Issuance, listing and trading of Perpetual Non-Cumulative Preference Shares (PNCPS) and Innovative Perpetual Debt Instruments (IPDIs)/Perpetual Debt Instruments (PDIs)
Summary
This circular establishes a regulatory framework for the issuance, listing, and trading of Perpetual Non-Cumulative Preference Shares (PNCPS) and Innovative Perpetual Debt Instruments (IPDIs). It mandates that only Qualified Institutional Buyers (QIBs) may participate in these instruments and requires a minimum allotment and trading lot size of Rs. 1 crore. The document further specifies disclosure obligations regarding risk factors, call options, and Point of Non Viability clauses.
Text
The issuance of AT1 instruments shall be done mandatorily on the Electronic Book Provider (EBP) platform irrespective of the issue size.
Issuers and Stock Exchanges shall ensure that only QIBs are allowed to participate in the issuance of AT1 instruments.
The minimum allotment of AT1 instruments shall not be less than Rs.1 crore.
The minimum trading lot size for AT1 instruments shall be Rs.1 crore.
Details of all the conditions upon which the call option will be exercised by them for AT1 instruments, in the Information /Private Placement Memorandum.
Risk factors, to include all the inherent features of these AT1 instruments highlighted at para 2 above.
The absolute right, given to the RBI, to direct a bank to write down the entire value of its outstanding AT1 instruments/bonds, if it thinks the bank has passed the Point of Non Viability (PONV), or requires a public sector capital infusion to remain a going concern.
This circular shall come into force with effect from October 12, 2020.
An undertaking from the issuer stating that the necessary documents for the creation of the charge... would be executed within the time frame prescribed... and uploaded on the website... within 5 working days of execution.
Latest Audited / Limited Review Half Yearly Consolidated (wherever available) and Standalone Financial Information (Profit & Loss statement, Balance Sheet and Cash Flow statement) and auditor qualifications.
A copy of the latest annual report to the Trustee and the Trustee shall be obliged to share the details submitted under this clause with all ‘Qualified Institutional Buyers’ (QIBs) within 180 days from the end of the financial year.
Gross debt-equity ratio of the company, before and after the issuance of the AT1 instrument.
Source: SecMarx — Issuance, listing and trading of Perpetual Non-Cumulative Preference Shares (PNCPS) and Innovative Perpetual Debt Instruments (IPDIs)/Perpetual Debt Instruments (PDIs). Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.