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Wednesday, May 13, 2009

Understand 30 clauses of debt securities listing agreement with 2 parts & 5 annexures under securitised debt instruments regulations, 2008

Simplified Listing Agreement for Debt Securities

SEBI/IMD/BOND/1/2009/11/05 dated May 11, 2009

as amended SCRA enables, SEBI (Public Offer and Listing of Securitised Debt Instruments) Regulations, 2008 from 26 may 2008 onwards, SEBI has issued Listing Agreement for debt securities w.e.f. 11th May 2009.

As per Regulation 2(1)(e) of the said regulations, Debt Securities MEANS a non-convertible debt security,

  • which create/acknowledge indebtedness AND INCLUDES,
  • debentures/bonds/other securities of body corporate/statutory body,
  • whether constituting CHARGE on the assets OR not, BUT EXCLUDES,
  • bonds issued by Government, Security Receipts (SR) & Securitised Debt Instruments.

The said listing agreement is divided into 2 parts with 30 clauses and 5 annexures.  Kindly note dematerialisation of securities is a pre-condition to listing as per Clause 24.

Part A - Minimum Incremental Disclosures, when equity of the issuer company is listed [Clauses 1 to 11].

Part B – Detailed Disclosures (though fewer than Equity Listing), in all other cases [Clauses 12 to 30].

Part A

(in case issuer’s equity securities are listed)

  1. Issuer may, subject to the consent of the debenture trustee, send the information stipulated in Clause 2(a) to (d) in electronic form/ fax.  Issuer (NOT, bank/NBFC) to submit within 1 month a half yearly certificate regarding maintenance of 100% security cover in respect of listed secured debt securities as certified by Practising Company Secretary or practising Chartered Accountant.

  2. Issuer (NOT, bank/NBFC) shall disclose EPS along with debt service coverage ratio & interest service coverage ratio in accordance with Clause 4 read with Annexures I, II & III in half yearly/annual results.

  3. Issuer to create and maintain security ensuring 100% security cover for listed secured debt securities at all times as per Clause 5.

  4. Issuer to send half-yearly report to Stock Exchange WITHIN 1 month of September & March, the details of payment of principal interest, alongwith such other details as per Clause 6.

  5. Issuer to use ECS/RTGS/NEFT for the purpose of interest/redemption/repayment and also intimate the expected default as soon as it becomes apparent as per Clause 7 & 8.

  6. Issuer to credit DEMAT account of allottees WITHIN 2 working days of allotment as per Clause 9.

  7. In case of public issue & listing of debt securities, allotment or refund orders shall be given WITHIN 30 days of closure of public issue or pay interest @ 15% p.a. as per Clause 10.

Part B

(in case of NO listed equity securities or on delisting of equity securities)

  1. Issuer to transfer unclaimed interest to IEPF and redeem listed securities on pro rata basis or by lots, UNLESS the issue provides otherwise as per Clause 12.
  2. Issuer may, subject to the consent of the debenture trustee, send
    the information stipulated in Clause 13(a) to (d) in electronic form/ fax.  Issuer (NOT, bank/NBFC) to submit within 1 month a half yearly certificate regarding maintenance of 100% security cover in respect of listed secured debt securities as certified by Practising Company Secretary or practising Chartered Accountant.
  3. Issuer agrees to send copies of Director’s Annual Report, Balance Sheet and Profit and Loss Account to Debenture Trustees, Stock Exchanges & on request to debt security holders as per Clause 15.
  4. Issuer to use ECS/RTGS/NEFT for the purpose of interest/redemption/repayment and issue ‘payable-at-par’ warrants/ cheques for payment of interest and redemption and comply with such other requirements of SEBI/SCRA as per Clause 16.
  5. Issuer to credit DEMAT account of allottees WITHIN 2 working days of allotment as per Clause 17.
  6. In case of public issue & listing of debt securities, allotment or refund orders shall be given WITHIN 30 days of closure of public issue or pay interest @ 15% p.a. as per Clause 18.
  7. Issuer shall promptly notify stock exchange of any change that would affect the rights and obligations of the holders of debt securities and any other information having bearing on the operation/performance of the Issuer as well as price sensitive information, including Clause 19 (a) to (n).
  8. In case of book closure/record date, 7 clear working days advance notice to be given to stock exchange as per Clause 20.
  9. Issuer to intimate any intention to issue new debt securities and also make listing application for the same.  Any material modification in terms of debentures requires prior approval of Stock Exchange as approved by Board of Directors & Debenture Trustees [Clause 21].
  10. As per Clause 22, Issuer to designate the Company Secretary or any
    other person as Compliance Officer.
  11. Annual listing fees to be paid on or before 30th April every year [Clause 23].
  12. Issuer to send notice of meetings & half-yearly report to Stock Exchange WITHIN 1 month of September & March, the details of payment of principal interest, alongwith such other details as per Clause 27.
  13. As per Clause 28, Issuer to give Annual Disclosures in Annual Report with respect to its parent & subsidiary companies along with Cash Flow Statement in accordance with AS-3.
  14. The Issuer shall,  [Clause 29]
    • WITHIN 48 hours of the conclusion of the Board/Council/Sub Committee Meeting, publish the unaudited financial results in at least one English daily newspaper (which is signed by MD/Executive Director). 
    • Furnish Unaudited Financial Results (Ann I/II/III) to Stock Exchange WITHIN 1 month of half-year.
    • Furnish Limited Review Report (Ann IV/IV) by statutory auditors (PCA for Public Sector) to Stock Exchange WITHIN 1 month of the month of publication of Unaudited financials.
    • Issuer has the option to furnish audited report WITHIN 3 months of financial year (for last half-year) with advance intimation to stock exchange.
    • address qualifications in audit report, if any.

Issuer shall comply with the said agreement and all provisions of  securities laws.  ‘Securities Laws’ mean the SEBI Act, 1992, the Securities Contracts (Regulation) Act, 1956, the Depositories Act, 1996 and the provisions of the Companies Act, 1956 which are administered by SEBI under section 55A thereof, the rules, regulations, guidelines etc. made under these Acts and the Listing Agreement for debt securities.  Issuer also has the option to apply for relaxation of strict enforcement of provisions, in which case Stock Exchange may grant exemption with prior approval of SEBI.

Thus, now Debt Securities has a separate regulation and separate listing agreement.

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