Regulatory updates

This consultation paper seeks comments from public on the following proposals related to ease of doing business for non-convertible securities:

• Alignment of regulations governing approval and authentication of financial results for entities having listed non-convertible securities with that for equity listed entities.
• Alignment of regulations governing disclosure of fraud /default in respect of price sensitive information for entities having listed non-convertible securities with that of equity listed entities under Schedule III of the LODR Regulations.
• Reduction in timeline for intimation of record date to Stock Exchanges by entity having listed non-convertible securities to ‘atleast three working days’ from ‘atleast seven working days’
• Filing of all disclosures by listed entity (having listed non-convertible securities) with Stock Exchanges to be in XBRL format in line with regulations specified for equity listed entities
• In order to encourage issuers to list their grandfathered outstanding unlisted ISINs, unlisted ISINs outstanding as on 31 December 2023 are exempt from restrictions with respect to maturity.

The consultation on this paper ended on 6 September 2024.

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Building on the recent feedback and developments on the Environment, Social and Governance (ESG) front, SEBI proposed to provide for a framework for social bonds, sustainable bonds and sustainability linked bonds in addition to the existing Green Debt Securities. These securities would together be referred to as ESG debt securities. Further, it has been proposed to introduce the concept of sustainable securitised debt instruments.

The consultation on this paper ended on 6 September 2024

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The Consultation paper has made proposals to bring in uniformity in timelines for credit and trading of bonus shares from the record date, ensuring bonus issue is implemented in a timely manner.

Accordingly, to facilitate fast credit and trading of shares allotted pursuant to bonus issue and to reduce investors’ risk of market volatility due to any delay in credit of bonus shares, it is proposed to streamline and reduce timelines of bonus issue enabling T+2 trading of shares post record date (T day).

The consultation on this paper ended on 26 August 2024.

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Regulation 13(1) of the FVCI Regulations, 2000 (FVCI regulations) require FVCIs to provide quarterly reports with respect to their venture capital activities to SEBI in a prescribed format.

Recently SEBI has approved amendments to FVCI regulations which will be notified in due course. In this context, a need for revising the format for filing of compliance report by FVCI has been felt.

This consultation paper has proposed the revised format for FVCIs.

The consultation on this paper ended on 29 August 2024.

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One of the factors that drives investor participation in a market is the availability of liquidity. Low levels of secondary market transactions in corporate bonds has resulted in the corporate bond market being perceived as illiquid.

To address the issue of liquidity for investors, SEBI has proposed to establish a framework of providing a Liquidity Window facility by the issuers through use of put options exercisable on pre-specified dates or intervals.

The consultation on this paper ended on 6 September 2024.

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Currently, entities that have a pecuniary relationship with an issuer of debt securities (issuer), amounting to lower of- two per cent of the issuer’s gross turnover (or total income) or INR50 lakh, during the current year or two immediately preceding financial years is restricted from being appointed as a Debenture Trustee (DT).

In this consultation paper, SEBI clarifies that remuneration payable to DTs should not be considered while assessing the pecuniary relationship.

It has further been proposed that henceforth, the issuer should disclose in the offer document the remuneration/revenue received by the DT from the issuer in respect of debenture trusteeship services as a percentage of the total remuneration/revenue received by DT from the said issuer in respect of all services (including services other than the debenture trusteeship services), over the last three financial years.

The consultation on this paper ended on 11 September 2024.

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The key proposals in this consultation include the following:

Doing away with the current requirement of filing Draft Letter of Offer (DLoF) with SEBI for issuance of observations Rationalising the content of Letter of Offer (LoF) by reducing the current disclosures to contain some of the relevant information regarding the rights issue such as object of the issue, price, record date, entitlement ratio, etc. Reviewing the role of intermediaries involved in the rights issue Process Reducing the timelines involved in rights issue process Enabling allotment to selective investors in rights issue Laying down adequate checks and balances

The consultation on this paper ended on 10 September 2024.

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The MB regulations have been proposed to be revised with the following, considering the changes in market dynamics and increased compaliance over the past three decades, and considering the critical role merchant bankers play in the primary market: Existing MB regulations need to be aligned with amendment in other SEBI Regulations and with the current ecosystem. The capital adequacy requirement and eligibility criteria of merchant bankers needs to be reviewed. Clarity on the activities that a merchant banker is permitted to undertake and ensure continuance of only serious players in securities market. Delete provisions which have become reductant and have outlived their utility. The consultation on this paper ended on 18 September 2024.

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Currently, regulated entities of SEBI are mandated to communicate various types of information to numerous stakeholders. This enables a regular and timely disbursal of information to the relevant stakeholders. However, the record of such mandatory communication is required to be maintained only for a limited class of communication.

The legally verifiable record of mandatory communication would help in resolving various issues, such as resolving investor grievances, protecting the interest of investors, etc. Accordingly, it has been proposed that the regulated entities may be mandated to maintain the record of all such communication, which are mandated to be communicated under the respective governing regulations and the circulars issued thereunder.

The consultation on this paper ended on 13 September 2024.

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