Electronic book mechanism for issuance of securities on private placement basis
Summary
This circular mandates the use of an electronic book mechanism for private placements of debt securities and NCRPS exceeding Rs 200 crore. It repeals the previous 2016 circular and introduces revised guidelines to streamline procedures and enhance transparency. The document defines key terms, outlines issuer obligations regarding documentation and disclosure, and specifies rules for offer withdrawal. This section details the KYC verification and enrolment procedures for different investor categories on the Electronic Book Provider platform. It outlines specific bidding rules, including direct bidding thresholds, arranger disclosure requirements, and payment obligations. The text further defines the bidding process mechanics, allotment criteria based on yield priority, and the operational obligations of the Electronic Book Providers.
Text
This circular shall come in to force with effect from April 01, 2018 and the SEBI circular CIR/IMD/DF1/48/2016 dated April 21, 2016 shall stand repealed from the date of the enforcement of this circular.
Recognized Stock Exchanges are directed to comply with the conditions laid down in this circular; put in place necessary systems and infrastructure for implementation of this circular; make consequential changes, if any, to their bidding portal and respective exchange bye-laws; and communicate and create awareness about these revised guidelines amongst issuers, arrangers and investors.
“Arranger” means a SEBI registered Merchant Banker, broker or a RBI registered Primary Dealer, who on behalf of the eligible participants bid on the EBP platform. Provided, that any of the aforesaid entities, prior to acting as an arranger in an issue, shall be authorized by the issuer to act as an arranger for that issue.
“Bidder” means eligible participant bidding on EBP platform.
“Cut off yield” means the final yield so determined in an issue. In other words, it is the highest yield at which a bid is accepted.
“Eligible participant” means following: a) Qualified Institutional Buyers (QIBs), defined as per Regulation 2(zd) of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009. b) Any non-QIB investor including arranger(s), who/which has been authorized by the issuer, to participate in a particular issue on EBP Platform.
"Electronic Book Provider" or "EBP" means a recognized stock exchange(s), which pursuant to obtaining approval from SEBI, provides an electronic platform for private placement of securities.
“Estimated cut off yield” means yield so estimated by the issuer, prior to opening of issue
"Securities" for the purpose of this circular shall mean following: a) debt securities as defined under Regulation 2(e) of Issue and Listing of Debt Securities Regulations, 2008 (“ILDS Regulations” hereinafter); b) non-convertible redeemable preference shares ("NCRPS" hereinafter) as defined under Regulation 2(k) of SEBI (Non-Convertible Preference Shares) Regulations, 2013 (“NCRPS Regulations” hereinafter); c) debt securities as defined under 2(e) of SEBI (Issue and Listing of Debt Securities by Municipalities) Regulations, 2015 ("ILDM Regulations" hereinafter) d) 'Commercial paper' and/or 'Certificate of Deposits' as defined under RBI guidelines
“Term Sheet” means summary of important terms and conditions related to an issue.
All private placement of debt securities and NCRPS as per the provisions of ILDS and NCRPS Regulations, respectively, shall be required to be made through EBP Platform if it is: 2.1.1. a single issue, inclusive of green shoe option, if any, of Rs 200 crore or more; 2.1.2. a shelf issue, consisting of multiple tranches, which cumulatively amounts to Rs 200 crore or more, in a financial year; 2.1.3. a subsequent issue, where aggregate of all previous issues by an issuer in a financial year equals or exceeds Rs 200 crore.
An issuer, irrespective of issue size, if desires, may choose to access EBP platform for private placement of: 2.2.1. Debt securities as per provisions of ILDM Regulations 2.2.2. Commercial Paper; and 2.2.3. Certificate of Deposits.
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Source: SecMarx — Electronic book mechanism for issuance of securities on private placement basis. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.