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SEBI relaxes guidelines for primary issuance of debt securities

30 Oct 2013 Evaluate

In a bid to develop the country's corporate bond market, market regulator Securities and Exchange Board of India (SEBI) has relaxed the norms for primary issuance of debt securities by companies.

According to the new measures taken by the SEBI, cash flows generating from the debt securities would have to be disclosed in the prospectus or the disclosure document by way of an illustration. The market regulator has also noted that if the coupon payment date of the debt securities falls on a Sunday or a holiday the payment would be made on the next working day. Furthermore, if the maturity date of the debt securities, falls on a Sunday or a holiday, the redemption proceeds would be paid on the previous working day. These debt securities norms would be applicable to debt securities issued from December 1, 2013.

Moreover, SEBI stressed that the allotment in the public issue of debt securities should be made on the basis of date of upload of each application into the electronic book of the stock exchange. However, on the date of over-subscription, the allotments should be made to the applicants on proportionate basis. Regarding frequent debt issuers, market regulators noted that frequent debt issuers who are in compliance with listing norms, are allowed to disclose unaudited financials with limited review report in the offer document instead of audited results. However, these entities will have to comply with to necessary disclosures including risk factors. These norms would be applicable from November 1, 2013.

In order to enable the investors to forward their grievances to the debenture trustees, the market regulator has asked the companies which have listed their debt securities to disclose the name of the debenture trustees with contact details in their annual report and on their websites from December 1.

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