REGULATORY AND POLICY UPDATES
SEBI issues circular for review of provisions pertaining to Electronic Book Provider platform1
The Securities Exchange Board of India ("SEBI") through a circular dated 16.05.2025 ("EBP Circular"), has introduced amendments to the Master Circular for issuance and listing of Non-Convertible Securities, Securitized Debt Instruments, Security Receipts, Municipal Debt Securities, and Commercial Paper dated 22.05.2024. These changes relate specifically to the provisions governing the Electronic Book Provider ("EBP") platform, which are as follows:
(1) Use of EBP Platform is now mandatory for private placement of debt securities, non-convertible redeemable preference shares, and municipal debt securities if:
(a) a single issue (inclusive of green shoe option, if any) is of Rs. 20 crore or more;
(b) a shelf issue, across multiple tranches in a financial year, aggregates to Rs. 20 crore or more; or
(c) a subsequent issue, where the total amount of previous issues in a financial year by the same issuer equals or exceeds Rs. 20 crores.
(2) Issuer may voluntarily access the EBP platform for private placement of the instruments such as, securitised debt instruments, security receipts, commercial papers, certificates of deposit and units issued by Real Estate Investment Trusts ("REITs"), small and medium REITs and infrastructure investment trusts.
(3) Issuers may allocate securities to anchor investors at its discretion, provided the total allocation does not exceed the base issue size. Such allocation limits are up to 30% (thirty percent) for instrument having rating AAA/ AA+/AA/AA-, 40% (forty percent) for A+/A-, and 50% (fifty percent) for lower-rated instruments
(4) Additionally, the EBP Circular amended the timeline for obtaining in-principle approvals from stock exchange(s), now requiring EBP issuers to obtain approval prior to T-2/T-3 instead of the earlier requirement of before T-2/T-5, where T refers to the issue date.
SEBI issues norms for internal audit mechanism and composition of the audit committee of MIIs2
SEBI has issued a circular dated 19.05.2025 ("MIIs Circular") to prescribe enhanced norms for the internal audit mechanism and the composition of the audit committee of Market Infrastructure Institutions ("MIIs") effective from 90th (ninetieth) day of notification i.e. 17.08.2025. Key provisions of the MIIs Circular are as follows:
(1) SEBI has mandated that all MIIs including stock exchanges, clearing corporations, and depositories must conduct an internal audit of all their functions and activities across Vertical 1 (Critical Operations), Vertical 2 (Regulatory, Compliance, Risk Management, and Investor Grievances), and Vertical 3 (Other Functions, including Business Development) at least once every financial year through independent audit firms. Internal auditors shall report directly to the audit committee of MIIs.
(2) The scope of the internal auditor must be approved by the audit committee of MIIs, and internal auditors are required to brief the audit committee at least once every six months, within 60 (sixty) days from the end of September and March of the relevant financial year, on critical issues concerning the MII, in the absence of management.
(3) Further, the audit committee of the MIIs shall exclude any executive director (including the managing director) of the MII. However, auditors and key management personnel may be invited to participate in meetings without voting rights.
SEBI issues amendments to the Alternative Investment Fund Regulations 3
SEBI notified the SEBI (Alternative Investment Funds) (Amendment) Regulations, 2025 ("AIF Amendment") vide Notification F. No. SEBI/LAD-NRO/GN/2025/248 on 21.05.2025, which has amended Regulation 17 of the SEBI (Alternative Investment Funds) Regulations, 2012 ("AIF Regulations"), and is effective with immediate effect.
The AIF Amendment amended Regulation 17(a) of the AIF Regulations, which deals with the investment conditions applicable to Category II Alternative Investment Funds ("AIFs"). Now, Category II AIFs shall invest primarily in unlisted securities and/or listed debt securities (including securitized debt) rated 'A' or below by a SEBI-registered credit rating agency either directly or through investment in units of other AIFs. Prior to this AIF Amendment, Category II AIFs primarily invested in unlisted companies, either directly or through investments in units of other AIFs.
SEBI issues circular on provisions relating to KMPs of a Market Infrastructure Institution (MII)4
SEBI has issued circular no. SEBI/HO/MRD/MRD-PoD3/P/CIR/2025/75 dated 26.05.2025 ("MII KMP Circular") in relation to the process for appointment, re-appointment, termination, or acceptance of resignation of specific Key Managerial Personnel ("KMPs") of Verticals 1 and Vertical 2 of an MII, which shall become applicable from the 90th (ninetieth) day of notification, i.e., 24.08.2025, of the MII KMP Circular. Key provisions of MII KMP Circular are as follows:
(1) MIIs shall appoint suitable candidates as CO, CRiO, CTO, and CISO based on recommendations from an independent external agency, evaluated by the Nomination and Remuneration Committee ("NRC"). However, the final decision on the appointment of such KMPs shall be taken by the governing board of the MIIs, based on the NRC's recommendations.
(2) The NRC shall review and recommend re-appointment, termination, or resignation of the CO, CRiO, CTO, and CISO or other KMP to the governing board, which will make the final decision, ensuring due process. MIIs may extend this mechanism to other KMPs at their discretion.
(3) The mandatory 1(one) year cooling-off period for Public Interest Directors ("PIDs") and non-independent directors joining another MII has been replaced with a mechanism to be prescribed by the MII's governing board. The governing board must also define a coolingoff policy for KMPs (including the managing director) joining a competing MII, as defined under Securities Contracts (Regulations) (Stock Exchanges and Clearing Corporations) Regulations, 2018.
(4) If a PID is not re-appointed after their first term, the governing board must record the rationale and inform SEBI
RBI issues circular on reporting requirements for issuance of partly paid units by investment vehicles5
The Reserve Bank of India ("RBI"), through its notification bearing reference no. RBI/2025-26/40 dated May 23, 2025 ("RBI Circular"), has permitted investment vehicles to issue partly paid units to persons resident outside India, in accordance with the extant regulations. Any partly paid units issued prior to this RBI Circular may be reported in Form InVI within 180 (one-hundred and eighty) days from the date of the notification, i.e., 24.11.2025, without incurring late submission fees, whereas those issued thereafter must be reported within 30 (thirty) days, in accordance with the Foreign Exchange Management (Mode of Payment and Reporting of Non-Debt Instruments) Regulations, 2019.
IBBI amended the IBBI (Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Regulations, 20196
The Insolvency and Bankruptcy Board of India ("IBBI") vide notification no. IBBI/ 2025-26/ GN/ REG125 dated 19.05.2025, has issued the IBBI (Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) (Amendment) Regulations, 2025 ("Amendment to IRP for Personal Guarantors") to amend the IBBI (Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Regulations, 2019 with immediate effect. Pursuant to the Amendment to IRP Personal Guarantors, a new Regulation 17B has been inserted, requiring the resolution professional tofile an application before the adjudicating authority with the approval of the creditors, for notifying the non-submission of a repayment plan and to seek appropriate directions, if no repayment plan is prepared under Section 105 of the Insolvency and Bankruptcy Code, 2016.
IBBI notifies IBBI (Insolvency Resolution Process for Corporate Persons) (Third Amendment) Regulations, 20257
IBBI vide notification no. IBBI/2025-26/GN/REG126 dated 19.05.2025, has issued the IBBI (Insolvency Resolution Process for Corporate Persons) (Third Amendment) Regulations, 2025 ("3rd Amendment to IRP for Corporate Persons") to amend the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 ("Principal Regulations") which shall come into force from 01.06.2025.
Pursuant to 3rd Amendment to IRP for Corporate Persons, Regulation 40B of the Principal Regulations which deals with filing of forms with respect to the Corporate Insolvency Resolution Process ("CIRP") which inter alia includes filing of Form IP-1 for pre-assignment, Form CIRP 1 from commencement of CIRP till issue of public announcement, Form CIRP 2 from public announcement till confirmation/replacement of the Interim Resolution Professional ("IRP"), Form CIRP 3 from appointment of Resolution Professional ("RP") till issue of Information Memorandum ("IM") to members of Committee of Creditors ("CoC"), Form CIRP 4 from issue of IM till issue of Request for Resolution Plan ("RFRP"), Form CIRP 5 from issue of RFRP till completion of CIRP and Form CIRP 6 for certain events such as filing of application in respect of preferential undervalued, fraudulent, and extortionate transaction, etc., has been substituted with the following new filing requirements for various stages of the CIRP:
(1) Form CP-1 to be filed by IRP from the commencement of CIRP till the constitution of CoC on or before the 10th (tenth) day of the month following the filing of CoC constitution report with Adjudicating Authority ("AA");
(2) Form CP-2 to be filed by RP from the constitution of CoC till the issue of RFRP on or before the 10th (tenth) day of the month following issuance of RFRP;
(3) Form CP-3A to be filed by RP for filing of resolution plan/ liquidation/ closure application to be filed with AA on or before the 10th (tenth) day of the month following filing of application (s) with AA;
(4) Form CP-3B to be filed by RP for approval of resolution plan/ liquidation/ closure by AA within 7 (seven) days of the disposal of application by AA;
(5) Form CP-4 to be filed by RP for reporting avoidance transactions to AA on or before the 10th (tenth) day of the month following the filing or disposal of application(s) by AA; and
(6) Form CP-5 to be filed by IRP/RP for reporting of updates on the status of CIRP on a monthly basis on or before the 10th (tenth) of every month for the preceding month.
Further, any forms filed after their due dates, whether for correction, update, or otherwise, shall incur a late fee of Rs. 500 (Rupees Five Hundred only) per form for each calendar month of delay, effective from a date that will be notified separately by the IBBI. Additionally, the IRP or RP may face consequences, including the refusal to issue or renew their authorisation for the assignment, if they fail to file the required Form with requisite information and records, or submit inaccurate or incomplete information, or file forms with delay.
In addition to above Amendment to IRP for Corporate Persons, IBBI has also issued a circular vide IBBI/ CIRP/85/2025 dated 26.05.2025 for launch of revised forms for CIRP setting out the indicative templates of the aforementioned forms.
IBBI notifies IBBI (Insolvency Resolution Process for Corporate Persons) (Fourth Amendment) Regulations, 20258
IBBI vide its notification dated 26.05.2025, has issued the IBBI (Insolvency Resolution Process for Corporate Persons) (Fourth Amendment) Regulations, 2025 to amend the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 ("Principal Regulations") with immediate effect. Key amendments to the Principal Regulations are as follows:
(1) A new sub-regulation (5) under Regulation 18 has been added, which permits the CoC to invite interim finance providers to attend its meetings as observers without voting rights.
(2) Regulation 36A(1A) has been inserted which now enables the RP, with CoC approval, to seek expressions of interest for resolution plans covering for the corporate debtor as a whole, or for the sale of one or more assets of the corporate debtor, or for both.
(3) Sub-regulation (6A) of Regulation 36B, which allowed the RP to issue a request for asset sale plans with CoC approval if no resolution plan was received, has been removed.
(4) A new proviso to Regulation 38(1) requires that in staged payments under a resolution plan, dissenting financial creditors must be paid at least pro rata and prior to consenting financial creditors in each stage.
(5) Regulation 39 has been amended to improve the handling of resolution plans by updating compliance requirements and requiring the RP to disclose details of non-compliant plans and any related transactions to the CoC.
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Footnotes
1 SEBI Circular for review of provisions pertaining to EBP Platform
2 Circular in relation to norms for internal audit mechanism and composition of the audit committee of MIIs.
3 SEBI (Alternative Investment Funds) (Amendment) Regulations, 2025.
4 Circular on provisions relating to KMPs of a MII.
5 RBI Reporting Requirement on issuance of partly paid units.
6 IBBI (Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) (Amendment) Regulations, 2025.
7 IBBI (Insolvency Resolution Process for Corporate Persons) (Third Amendment) Regulations, 2025.
8 IBBI notifies IBBI (Insolvency Resolution Process for Corporate Persons) (Fourth Amendment) Regulations, 2025.
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