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Sunday, January 10, 2010

Debt Listing: Special Exemptions to regulated financial sector entities eligible for meeting capital requirements as specified by respective regulators, SEBI amendment

SEBI/IMD/DOF-1/BOND/Cir-1/2010 dated 7th January 2010

SEBI has introduced Simplified Debt Listing Agreement that prescribed norms for issue of public or privately placed debt securities and listing of such securities on the exchange and has also issued Clarification on applicability of SEBI Regulations/ Circulars on Initial and Continuous Disclosures for Convertible and Non-Convertible Debt.

Since Part-A of the Listing Agreement for debt is applicable for debt issuers with already listed equity, it is clarified that the covenants in the Equity Listing Agreement that require submission of a draft offer document to SEBI for observations or obtaining of an acknowledgement card are not applicable in case of an issue of debt securities which is made in terms of the SEBI (Issue and Listing of Debt Securities) Regulations, 2008.

Further, SEBI vide SEBI/IMD/DOF-1/BOND/Cir-5/2009 dated 26th November, 2009 has amended the Debt Listing Agreement.

In continuation thereof, it has been decided to amend the Simplified Listing Agreement for Debt Securities as follows with immediate effect:
(a) After clause 5, the following proviso shall be inserted:

Clause 5: In respect of its listed debt securities, the Issuer agrees that it shall maintain 100% asset cover sufficient to discharge the principal amount at all times for the debt securities issued and shall disclose to the exchange on half-yearly basis and in their annual financial statements the extent and nature of security created and maintained.

Provisio: Provided that this requirement shall not be applicable in case of unsecured debt instruments issued by regulated financial sector entities eligible for meeting capital requirements as specified by respective regulators.


(b) In clause 16, after sub-clause (a), the following proviso shall be inserted:

Clause 16(a): In respect of its listed debt securities, the Issuer agrees that it shall maintain 100% asset cover sufficient to discharge the principal amount at all times for the debt securities issued and shall disclose to the exchange on half-yearly basis and in their annual financial statements, the extent and nature of security created and maintained.

Provisio: Provided that this requirement shall not be applicable in case of unsecured debt instruments issued by regulated financial sector entities eligible for meeting capital requirements as specified by respective regulators.


(c) In clause 29A, in sub-clause (b) and sub-clause (c), the word “un-audited” shall be omitted.

Clause 29A(b): Such unaudited half-yearly results [meaning, EITHER audited half yearly results OR unaudited with Limited Review Report as per Clause 29A(a)] should have been taken on record by the Board of Directors/ Council of Issuer as the case may be or its Sub Committee and signed by the Managing Director / Executive Director.
Clause 29A(c): The Issuer shall, within 48 hours of the conclusion of the Board/Council or its Sub Committee Meeting, publish the unaudited financial results [meaning, EITHER audited  results OR unaudited with Limited Review Report as per Clause 29A(a)] in at least one English daily newspaper circulating in the whole or substantially the whole of India.

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