SEBI Consultation Paper on Review and Merger of SEBI (Issue and listing of Debt Securities) Regulations, 2008

Securities and Exchange Board of India

Consultation Paper – Review and Merger of SEBI (Issue and listing of Debt Securities) Regulations, 2008 and SEBI (Issue and Listing of Non-Convertible Redeemable Preference Shares) Regulations, 2013 into SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021.

May 19, 2021 

A. Objective  

To solicit public comments / views on the merger of the SEBI Issue and Listing of Debt Securities) Regulations, 2008 (hereinafter referred as “ILDS Regulations”) and SEBI (Issue and Listing of Non- Convertible Redeemable Preference Shares) Regulations, 2013 (hereinafter referred as “NCRPS Regulations”) into a single regulation – SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021 (hereinafter referred as “NCS Regulations”).

The new NCS Regulations would ease compliance burden on listed entities, harmonize with the Companies Act, 2013 and maintain consistency with the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 (hereinafter referred as “LODR Regulations”), SEBI (Debenture Trustees) Regulations, 1993 (hereinafter referred as “DT Regulations”) and circulars issued thereunder. Further NCS Regulations would also include certain provisions issued via circulars under ILDS Regulations and NCRPS Regulations.

B. Review of the ILDS Regulations and NCRPS Regulations and proposed amendments:

The ILDS Regulations and NCRPS Regulations were notified on June 06, 2008 and June 12, 2013 respectively. The ILDS Regulations were enacted for the issuance and listing of debt securities whereas NCRPS Regulations was enacted for the issuance and listing of non-convertible redeemable preference shares. The NCRPS Regulations, also cover the listing of perpetual debt instruments (PDIs) and Perpetual Non-Convertible Preference Shares (PNCPS).

While debt securities are ‘pure play’ debt instruments, NCRPS’ are hybrid equity and debt instruments – they carry a fixed dividend rate, are redeemable and the holder is entitled to voting rights in case dividend is not paid for two years as per the Companies Act, 2013; therefore, they are also termed as a ‘quasi-debt’ instruments. The NCRPS Regulations, which were notified in 2013, were enacted for the issue and listing of preference shares, that were non-convertible in nature, thus largely in the nature of debt. This can also be seen in the content of the regulations including eligibility conditions, disclosure requirements, etc. which are very similar to the ILDS Regulations. The NCRPS Regulations have been modelled on the ILDS Regulations.

Subsequent to the implementation of the ILDS Regulations and NCRPS Regulations, considerable time has passed. Significantly, various changes have taken place in the regulatory landscape, like:

• Amendments made to the Companies Act, 2013 (‘Companies Act’);
• Repeal of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 and substitution with ICDR Regulations, 2018 (‘ICDR Regulations’);
• Enhancement of requirements for Debenture Trustees;
• Issue of various circulars in relation to the ILDS and NCRPS Regulations keeping in mind the market dynamics;
• Issue of informal guidance/ interpretative letters regarding interpretation of the regulations etc.

A need was thus felt to merge and realign the ILDS and NCRPS Regulations to ensure that ease of reference and language and also remove redundancies which would entail following objectives:

(1)  To simplify and to align the Regulations in line with the various circulars/guidance and various provisions of the regulations, issued by SEBI and improve the structure of the regulations in order to enhance readability

(2)  To identify policy changes in line with the present market practices and the prevailing regulatory environment and to ease doing business.

(3)  To separate the chapters on the basis of type of issuance-public/private placement and instruments – debt securities/NCRPS/PNCPS/PDIs/ Commercial Papers, so that all relevant information is sorted and are available at one place;

(4)  To align the regulations with the amendment in the Companies (Share Capital and Debentures) Rules, 2014 and Companies (Prospectus and Allotment of Securities) Rules, 2014 etc.;

(5)  To merge all the existing circulars into a single operational circular.

Please find the attachment for details.