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JC - Legal Updates - Framework for issue of Non Convertible Securities consolidated

Legal Updates

01 Jul 2021

Framework for issue of Non Convertible Securities consolidated

The Securities and Exchange Board of India (“SEBI”) has approved proposals for promulgation of the SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021 (“NCS Regulations”).

An overview of the proposed NCS Regulations is as follows:

(a)  The NCS Regulations will consolidate and merge the SEBI (Issue and Listing of Debt Securities) Regulations, 2008 and SEBI (Non-Convertible Redeemable Preference Shares) Regulations, 2013;

(b)  Issuers (other than unlisted Real Estate Investment Trusts and Infrastructure Investment Trusts in existence for less than 3 (three) years permitted to tap the bond market subject to issuance of debt securities being (i) on private placement basis, (ii) made on the electronic book platform (“EBP”) (irrespective of issue size); and (ii) open for subscription only to qualified institutional buyers;

(c)  Parameters for identification of risk factors to be introduced to enable disclosure of pertinent risk factors viz. risks intrinsic to issuer, the instrument, any factors having an impact on the issue etc;

(d)  The restriction on having not more than four public issuances of debt securities in a year through a single shelf prospectus to be lifted;

(e)  Provisions regulating put and call options in respect of debt securities which are issued on private placement basis to be introduced;

(f)  The minimum period for exercise of call / put options in respect of public issuances to be brought down to 12 months from 24 months;

(g)  Issuers who have cured default in payment of interest/ dividend/ redemption, have been permitted to file a shelf prospectus for a public issue (post curing of default), provided they have cured the default at least 30 (thirty) days prior to filing the draft shelf prospectus;

(h)  Stipulation that the minimum public issue size must be INR 100 Crore to be removed; and

(i)  The threshold to which the mandatory requirement of undertaking an issuance of privately placed debt securities (that are proposed to be listed) through EBP applies has been reduced from issuances aggregating to INR 200 crore or more in a financial year to issuances aggregating to INR 100 Crore or more in a financial year.

SEBI approved the abovementioned proposals in its board meeting held on 29th June 2021. The proposal for a consolidated NCS Regulations was previously discussed by SEBI in a consultation paper dated 19th May 2021. The final NCS Regulations are awaited.


For any further information, please contact Ms. Apurva Kanvinde (apurva.kanvinde@jclex.com) or Mr. Sumitava Basu (sumitava.basu@jclex.com