CIRCULAR, CIR/IMD/DF/18/2013, dated October 29, 2013
To
All
Recognized Stock Exchanges
All
Registered Merchant Bankers
SEBI
has been holding discussions with issuers and various other market participants
regarding the issues concerning development of Corporate Bond Market. Based on
the suggestions received in the aforesaid meetings, it has been decided to
implement the following measures:
I. Disclosure of Cash Flows:
SEBI vide circular no. SEBI/CBM/BOND/2/2007/13/04
dated April 13, 2007 specified that day count convention for calculation of
interest payments for listed corporate debt securities (for all new issues of
corporate bonds) shall be Actual/Actual. This is reiterated in the circular dated
January 24, 2013 providing Guidelines for Setting up Dedicated Debt Segment. It
has been pointed out by the market participants that the disclosures can
further be improved, if cash flows concerning interest payment and redemption
of debt securities are given by way of illustration in the offer document.
Considering the same, it has been
decided that the cash flows emanating from the debt securities shall be
mentioned in the Prospectus/Disclosure Document, by way of an illustration.
Further, for the purpose of standardization and in line with the dated
government securities, it has also been decided that if the coupon payment date
of the debt securities, falls on a Sunday or a holiday the coupon payment shall
be made on the next working day. If the maturity date of the debt securities,
falls on a Sunday or a holiday, the redemption proceeds shall be paid on the
previous working day. An illustration for guidance in this regard is prescribed
in Annexure A to this circular.
II. Withdrawal of requirement to
upload bids on date-time priority:
Vide circular dated July 27, 2012,
SEBI has advised that in public issues of debt securities, where the issuer has
signed agreement with multiple stock exchanges, the registrar shall ensure that
allotment is done on date-time priority basis. However, SEBI is receipt of
requests from market participants to relax the said requirement, stating the
operational difficulties at present in making allotment on date time priority
basis, such as time gap between receipt of application and upload, uploading of
applications in lots, acknowledgement stamp and upload may not happen
simultaneously, etc.
In this regard, it has been
decided 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 oversubscription, the
allotments should be made to the applicants on proportionate basis.
III.
Disclosure of unaudited financials with
limited review report:
Presently, the companies
proposing to make public issue of debt securities are required to give the
audited financials in the offer document, which are not older than 6 months
from the date of the prospectus, as per the disclosure requirements specified
in SEBI (Issue and Listing of Debt Securities) Regulations read with Schedule
II to the Companies Act, 1956. SEBI (Issue of Capital and Disclosure
Requirements) Regulations, 2009 enables listed issuers to disclose unaudited
financials for stub period with limited review report in the offer document, in
case of further public issues or rights issue of equities, where audited
accounts as at such date are not available.
To avoid hardships to frequent
debt issuers, it has been decided that listed issuers (who have already listed
their equity shares or debentures) who are in compliance with the listing
agreement, may disclose unaudited financials with limited review report in the
offer document, as filed with the stock exchanges in accordance with the listing
agreement, instead of audited financials, for the stub period, subject to
making necessary disclosures in this regard in offer document including risk
factors.
IV.
Disclosure of contact details of
Debenture Trustees in Annual Report:
It has been decided to amend the
Listing Agreement for Debt Securities (as specified in Annexure B) by
inserting a clause stating that the companies, which have listed their debt
securities, shall disclose the name of the debenture trustees with contact
details in their annual report and as ongoing basis, on their website, to
enable the investors to forward their grievances to the debenture trustees.
Applicability:
2. The provisions in Para I of this
circular shall be applicable for the debt securities issued, in accordance with
SEBI (Issue and Listing of Debt Securities) Regulations, 2008, on or after
December 01, 2013. The provisions in Para II and III of this circular shall be
applicable for the draft offer document for issuance of debt securities filed
with the designated stock exchange on or after November 01, 2013. The
provisions in Para IV shall be applicable from December 01, 2013 and all stock
exchanges are advised to carry out the amendments in their Listing Agreement as
per the Annexure B to this circular.
3. This circular is issued in
exercise of powers conferred under Section 11(1) of the Securities and Exchange
Board of India Act, 1992 to protect the interests of investors in securities
and to promote the development of, and to regulate the securities markets.
4. This circular is available on
SEBI website at www.sebi.gov.in.
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