Okays amendments to improve liquidity in debt markets

Good, preventive measure

Tejesh Chitlangi, Partner, IC Legal, said “This is a good move since the institutional shareholders despite being less in number, hold large stakes compared to a vast number of public shareholders who have smaller holdings and whose non-participation due to lack of awareness or interest could have derailed even good delisting offer.”

Harmonising the norms on receipt of upfront payment and tenure of partly paid shares with the Foreign Exchange Management Act, SEBI said a minimum 25 per cent of the issue price shall necessarily be received upfront. The balance will be received within 12 months if the issue size is less than ₹500 crore and for larger issues, the period can be decided by the issuer according to the existing regulatory framework. With reference to norms for warrants issued along with public or rights issue of securities, upfront payment received by the issuer would be 25 per cent and tenure 18 months as against 12 months presently.

Express provisions 

SEBI has also amended regulations to issue debt instruments by incorporating express provisions for enabling consolidation and re-issuance of debt securities and call and put options.

Consolidation and re-issuance of debt securities will lead to creation of a larger floating stock for corporate bonds that are otherwise illiquid.

Companies listed on exiting regional stock exchanges have been given 18 months to comply with the listing norms of nationwide stock exchanges. Till such time the shares of these companies will remain on the dissemination board of nationwide bourses. 

To enhance investor confidence in securitisation transactions, SEBI approved amendments to securitised debt instruments regulations.

SEBI has rationalised and clarified the role and responsibilities of a trustee besides allowing banks and public financial institutions to act as trustee without obtaining registration.