Overview:
Key amendments have been introduced with respect to the issuance of listed debt securities ("NCDs") pursuant to an amendment to the SEBI (Issue and Listing of Non-Convertible Securities) ("NCS Regulations"):
Technical Details:
1. Substitution of Shelf Placement Memorandum and Tranche Placement Memorandum with General Information Document ("GID") and Key Information Document ("KID"):
An issuer seeking to issue and list their NCDs shall be required to file a GID with the stock exchange, which shall contain the disclosures as specified in the NCS Regulations, Companies Act 2013 and any additional disclosures as may be specified by SEBI from time to time.
An issuer shall endeavour to file the GID instead of a placement memorandum for private placement of NCDs sought to be listed until 31st March 2024.
Issuers making second or subsequent offer of NCDs during the validity of the shelf placement memorandum filed prior to these amendments coming into force (i) either on private placement basis or (ii) by way of public issue, and merely the filing of KID shall suffice. Needless to say, the other disclosures requiring regular updates shall be continued to be made.
The GID and KID mechanism does not restrict the borrowing programme of the Company to a specific amount (unlike the earlier mechanism) but is valid for the entire validity period of 1 year, which is not linked to any amount.
2. Easy mechanism for multiple Commercial Paper ("CPs") issuances
Issuers intending to issue and list their CPs after having already filed the GID or having filed the shelf prospectus in case of public issue shall now only be required to file the KID for their issuance.
3. Omission of Schedule II and Substitution of Schedule I - Disclosures for Issue of Securities.
SEBI has omitted Schedule II (Disclosures for Private Placement of Non-Convertible Securities) of the NCS Regulations and has further substituted Schedule I (formerly known as Disclosures for Public Issue and Non-Convertible Redeemable Preference Shares) with a new schedule which shall contain disclosure requirements applicable for both, private and public issuances of NCDs.
JC Takeaways
Now there is no difference in the disclosure requirements for public issuance and private placement of NCDs. The GID and KID mechanism is expected to benefit the regular issuers of NCDs and CPs and thereby cut down the timelines for issuance.
For further details, please see:
Originally published by 07 July, 2023
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
