Secondary Market for Corporate Debt Securities - Clarifications
Summary
This circular provides clarifications on the conditions for private placement of corporate debt securities following a previous SEBI directive. It defines the applicability to listed and unlisted issuers, specifies disclosure requirements under DIP Guidelines, and outlines trading mechanisms on stock exchanges. The document also establishes transition periods for existing issues and directs stock exchanges to implement necessary regulatory amendments.
Text
The circular is applicable to all listed companies (including Public Sector Undertakings) with securities offered through an offer document, and unlisted companies may list privately placed debt securities by complying with these provisions.
The circular applies to debt securities issued on or after September 30, 2003, and outstanding securities issued prior to that date must comply by March 31, 2004; otherwise, they remain unlisted and cannot be traded from April 1, 2004.
The circular is not applicable for the private placement of debt securities having a maturity of less than 365 days.
Issuer companies shall make full initial and continuing disclosures in the manner prescribed in Schedule II of the Companies Act, 1956, Chapter VI of the SEBI (DIP) Guidelines, 2000, and the listing agreement.
Disclosures may be made through the website of the stock exchanges if the privately placed debt securities are issued in the standard denomination of Rs. 10 lakhs.
Issuer companies making frequent private placements are permitted to file an umbrella offer document similar to a 'Shelf prospectus' as applicable for a public issue.
Issuers unable to disclose audited accounts within six months may disclose audited accounts for the last financial year and unaudited accounts for subsequent quarters with a limited review by a practicing Chartered Accountant.
Provisions other than Chapter VI of the SEBI (DIP) Guidelines, 2000 will not be applicable for privately placed debt securities.
The appointment of intermediaries (other than debenture trustee) for private placement of debt securities is not mandatory.
SEBI registered intermediaries associated with privately placed unlisted debt securities are accountable for their activities and must furnish periodical reports to SEBI in the specified format.
There is no requirement of vetting of the offer document by SEBI.
There is no requirement to deposit 1% of the issue size of the privately placed debt securities with the stock exchanges.
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Source: SecMarx — Secondary Market for Corporate Debt Securities - Clarifications. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.