AMENDMENTS TO SEBI REGULATIONS ON NON-CONVERTIBLE SECURITIES

Introduction 

Non-convertible securities, such as debt securities and preference shares, are pivotal in the financial sector. To bolster transparency and investor trust, SEBI announced the SEBI (Issue and Listing of Non-Convertible Securities) (Amendment) Regulations, 2024, on July 8, 2024with an aim to fortify due diligence standards for debenture trustees, augment disclosure requirements for listed entities, and update the format of due diligence certificates.  

The following sections delve into these key amendments: 

1. Record Date Requirement Advanced to 15 Days Before Payment Due Date 

The Amendment to Regulation 23 mandates issuers to set a record date for interest, dividend, redemption, or repayment payments at least 15 days before the due date, providing clarity and enhancing compliance for investors. 

1. Strengthened Due Diligence Obligations for Debenture Trustees 

Regulation 40 now requires debenture trustees to furnish due diligence certificates to SEBI and stock exchanges  prior to public issue commencement, heighting transparency and accountability. Moreover, stock exchanges must publish these certificates, fostering greater investor assurance. 

1. Audited Financial Statements Accessible via QR Code and Web-link 

An amendment to Schedule I now allows issuers to include a web link and static QR code for audited financial statements in offer documents, enhancing access to financial information, complemented by certified comparative analyses of operational and financial metrics; thereby reinforcing investor confidence and regulatory compliance. 

1. Revised Format for Due Diligence Certificates by Debenture Trustees 

SEBI updated due diligence certificates from debenture trustees, now requiring disclosure of asset charges and proposed covenants in the offer documents for enhanced transparency and investor security. 

Conclusion 

These SEBI regulatory amendments signify a crucial stride towards bolstering transparency, accountability, and investor confidence within the non-convertible securities domain. By enhancing due diligence norms, refining disclosure requisites, and modernizing certificate formats, SEBI fortifies the regulatory framework, ensuring a resilient and transparent investment environment for all stakeholders.