Operational framework for transactions in defaulted debt securities post maturity date/redemption date under provisions of SEBI (Issue and Listing of Debt Securities) Regulations, 2008
Summary
This circular establishes an operational framework for trading in defaulted debt securities after the maturity or redemption date. It outlines specific obligations for issuers, debenture trustees, stock exchanges, and depositories to manage payment status intimation and transaction restrictions. The provisions aim to protect investor interests by ensuring transparency and coordinated action among market intermediaries. Annexure B establishes a detailed timeline for activities related to the redemption and maturity of debt securities. It mandates specific actions by issuers, trustees, stock exchanges, and depositories regarding payment status updates. The provisions cover both event-driven notifications and continuous annual assessments of payment statuses.
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introduce an operational framework for transactions in defaulted debt securities Accordingly, this circular outlines the operational framework for transactions in defaulted debt securities and also prescribes the obligations of Issuers, Debenture Trustee(s), Depositories and Stock Exchange(s) while permitting such transactions.
comply with the obligations laid down in this circular including mechanism for inter-depository and exchange coordination, wherever required;
put in place necessary systems and infrastructure for implementation of this circular and complete the same by June 29, 2020.
The provisions of this circular shall come into force from July 01, 2020.
This circular is issued in exercise of powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992 read with Regulation 31(1) of SEBI (Issue and Listing of Debt securities) Regulations, 2008, to protect the interests of investors in securities and to promote the development of, and to regulate the securities markets.
Stock Exchange(s) shall not allow any transactions in the defaulted debt securities, two working days prior to their maturity/redemption date.
On maturity/redemption date of the defaulted debt securities Depositories shall temporarily restrict transactions in such debt securities from such maturity/redemption date till the time its status of payment is determined.
Issuer shall intimate to the Stock Exchanges, Depositories and Debenture Trustee(s) the status of payment of debt securities within 1 working day of payment/redemption date.
Provided for debt securities in which default has occurred before the date of this circular, the issuer shall intimate the status of payment within 5 working days from the issuance of this circular.
While intimating the status of payment to Debenture Trustee(s), Issuer shall also intimate to Debenture Trustee(s) that they have informed the status of payment or otherwise to the Stock Exchanges and Depositories.
In case the Issuer fails to intimate the status of payment of the debt securities within stipulated timelines, then Debenture Trustee(s) shall seek status of payment from Issuer and/or conduct independent assessment (from banks, investors, rating agencies, etc) to determine the same.
At the time of executing Debenture Trust Deed, Issuer shall provide its bank details (from which it proposes to pay the redemption amount) and pre- authorise Debenture Trustee(s) to seek debt redemption payment related information from the Issuer’s bank.
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Source: SecMarx — Operational framework for transactions in defaulted debt securities post maturity date/redemption date under provisions of SEBI (Issue and Listing of Debt Securities) Regulations, 2008. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.