SEBI has vide its notification dated 8th October, 2020 amended the Listing Obligations and Disclosure Requirements Regulations 2015 as follows:
In Chapter V pertaining to obligations of a listed entity which has listed its non convertible debt securities or non convertible redeemable preference shares or both.
Regulation 54(1) pertaining to asset cover has been amended as follows:
- [(1) In respect of its listed non-convertible debt securities, the listed entity shall maintain hundred per cent. asset cover or asset cover as per the terms of offer document/Information Memorandum and/or Debenture Trust Deed, sufficient to discharge the principal amount at all times for the non-convertible debt securities issued.]
In earlier version, the wordings highlighted above were not there. It has been added vide this amendment.
Regulation 54(3) has been omitted. Prior to its omission, reg 54(3) read as follows:
“(3) The requirement specified in sub-regulation (1), shall not be applicable in case of unsecured debt securities issued by regulated financial sector entities eligible for meeting capital requirements as specified by respective
So now even unsecured debt securities will be required to keep asset cover as per reg 54(1) ibid.
Regulation 56 pertaining to documentation and intimation to debenture trustees. New clause has been inserted in reg 56(1)(c) as follows, after existing sub-clause (iii).
1[(iv) all covenants of the issue (including side letters, accelerated payment clause, etc.)]
Reg 56(1)(c) pertains to intimations to be made to the debenture trustee by the issuer – intimations regarding revisions in rating, default in timely payment of interest or redemption or both in case of non-convertible securities or failure to create charge on the assets. Now one more clause has been added as above for making intimation to the debenture trustees.
Reg 56(1)(d) has been replaced as follows:
“(d) a half-yearly certificate regarding maintenance of hundred
percent asset cover or asset cover as per the terms of offer document/
Information Memorandum and/or Debenture Trust Deed, including
compliance with all the covenants, in respect of listed non-convertible
debt securities, by the statutory auditor, along with the half-yearly
Provided that the submission of half yearly certificate is not
applicable where bonds are secured by a Government guarantee.”
Earlier this certificate could have been issued by a practising CA or CS. Now that is one opportunity lost for us.
In Schedule III, in part A, a new clause has been added. Schedule III pertains to disclosure of events or information in respect of specified securities under regulation 30.
“17. Initiation of Forensic audit: In case of initiation of forensic audit,
(by whatever name called), the following disclosures shall be made
to the stock exchanges by listed entities:
a) The fact of initiation of forensic audit along-with name of
entity initiating the audit and reasons for the same, if available;
b) Final forensic audit report (other than for forensic audit
initiated by regulatory / enforcement agencies) on receipt by the
listed entity along with comments of the management, if any.”