recognised stock exchange may file a Shelf Disclosure Document containing disclosures…” Sebi said.

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Further, the regulator said that an issuer filing a shelf disclosure document would not be “required to file disclosure document, while making subsequent private placement of debt securities for a period of 180 days from the date of filing of the shelf disclosure document”.

The regulations state that the companies while making private placement under shelf disclosure document would have to disclose documents such as the memorandum and articles of association for the allotment of the debt securities and copy of last three years audited annual reports.

Besides, an issuer needs to file a copy of the Board authorising the borrowing and list of authorised signatories. The issuer has to submit disclosures to the Debenture Trustee in electronic form at the time of allotment of the debt securities.

Sebi said the company seeking to list debt securities via private placement needs to file with the concerned stock exchange “updated disclosure document with respect to each tranche, containing details of the private placement and material changes, if any, in the information provided in Shelf Disclosure Document.“Also, the companies would have to file fresh offer documents with Sebi if any changes in their issue objects leads to a decline of more than 20 percent in the offer size.

In another step aimed at helping the retail investors, Sebi has allowed retail individual investors to either withdraw or revise their bids until finalisation of the allotment, but institutional buyers and the non-institutional investors can neither withdraw nor lower the size of their bids at any stage.

The move is aimed at avoiding any misleading signals to retail investors about the extent of issue subscription.

PTI