SEBI vide its circular bearing ref. no. SEBI/ HO/ MIRSD/ DOS3/CIR/P/2019/68 dated May 27, 2019 has issued guidelines pertaining to enhanced disclosures in case of listed debt securities.
The Capital Market Regulator, to secure the interest of the investors in listed debt securities and taking cue from the Infrastructure Leasing & Financial Services (ILFS) default, has issued guidelines with a view to further enhance transparency in the functioning and operations of the Debenture Trustees (DTs).
These guidelines are issued pursuant to public consultation, amendments to the existing regulatory framework for governing Debenture Trustees (DTs), vide Gazette notifications no. 150, 151, 152 dated May 7, 2019 were carried out.
Summary of Guidelines so issued are as follows:
1. Disclosure by DTs on the on their websites:
1.1. Compensation arrangement with clients by Debenture Trustees on their websites. These shall include the following:
a) minimum fee to be charged (in absolute terms or as a percentage of the issue size) and;
b) factors determining the same
1.2. Calendar of interest/ redemptions, due and paid, for the financial year:
a) ISIN wise details of interest/ redemption due to the debenture holders within 5 working days of start of financial year;
b) Updation of aforementioned details within 5 days of closure of the issue.
c) ISIN wise payment status of issuers, within 1 day from the due date.
d) In case the payment is made with a delay by the issuer, DTs shall update the calendar specifying the date of such payment, with a remark ‘delayed payment’.
2. Furnishing of updated list of debenture holders
2.1. Issuers/ RTA shall forward the details of debenture holders to the DT at the time of allotment and thereafter by the 7th working day of every next month;
3. In case of privately placed issues:
Following Additional covenants, to be included in Issue Details in the summary term sheet
3.1. Default in Payment: In case of default in payment of Interest and/or principal redemption on the due dates, additional interest of atleast @ 2% p.a. over the coupon rate shall be payable by the Company for the defaulting period;
3.2. Delay in Listing: In case of delay in listing of the debt securities beyond 20 days from the deemed date of allotment, the Company shall pay penal interest of atleast @ 1 % p.a. over the coupon rate from the expiry of 30 days from the deemed date of allotment till the listing of such debt securities to the investor.