Date: 2021-12-17Category: Not ApplicableState: Union GovernmentCountry: India
Revision to Operational Circular for issue and listing of Non-convertible Securities, Securitised Debt Instruments, Security Receipts, Municipal Debt Securities and Commercial Paper
Executive Summary:
This circular, issued by SEBI on December 17, 2021, amends the operational circular regarding the issue and listing of Commercial Paper (CP). The changes are based on market feedback and regulatory updates, aiming for uniformity in requirements. The circular is effective immediately.
Key Points / Main Content:
Listing of Commercial Paper (CP):
* Paragraph 4.1 is modified to include details of the current tranche, all credit ratings (including unaccepted ratings) with validity, and a declaration of rating validity at issuance and listing.
* A new paragraph 4.5 states that if an issuer has been in existence for less than three years, the issue is open for subscription only to Qualified Institutional Buyers.
* Paragraph 5.1 is modified to include financial information requirements based on the issuer's existence:
* For issuers in existence for three years or more: Audited limited review half yearly consolidated (wherever available) and standalone financial information (Profit Loss statement, Balance Sheet, and Cash Flow statement) for the last three years, along with the latest available financial results and auditor qualifications (if any).
* For issuers in existence for less than three years: Audited limited review half yearly consolidated (wherever available) and standalone financial information (Profit Loss statement, Balance Sheet, and Cash Flow statement) for the years of existence, along with auditor qualifications (if any).
Impact Analysis:
Issuers of Commercial Paper:
* Impact: Issuers need to comply with the revised disclosure requirements for CP listings, including providing more detailed credit rating information and restricting subscription to Qualified Institutional Buyers if the issuer's existence is less than three years. They also need to adhere to revised financial information disclosure requirements.
* Action Required: Update CP listing procedures to incorporate the new disclosure requirements and ensure compliance with the subscription restrictions for newer issuers.
Recognised Stock Exchanges, Registered Depositories:
* Impact: Exchanges and depositories must ensure that CP listings meet the new requirements.
* Action Required: Update listing processes and systems to accommodate the revised disclosure requirements for CP.
Registered Credit Rating Agencies:
* Impact: CRAs' ratings will be subject to more detailed disclosure requirements in CP listings.
* Action Required: Ensure timely communication of ratings and validity to issuers for accurate disclosure.
Debenture Trustees, Depository Participants, Merchant Bankers, Registrars to an Issue and Share Transfer Agents, Bankers to an Issue:
* Impact: These intermediaries will need to ensure compliance with the updated CP listing requirements in their respective roles.
* Action Required: Update due diligence and procedural checks to align with the new disclosure requirements for CP listings.
Key Entities Referenced
Securities and Exchange Board of India (SEBI): Regulatory body for securities market in India, issuing the circular.
Commercial Paper: A short-term debt instrument issued by companies, the subject of the operational circular revisions.
Nonconvertible Securities: A type of debt security, mentioned in the context of issue and listing procedures.
Securitised Debt Instruments: Debt instruments that have been securitized, mentioned in the context of issue and listing procedures.
Security Receipts: Receipts representing an interest in securitization, mentioned in the context of issue and listing procedures.
Municipal Debt Securities: Debt securities issued by municipalities, mentioned in the context of issue and listing procedures.
SEBI Issue and Listing of Nonconvertible Securities Regulations, 2021: Regulations under which the circular is issued.
Qualified Institutional Buyers: A class of investors to whom issues by issuers with less than three years of existence are restricted.
CIRCULAR
SEBI/HO/DDHS/P/CIR/2021/0692
December 17, 2021
To
Issuers who have listed and/ or propose to list Commercial Paper;
Recognised Stock Exchanges;
Registered Depositories;
Registered Credit Rating Agencies, Debenture Trustees, Depository Participants,
Merchant Bankers, Registrars to an Issue and Share Transfer Agents, Bankers to
an Issue
Madam/ Sir,
Sub: Revision to Operational Circular for issue and listing of Non-convertible
Securities, Securitised Debt Instruments, Security Receipts, Municipal Debt
Securities and Commercial Paper
1. Vide Circular no. SEBI/HO/DDHS/P/CIR/2021/613 dated August 10, 2021, SEBI
consolidated existing procedures pertaining to issue and listing of Non-convertible
Securities, Securitised Debt Instruments, Security Receipts, Municipal Debt Securities
and Commercial Paper.
2. Based on feedback from market participants and recent regulatory changes, in order
to bring about uniformity in requirements, certain amendments are being made to the
said Circular, pertaining to listing of Commercial Paper, as given below:
Chapter XVII – Listing of Commercial Paper
Paragraph 4.1 shall stand modified as follows:
“Details of current tranche including ISIN, amount, date of issue, maturity, all credit
ratings including unaccepted ratings, date of rating, name of credit rating agency, its
validity period, declaration that the rating is valid as at the date of issuance and listing,
details of issuing and paying agent and other conditions, if any.”
Page 1 of 2A new paragraph 4.5 be inserted as follows:
“Where an issue is made by an issuer who has been in existence for less than three
years, a disclosure that the issue is open for subscription only to Qualified Institutional
Buyers.”
Paragraph 5.1 shall stand modified as follows:
“a. Audited/ limited review half yearly consolidated (wherever available) and
standalone financial information (Profit & Loss statement, Balance Sheet and Cash
Flow statement) along with auditor qualifications, if any, for last three years along with
latest available financial results, if the issuer has been in existence for a period of
three years and above; or,
b, Audited/ limited review half yearly consolidated (wherever available) and
standalone financial information (Profit & Loss statement, Balance Sheet and Cash
Flow statement) along with auditor qualifications, if any, pertaining to the years of
existence, if the issuer has been in existence for less than three years.”
3. The provisions of this circular shall come into effect immediately.
4. The Circular is issued in exercise of the powers conferred under Section 11(1) of the
Securities and Exchange Board of India Act, 1992 read with Regulation 55 (1) of the
SEBI (Issue and Listing of Non-convertible Securities) Regulations, 2021 to protect
the interest of investors in securities and to promote the development of, and to
regulate the securities market.
5. This Circular is available at www.sebi.gov.in under the link “LegalCirculars”.
Yours faithfully,
Pradeep Ramakrishnan
General Manager
Department of Debt and Hybrid Securities
+91-22-26449246
pradeepr@sebi.gov.in
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