May 20, 2019

SEBI Amendement: Issuance of Debt Securities

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The Apex Capital Market Regulator, SEBI, on 7th May 2019 came up with amendments in various Regulations pertaining to issuance of debt securities vis-à-vis SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, SEBI (Issue & Listing of Debt Securities) Regulation, 2008 and SEBI (Debenture Trustees) Regulations, 1993.

Aimed at enlarging the scope of debt funding in India and developing a sound debt market, the Regulators are taking multiple steps like CG proposing compulsory debt funding by large corporates and relaxing debt funding norms for Portfolio Investors etc. However, even with much efforts/ initiatives by the Government as well as the Regulators, the bond market didn’t gain that popularity as envisioned.

With the objective to promote the development of Corporate Bond Markets and to shift the focus from contemporary sources of fund raising along with providing ease of doing business to the corporates, the amendments so enforced by SEBI are in the nature of self-regulatory and at the same time protective towards the interests of the investor.

The brief of amendments are as follows:

I. Amendment in SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015


Pertaining to


CP Remarks

Proviso to 52(1)

Intimation of Results to Debenture Trustee

Provided that in case of entities which have listed their debt securities, a copy of the financial results, as submitted to stock exchanges shall be provided to the Debenture Trustees as well, on the same day, the information is submitted to stock exchanges.”

Now, financial results are to be simultaneously provided to the Stock Exchange(s) as well as the Debenture Trustee. Earlier no, specific timeline was prescribed but practice already persisted.


Certificate for disclosure of contents by the Debenture Trustee

Substitution of Regulation 52(5) is as follows:
The listed entity shall, within 7 working days from the date of submission of the information required under sub- regulation (4), submit to stock exchange(s), a certificate signed by debenture trustee that it has taken note of the contents."
Reg 52(4) mandates that while submitting the half yearly/ annual financial results, certain items like credit rating, asset cover available, debt equity ratio, debt service coverage ratio etc. to be disclosed.

Earlier there was no timeline mentioned in the regulation 52(5) for submitting a certificate signed by the debenture trustee that it has taken note of the contents.

Click here to view Notification.

II. Amendment in SEBI (Issue & Listing of Debt Securities) Regulation, 2008


Pertaining to


CP Remarks

15(1) (A): Newly Inserted

Liability in case of failure to execute Trust Deed

Where an issuer fails to execute the trust deed within 3 months of closure of issue, (as specified in the sub-regulation 1 of ILDS Regulations) in addition to any liability that may arise on account of violation of the provisions of the Act and these Regulations, the issuer shall also pay interest of at least 2% pa to the debenture holder, over and above the agreed coupon rate, till the execution of the trust deed.

This provision is newly added and earlier there was no such provision for payment of additional penal interest to the debenture holder if the trust deed is not executed within the stipulated time period.

15(1)(B): Newly Inserted

Disclosure of aforesaid penal interest clause in Offer Document and Trust Deed

A clause stipulating the requirement under sub-regulation (1A) shall form part of the Trust Deed and also be disclosed in the Offer Document.

Additional disclosure requirement to be incorporated in the Offer document.

Schedule I,  Part B, Clause (a)

Disclosure in the Offer Document

In Schedule I, Part B, Clause (a) i.e. Issue Details, the summary term sheet will include one more disclosure as follows:
“Interest to the debenture holder over and above the coupon rate as specified in the Trust Deed and disclosed in the Offer Document"

Disclosure pertaining to penal interest to be disclosed in Offer Document

Schedule I, Part B, Clause (b)- Omitted

Additional Covenants in case of Private Placement:

  • Security creation
  • Default in payment
  • Delay in listing



Impact w.r.t., Omitted points:

  • Earlier in case of delay in execution of trust deed and change document the companies were required to refund the subscription with agreed rate of interest or will pay the penal interest of 2% p.a. till the date of compliance at the option of investor.
  • Penal interest on delayed execution of charge documents/ trust deeds have been applicable to all debt issues instead of private place placement only;
  • Additional penal interest of minimum 2% p.a. in case of default in payment has been done away with. Now, parties are free to determine additional  interest rate in case of default;
  • Penal interest of 1% p.a. payable to the investor in case of delayed listing has been done away with.

Click here to view Notification.

III. Amendment in SEBI (Debenture Trustees) Regulations, 1993


Pertaining to


CP Remarks


Factors to be considered for grant of certificate for “Debenture Trustee”

The capital adequacy requirement referred to in clause (g) of regulation 6 shall not be less than the net worth of ten crore rupees
Provided that a debenture trustee holding certificate of registration as on the date of this amendment notification is required to comply with the aforementioned net worth requirement of Rs. 10 Crore within a period of 3 years from the date of such commencement.

In order to strengthen the fundamentals and balance the risk weighted assets managed by Debenture Trustees, the Capital adequacy requirement has been increased from Rs. 2 cr. to Rs. 10 cr.

Proviso to 15(2)(b)

Duties of Debenture Trustee- meeting of Debenture holders

Provided that a debenture trustee may seek the consent of debenture holders through E-voting, wherever applicable.
Provided further that the requirement to convene a meeting of debenture holders in case of a default in payment obligation by the issuer, shall not be applicable in case of debentures issued by way of public issue.

Earlier no such provision was there for E-voting, by providing E-voting facility SEBI has make it convenient for the debenture trustee and the debenture holder to seek and give the consent.

Click here to view Notification.

How we can help!
We at Corporate Professionals, with the experience in handling complex debt-issuance based transactions, provide the following bouquet of services:
Pre- Issue
  • Pre Issue/ applicability advisory;
  • Thorough pre issue health check-checking the financial/ compliance health of the Company and suitability of NCD issuance for the entity;
  • Drafting of Information Memorandum/ Term Sheet/ Debenture Trustee Agreement/ Hypothecation Agreements etc;
  • Stock Exchange(s) In Principle Approvals;
  • Acting as Arrangers for the Electronic
    Book Mechanism (EBP);
  • Handling entire issue process;
  • Listing Approvals

During the issue

Post- Issue

  • Retainership Services- Routine Compliances;
  • Event Based Compliances;
  • Redemption/ Maturity Related Services;

For any discussion feel free to contact:

Ms. Anjali Aggarwal

Partner & Head-Capital Market Services

+91 9971673336

+91 11 40622230

Request a Call