SEBI Amends Rules for Listing Non-Convertible Debt Securities Issuance

• 23 Sep 2023

The Securities and Exchange Board of India (SEBI) has recently made amendments to regulations, mandating that listed entities with outstanding non-convertible debt securities must list subsequent issuances of such securities on stock exchanges.

This regulatory change will be effective from January 1, 2024, according to a notification published by SEBI.

Key Points

• Enhancing Transparency: SEBI's move aims to enhance transparency in the price discovery process for non-convertible debt securities.
• It also seeks to provide investors and the market with improved disclosures, thereby reducing confusion related to International Securities Identification Numbers (ISINs) and the potential mis-selling of unlisted bonds.
• Exemptions from Requirement: These exemptions include debt securities subject to capital gains tax under Section 54EC of the Income Tax Act, 1961; Non-Convertible Debentures (NCDs) where parties have agreed to hold the securities until maturity, ensuring they remain unencumbered; and NCDs issued in compliance with orders from courts, tribunals, or regulatory requirements set by financial sector regulators, such as SEBI, RBI, IRDA, PFRDA, or IBBI.
• Lock-in for Investors: SEBI clarified that securities issued by listed entities will be locked in and held by investors until maturity, thus encumbering them.