Monitoring and Disclosures by Debenture Trustee(s)

SEBI/ HO/ MIRSD/ CRADT/ CIR/ P/ 2020/230 November 12, 2020 To, All listed entities who have listed their debt securities or issuers who propose to list their debt securities All Recognized Stock Exchanges All Debenture Trustees registered with SEBI Dear Sir/ Madam, Sub: Monitoring and Disclosures by Debenture Trustee(s) 1. SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and SEBI (Debenture Trustees) Regulations, 1993 (“DT Regulations”) mandates issuers to submit information/ documents to Debenture Trustee(s). In order to enable debenture trustee(s) to discharge its obligations in respect of listed debt securities, the debenture trustee(s) shall undertake independent periodical assessment of the compliance with covenants or terms of the issue of listed debt securities including for ‘security created’. A. Monitoring of ‘security created’ / ‘assets on which charge is created’ 2. SEBI Circular No. SEBI/ HO/ MIRSD/ CRADT/ CIR/ P/ 2020/218 dated November 03, 2020, has prescribed the manner in which debenture trustees shall carry out due diligence for creation of security at the time of issuance of debt securities and as required under Regulation 15(1)(s) & 15(1)(t) of DT Regulations, debenture trustee(s) shall carry out due diligence on continuous basis. Debenture trustee shall carry out periodical monitoring in following manner: 2.1. Debenture trustee shall incorporate the terms and conditions of periodical monitoring in the debenture trust deed wherein listed entity shall be liable to provide relevant documents/ information, as applicable, to enable the debenture trustee(s) to submit the following reports/ certification to Stock Exchange(s) within the timelines mentioned below: 1 | PageReports/Certificate Periodicity Format Asset cover Certificate Quarterly basis within Annexure A 60 days from end of each A statement of value of pledged securities quarter - A statement of value for Debt Service Reserve - Account or any other form of security offered Net worth certificate of guarantor (secured by Half yearly basis within - way of personal guarantee) 60 days from end of each half-year. Financials/value of guarantor prepared on Annual basis within 75 - basis of audited financial statement etc. of the days from end of each guarantor(secured by way of corporate financial year. guarantee) Valuation report and title search report for the - immovable/movable assets, as applicable. 2.2. For existing debt securities, listed entities and debenture trustee(s) shall enter into supplemental/amended debenture trust deed within 120 days from the date of this circular incorporating the changes in the debenture trust deed. 2.3. In case, a listed entity has more than one debenture trustee for its listed debt securities, then debenture trustees may choose a common agency for preparation of asset cover certificate. B. Action to be taken in case of breach of covenants or terms of issue 3. In case of breach of covenants or terms of the issue by listed entity, the debenture trustee shall take steps as outlined in para 6.1 and 6.3 of SEBI Circular SEBI/HO/MIRSD/CRADT/CIR/P/2020/203 dated October 13, 2020 and thereafter take necessary action as decided in the meeting of holders of debt securities in this regard. C. Disclosure on website by debenture trustee 4. The debenture trustee(s) shall make the following disclosures on their websites as specified below: 2 | PageDisclosures Periodicity Format Revision in Credit ratings Continuous basis Table 1 of Annexure B within T+1 day from Status of payment of interest/ receipt of information Table 2 of Annexure B principal by the listed entity Monitoring of Asset cover certificate Quarterly basis within Table 3 of Annexure B and Quarterly compliance report of 60 days of end of each the listed entity. quarter Details of Debenture issues handled Half-yearly basis Table 4 of Annexure B by debenture trustee and their status within 60 days of the Status of information regarding end of each half-year Table 5 of Annexure B breach of covenants/terms of the issue, if any action taken by debenture trustee Complaints received by debenture Table 6 of Annexure B trustee(s) including default cases Status regarding maintenance of Annual basis within 75 Table 7 of Annexure B accounts maintained under days of the end of the supervision of debenture trustee financial year Status of information regarding any Table 8 of Annexure B default by listed entity and action taken by debenture trustee Monitoring of Utilization Certificate Table 3 of Annexure B D. Reporting of regulatory compliance 5. The formats for periodical reporting prescribed by SEBI Circular No. CIR/MIRSD/25/2011 dated December 19, 2011 stands rescinded and the debenture trustee(s) shall furnish revised periodical reports to SEBI in the formats as follows: Report Periodicity Format Half yearly compliance report Annexure C Details of other activities carried out - Half-yearly basis by Debenture Trustee(s) including within 30 days of the type of activity, description of activity end of each half-year. etc. Risk-Based Supervision report - 6. This circular is issued in exercise of the powers conferred upon SEBI under Section 11 (1) of the Securities and Exchange Board of India Act, 1992 read with the provisions of Regulation 2A of the Securities and Exchange Board of India (Debenture Trustees) Regulations, 1993, Regulation 31(1) of the Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008, Regulation 101(1) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Regulation 29 of the Securities and Exchange Board of India (Issue and Listing 3 | Pageof Municipal Debt Securities) Regulations, 2015 to protect the interest of investors in securities and to promote the development of, and to regulate, the securities market. 7. Applicability: The provisions of this circular shall come into force w.e.f. quarter ended December 31, 2020 for listed debt securities. Yours faithfully, Richa G. Agarwal Deputy General Manager Market intermediaries Regulation & Supervision Department Email id: richag@sebi.gov.in Phone: +91-22-26449596 4 | PageAnnexure A Format of certificate for asset cover by debenture trustee in respect of listed debt securities of the listed entity To, Stock Exchange (s) Based on examination of books of accounts and other relevant records/documents, we hereby certify that: a) The listed entity has vide its Board Resolution and information memorandum/ offer document and under various Debenture Trust Deeds, has issued the following listed debt securities: ISIN Private Placement/ Public Secured/ Unsecured Sanctioned Amount Issue b) Asset Cover for listed debt securities: i. The financial information as on DD-MM-YY has been extracted from the books of accounts for the year ended DD-MM-YY and other relevant records of the listed entity; ii. The assets of the listed entity provide coverage of …… times of the interest and principal amount, which is in accordance with the terms of issue/ debenture trust deed (calculation as per statement of asset cover ratio for the Secured debt securities - table – I) iii. The total assets of the listed entity provide coverage of …… times of the principal, which is in accordance with the terms of issue (calculation as per statement of asset coverage ratio available for the unsecured debt securities - table – II) (as per requirement of Regulation 54 read with Regulation 56(1)(d) of LODR Regulations). Table – I: Sr. Particulars Amount No. i. Total assets available for secured Debt Securities’ – (secured by either pari A passu or exclusive charge on assets) (mention the share of Debt Securities’ charge holders)  Property Plant & Equipment (Fixed assets) - movable/immovable property etc  Loans /advances given (net of provisions, NPAs and sell down portfolio), Debt Securities, other credit extended etc  Receivables including interest accrued on Term loan/ Debt Securities etc  Investment(s)  Cash and cash equivalents and other current/ Non-current assets ii. Total borrowing through issue of secured Debt Securities (secured by either B pari passu or exclusive charge on assets)  Debt Securities (Provide details as per table below)  IND - AS adjustment for effective Interest rate on secured Debt Securities  Interest accrued/payable on secured Debt Securities iii. Asset Coverage Ratio A/B (100% or higher as per the terms of offer document/information memorandum/ debenture trust deed) 5 | PageISIN wise details S.No. ISIN Facility Type of Sanctioned Outstanding Cover Assets charge Amount Amount As on Required Required DD-MM-YYYY 1. XYZ Non-convertible Pari- Debt Securities passu/exclusive Grand Total Table - II SN Particulars Amount i. Net assets of the listed entity available for unsecured lenders (Property Plant A & Equipment (excluding intangible assets and prepaid expenses) + Investments + Cash & Bank Balances + Other current/ Non-current assets excluding deferred tax assets (-) Total assets available for secured lenders/creditors on pari passu/exclusive charge basis under the above heads (-) unsecured current/ non-current liabilities (-) interest accrued/ payable on unsecured borrowings) ii. Total Borrowings (unsecured) B  Term loan  Non-convertible Debt Securities  CC/ OD Limits  Other Borrowings  IND - AS adjustment for effective Interest rate on unsecured borrowings iii. Assets Coverage Ratio (A/B) (100% or higher as per the terms of Offer Document/Information Memorandum/ Debenture Trust Deed) c) Compliance of all the covenants/terms of the issue in respect of listed debt securities of the listed entity We have examined the compliances made by the listed entity in respect of the covenants/terms of the issue of the listed debt securities (NCD’s) and certify that the such covenants/terms of the issue have been complied by the listed entity except as stated below: - …………………………………………………….. ……………………………………………………. ********* 6 | PageAnnexure B 1. Revi sion in Credit ratings S. No. Name of the Listed ISIN Immediate Previous Credit Rating Revised Credit Rating Entity Credit Date of Credit Rating Credit Credit Rating Date of Hyperlink of the press Rating Rating Agency Rating Agency Review releases by the Credit rating Agency 2. Status of payment of interest/principal by the listed entity S.No Name of the listed ISIN Due Date of Actual date of Status of Payment Date of information Date of information Details of entity Payment of Payment of (Default / Delayed / given to Exchange given to CRA by action taken Interest/ Interest/ Non-Cooperation, No by the debenture the debenture by debenture Principal Principal Information etc.) trustee trustee trustee, if any 3. Monitoring of Utilization Certificate and Asset Cover Name of Issue Issue Whether Periodical status/ Utilization Certificate Asset cover Certificate the listed Type size (in Secured/ performance reports/ entity (Public/ ₹ Unsecured Quarterly Date of Delay (if Asset Cover Asset cover Date of Delay (if any (including Privately crores) Compliance reports/ receipt of any) & Certificate ratio Asset in ISIN ) placed Financial statements the reasons provided by maintained cover submission) listed) submitted by the certificate (including (debenture certificate & reasons listed entity (Yes/No) follow up trustee/ (including done by statutory follow up debenture auditor/other done by trustee) pls specify) debenture trustee) 7 | Page4. Details of Debenture issues handled by debenture trustee and their status Type Debenture issues at end of last Debenture issues accepted Debenture issues fully Debenture issues outstanding Cumulating half year ended March / Sep during half year ended March / redeemed during half year as on last day of half year issues 20… Sep 20… ended March / Sep 20… ended March / Sep 20… handled up to the half year ended March / Sep 20… Secured Unsecured Total Secured Unsecured Total Secured Unsecured Total Secured Unsecured Total No. Amt. No. Amt. No. Amt. No. Amt. No. Amt. No. Amt. No. Amt. No. Amt. No. Amt. No. Amt. No. Amt. No. Amt. No. Amt. Public Rights Privately Placed Listed Total 5. Status of information regarding breach of covenants/terms of the issue , if any action taken by debenture trustee S. No. Name of Covenants / Security to be Date of Date of Date of intimation Delay if any (in no. of Reasons Further action the Listed terms of enforced due to actual detecting given to debenture days) for the taken, if any Entity issue (if any breach of breach the breach holders, stock delay (ISIN) ) breached covenant/terms of by the exchanges, SEBI, In In during the issue including debenture etc. (if applicable) detecting intimation quarter any revised due trustee the breach date (if any) 6. Complaints received by debenture trustee including default cases No. of pending No. of No. of complaints No. of complaints Nature of the Complaint(s) Steps taken to Remarks, if any Complaints at the complaints resolved during pending at the end resolve the Delay in Delay in Any other end of last half received the half year (within of half year (for more pending payment of payment of year during the 30 days) than 30 days) complaints interest redemption half year 8 | Page7. Statu s regarding maintenance of accounts maintained under supervision of debenture trustee a. Debenture Redemption Reserve/Debenture Redemption/ maintenance of funds as per Companies (Share Capital and Debentures) Rules, 2014 S.N Name of the Issue Type Type of Issue Size ISIN (that is Amount Status of maintenance of DRR (15%/ Details of o. Listed Entity (Public/ entity (in ₹ crores) maturing in outstanding 10% of the amount maturing in the action taken, if Privately (NBFC/ the current year, applicable as per Companies any placed HFC/FI/ FY) (Share Capital and Debentures) listed) Other) Rules, 2014) b. Recovery expense fund S.N Name of the Listed Type of Issue Issue Size/ Value of Any addition in the Details of usage of the funds, Additional remarks o. Entity (including (Public/ Size (in recovery fund Recovery Expense fund if any , during the quarter ISINs) Privately ₹ maintained during the quarter Placed) crores) c. Accounts/ funds to be maintained in case of Municipal Debt Securities S.No. Name of the Type of Issue Issue Size Size/ Value of Fund/account maintained Action taken by debenture Listed Entity (Public/ Privately (in ₹ crores) trustee, if any (in case of Placed) shortfall etc) No lien escrow Interest payment Sinking fund account account account 8. Status of information regarding any default by listed entity and action taken by debenture trustee Name Issue Issue Secured Default of Year Date of Result of the voting (receipt of Date of Date of Date and Date of of the Type size / interest/ of intimating/ consents), if applicable convening enforce details of conclusion listed (Public/ (in ₹ Unsecur redemption default sending the ment of any other of recovery entity Privately crores) ed amount (1st/ notice to Negative Positive Other meeting security actions proceeding (inclu placed (Yes/ No) 2nd/ the consent consent consent of (Filing (Appointm s ding listed) along with 3rd/ ..) debenture for for s, if any debenture with ent of ISIN) the amount holders enforcem signing holders DRT/NC nominee outstanding ent of the ICA LT as director, security applicab joining le) ICA, etc. ) 9 | PageAnnexure C 1. COMPLIANCE CERTIFICATE FOR THE HALF YEAR ENDED SEPTEMBER / MARCH 20.. a) No conflict of interests with other activities The activities other than debenture trusteeship performed by DT are not in conflict with DT activities and appropriate systems and policies have been put in place to protect the interests of debenture holders. b) Change in status or constitution Reporting of changes in status or constitution' of DT (In terms of SEBI Circular No. CIR/MIRSD/10/2011 dated June 20, 2011) c) Other Information i. Details of arrest / conviction of key officials of DT ii. Details of prosecution cases or criminal complaints filed by investors against the DT iii. Details of any fraudulent activity by the employees associated with DT activities and action taken by the DT iv. Details of conviction of any offence involving moral turpitude or any economic offence by employees of DT v. Action taken by the DT on the above issues d) Compliance with registration requirements: Certified that the requirements specified for SEBI registration as DT are fulfilled, the details are as under; i. Net worth (audited) as defined in the Regulations as on FY ended ……… (as per the latest audited financials) ii. Any change in infrastructure since the last report / registration/ renewal iii. Changes in Key personnel during the half year ended……….) Name(s) of the key Appointment / Cessation Date of appointment / Qualification Experience personnel cessation e) Details of deficiencies and non-compliances f) Details of the review of the report by the Board of Directors i. Date of Board Review (DD/MM/YYYY) ii. Observation of the Board of Directors on the deficiencies and non-compliances and corrective measures initiated Certified that we have complied with SEBI (Debenture Trustee) Regulations, 1993, applicable provisions of SEBI (Issue and Listing of Debt Securities) Regulations, 2008, Circulars issued by SEBI and any other laws applicable from time to time except the deficiencies and non- compliances those specifically reported at Section IV (E) above. Name of Compliance Officer Email ID 10 | Page