Sebi proposes to merge debt securities rules into one

NEW DELHI : To ease the compliance burden on listed entities, Sebi on Wednesday proposed merging the listing rules for debt securities and non-convertible redeemable preferred shares into a single settlement.

The proposal aims to align with the 2013 Companies Act and maintain consistency with Sebi’s LODR (Listing Obligations and Disclosure Requirements) rules and debenture trustee standards, the regulator said in a document. consultation.

The Securities and Exchange Board of India (Sebi) invited public comment, open for 21 days, on the proposal.

As part of the proposal, Sebi suggested merging the debt securities issuance and listing standards or ILDS and the regulation on the issuance and listing of non-convertible preferred shares or NCRPS into one regulation – Issue and listing of non-convertible securities or NCS Regulations.

In addition, the NCS rules should also include certain provisions issued through circulars under the ILDS and NCRPS standards, Sebi noted.

The rules for ILDS and NCRPS were notified in June 2008 and June 2013, respectively. The ILDS regulation was promulgated for the issuance and listing of debt securities, while the NCRPS regulation was promulgated for the issuance and listing of non-convertible redeemable preferred shares.

Considerable time has passed since the implementation of these two rules, Sebi said.

In addition, various changes have taken place in the regulatory landscape, such as amendments to the Companies Act, the repeal of the Sebi regulations (issuance of capital and disclosure requirements), 2009 and the substitution by the ICDR rule, 2018. , Sebi noted.

They also include improving the requirements for bond trustees and issuing various circulars relating to ILDS and NCRPS rules with market dynamics in mind, he added.

The regulator said there was a need to merge and realign the ILDS and NCRPS regulations to ensure this ease of reference and language and also remove redundancies.

The proposal will simplify and align the regulations in line with the various circulars and guidelines issued by Sebi and improve the structure of the regulations to improve readability, the regulator said.

The proposed merger aims to identify policy changes in line with current market practices and the prevailing regulatory environment and to facilitate the conduct of business, he added.

In addition, it will separate the chapters according to the type of issue – public or private placement – and instruments – debt securities, commercial paper, so that all relevant information is sorted and available in one place.

In addition, it will merge all existing circulars into a single operational circular.

In addition to the listing of non-convertible redeemable preferred shares, the current NCRPS rules also cover the listing of perpetual debt securities (PDIs) and perpetual non-convertible preferred shares (PNCPS).

While debt securities are pure play debt instruments, NCRPS are hybrid equity and debt instruments. They carry a fixed dividend rate and are redeemable, and the holder has the right to vote in the event that the dividend is not paid for two years in accordance with the Companies Act and, therefore, they are also qualified as “quasi-debt” instruments.

The NCRPS Rules were modeled on the ILDS Rules.

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John A. Bogar