SEBI Has Issued Terms And Conditions For DTs Carrying Out Activities Outside The Purview Of SEBI

SEBI vide Circular No. HO/17/11/12(3)2025-DDHS POD1/I/146/2025 dated 25.11.2025 (“DT Circular”)¹, has specified the terms and conditions for Debenture Trustees (“DTs”) for carrying out activities outside the purview of SEBI. The DT Circular is issued in exercise of the powers conferred under Section 11(1) of the SEBI Act, 1992 and Regulation 2A of SEBI (Debenture Trustees) Regulations, 1993 (“DT Regulations”) and follows the amendments to the DT Regulations notified on 27.10.2025, whereby Regulation 9C was incorporated.

SEBI has clarified that DTs may undertake activities outside SEBI's purview (including activities regulated by other financial sector regulators or fee-based, non-fund based financial services activities) only through separate business units (“SBUs”) on an arms-length basis, segregated by chinese walls and ring fenced from the SEBI regulated activities. The key conditions stipulated by the DT Circular are that DTs are to (i) maintain separate grievance redressal mechanisms, records, and staff for non SEBI regulated activities; (ii) making clear website disclosures that SEBI investor protection mechanisms will not be available for such activities; (iii) obtaining upfront written confirmation from stakeholders about the nature and risks of non-SEBI regulated activities; and (iv) submitting half-yearly compliance reports to SEBI. DTs currently undertaking such activities must comply with disclosure requirements within 30 days, while existing arrangements must be documented and reported within six months. DTs also regulated by the Reserve Bank of India must carry out all DT activities through SBUs.

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