Reduction in denomination of debt securities and non-convertible redeemable preference shares
Summary
This circular modifies the Master Circular for non-convertible securities to allow private placement issuances with a reduced face value of Rs. 10,000. It mandates the appointment of at least one Merchant Banker and specifies permitted credit enhancements for such securities. The previous clauses requiring higher minimum denominations for private placements are deleted, and trading lots must equal the face value.
Text
The Issuer may issue debt security or non-convertible redeemable preference share on private placement basis at a face value of Rs. Ten Thousand
The issuer shall appoint at least one Merchant Banker
The following credit enhancements shall be permitted in the aforesaid securities: Guaranteed bonds; Partially guaranteed bonds; Standby Letter of credit (SBLC) backed securities; Debt backed by pledge of shares or other assets; Guaranteed Pooled bond issuance (PBI), not through a trust; Obligor/ Co-obligor structures or cross default guarantee structures; and Debt backed by Payment Waterfall /Escrow, or DSRA etc., but with Full Guarantee or DSRA Replenishment Guarantee from a third party
Credit Rating Agencies (CRAs) shall verify the documentation related to the specified support considerations to ensure the support is unconditional, irrevocable, and legally enforceable till all the obligations of the security has been paid to the investors
With respect to a shelf placement memorandum or General Information Document (GID) which is valid as on the ‘effective date of the circular’, the issuer may raise funds through tranche placement memorandum or Key Information Document at a face value at Rs. Ten Thousand provided at least one Merchant Banker is appointed to carry out due diligence in respect of such issuances
Clause 2.1 of Chapter V of the Master Circular will stand deleted
Clause 2.2 of Chapter V of the Master Circular will stand deleted
Trading lot of listed debt security issued on private placement basis... traded on a Stock Exchange or OTC basis shall always be equal to face value
The provisions of this circular shall be applicable to all issues of debt securities and non-convertible redeemable preference shares, on private placement basis that are proposed to be listed from the date of issuance of this circular
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 Regulation 55 (1) of the SEBI (Issue and Listing of Non-convertible Securities) Regulations, 2021
Source: SecMarx — Reduction in denomination of debt securities and non-convertible redeemable preference shares. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.