Clarification in respect of the compliance by the first time issuers of debt securities under SEBI (Issue and Listing of Non Convertible Securities) Regulations, 2021 with Regulation 23(6)
Summary
SEBI clarifies that first-time issuers of debt securities are granted a six-month grace period to amend their Articles of Association to comply with Regulation 23(6) of the NCS Regulations. Stock Exchanges must obtain an undertaking from these issuers at the time of in-principle approval to ensure compliance within this timeframe. This exemption addresses procedural difficulties faced by new issuers regarding shareholder approvals and financial year-end constraints.
Text
Regulation 23(6) read along with Regulation 2(1)(r) of Securities and Exchange Board of India (Issue and Listing of Non-Convertible Securities) Regulations, 2021 (“NCS Regulations”) requires the Articles of Association (“AoA”) of an issuer that is a company to include provisions with respect to the requirement for the board of directors to appoint such person nominated by the debenture trustee...
In view of the above and the difficulties posed to first time issuers, the Stock Exchanges are advised to take an undertaking from such first-time issuers that they will ensure that their AoA are amended within a period of six months from the date of the listing of the debt securities.
The issuer shall, within such time, comply and report compliance to Stock Exchanges, which shall periodically monitor/ remind such issuers on doing the needful.
The Circular is issued in exercise of the powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992 read with Regulations 55 (1) and 56 of the SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021, to protect the interest of investors in securities and to promote the development of, and to regulate the securities market.
Source: SecMarx — Clarification in respect of the compliance by the first time issuers of debt securities under SEBI (Issue and Listing of Non Convertible Securities) Regulations, 2021 with Regulation 23(6). Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.