A company issuing debt securities through private placement is required to comply with the provisions of section 42 of the Companies Act, 2013 read with the Companies (Prospectus and Allotment of Securities) Rules, 2014.
A private company issuing debt securities through private placement may also get its securities listed on the stock exchange platform with an intent to enhance its credibility. Further, listing of securities brings transparency in the operations of the company. Listed Entities are required to ensure timely compliance by providing information / disclosure to the stock exchange(s) / shareholders as laid down in the Listing Agreement or applicable guidelines under Securities Exchange Board of India (“SEBI”) Regulations.
- High Value Debt Listed Entities: listed entity which has listed its non-convertible debt securities and has an outstanding value of listed non-convertible debt securities of Rupees Five Hundred Crore and above.
- Listed Entity: means an entity which has listed, on a recognized stock exchange(s), the designated securities issued by it or designated securities issued under schemes managed by it, in accordance with the listing agreement entered into between the entity and the recognized stock exchange(s).
- SEBI LODR Regulations 2015: Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.
- SEBI DP Regulations 2018: Securities and Exchange Board of India (Depositories and Participants) Regulations, 2018.
Compliances pursuant to SEBI Regulations:
Following are the mandatory compliances pursuant to SEBI Regulations and circulars/notifications issued thereof to be complied with by the Listed Entities which has listed its privately placed non-convertible debt securities on stock exchanges:
|Regulation||Compliance Details||Nature of Compliance||Due date|
|SEBI LODR Regulations 2015:|
|1||7 (3)||Submission of compliance certificate, duly signed by both the compliance officer of the listed entity and the authorised representative of the share transfer agent.||Annually||Within 30 days from the end of the financial year.|
|2||13 (3)||Statement of Investor Complaints||Quarterly||Within 21 days from the end of quarter.|
|3||14||Payment of listing fees to the stock exchange(s) and custodians||Annually||Within 30 days from the end of financial year.|
|4||Regulation 17, 18, 19, 20||Composition of Board of Directors, Audit Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee||Continuous||—|
|5||Regulation 23(9)||Disclosures of related party transactions||Half Yearly||Within 30 days from the date of publication of results.|
|6||Regulation 24A(1)||Secretarial Audit Report (for listed entity & Indian material subsidiaries)||Annually||To be attached along with the report of Board of Directors.|
|7||Regulation 24A(2)||Secretarial Compliance Report||Annually||Within 60 days from end of each financial year.|
|8||Regulation 27(2)||Corporate Governance Report||Quarterly||Within 21 days from end of Quarter.|
|9||50(1)||Prior intimation of the Board Meeting in which any of the proposal is considered:|
an alteration in the form or nature of non-convertible securities that are listed on the stock exchange or in the rights or privileges of the holders thereof;an alteration in the date of the interest/ dividend/ redemption payment of non-convertible securities; financial results viz. quarterly or annual, as the case may be; fund raising by way of issuance of non-convertible securities; or any matter affecting the rights or interests of holders of non-convertible securities.
|Event Based||atleast 2 working clear days prior to the date of event.|
|10||50(2)||The listed entity shall intimate the stock exchange, in case of: |
any annual general meeting or extraordinary general meeting that is proposed to be held for obtaining shareholder approval for the proposals at clauses (c) and (d) under sub-regulation (1) of this regulation;any meeting of the holders of non-convertible securities in relation to the proposal at clause (e) of sub-regulation (1) of this regulation.
|Annual||Intimate not later than the date of commencement of dispatch of notices.|
|11||51(1)||All information having bearing on the performance/ operation of the listed entity, price sensitive information or any action that shall affect payment of interest or dividend or redemption of non-convertible securities.||Event based||Promptly inform (as soon as reasonably possible but not later than twenty-four hours from the date of occurrence of the event or receipt of information) to the stock exchange(s).|
|51 (2)||Disclosures as specified in Part B of Schedule III of SEBI LODR Regulation 2015.||Event based|
|13||52(1)||Submit audited/un-audited quarterly financial results along with Limited Review report/Audit report to stock exchange.||Quarterly/Annual||Within 45 or 60 days from the end of the quarter or the financial year respectively.|
|14||52(2)||Statement of Assets and Liabilities and cash flow statements for the half year ended.||Half-yearly||Along with submission of financials.|
|15||52(3)||Statement of Impact on Audit qualification for audit report of Modified opinion / Declaration of unmodified Opinion||Quarterly||Along with submission of financials.|
|16||52(4)||Disclosure along with Financial Statementsdebt-equity ratioDebt service coverage ratioInterest service coverage rationoutstanding redeemable preference shares (quantity and value)capital redemption reserve/debenture redemption reservenet worthnet profit after taxearnings per sharecurrent ratiolong term debt to working capital;bad debts to Account receivable ratio;current liability ratio;total debts to total assets;debtors turnoverinventory turnover;operating margin (%);net profit margin (%);sector specific equivalent ratios, as applicable||Quarterly||Along with financial statements|
|17||52(7)||Statement indicating the utilization of issue proceeds of non-convertible securities, which shall be continued to be given till such time the issue proceeds have been fully utilised or the purpose for which these proceeds were raised has been achieved.||Quarterly||Within 45 days from the end of quarter.|
|18||52(8)||Publication of financial results in Newspaper||Quarterly||Within 2 calendar days from the conclusion of meeting of Board of Directors for approval.|
|19||53||Annual Report||Annually||Not later than the commencement of dispatch to its shareholders.|
|20||54||Asset Cover Certificate disclosing the extent and nature of security created and maintained with respect to its secured listed non-convertible debt securities.||Quarterly||Along with financial statements|
|21||55||Each rating obtained with respect to non-convertible securities||Annual||at least once a year.|
|22||57(1)||Certificate regarding timely payment of interest or principal obligations to stock exchange.||Event Based||Within 2 days of the interest or principal or both paid.|
|23||57(5)||Certificate confirming the payment and details of unpaid of interests/dividend/principal obligations which were due in the quarter||Quarterly||Within 7 working days from the end of quarter.|
|24||60||Notice in advance to the recognised stock exchange(s) of the record date.||Event Based||Atleast 7 working days prior to record date.|
|25||61A (1)||Unclaimed interest/ dividend/ redemption amount within thirty days from the due date of interest/ dividend / redemption payment to be transferred to escrow account.||Event Based||Within 7 days from the expiry of said thirty days.|
|26||61A (2)||Unclaimed interest/ dividend/ redemption from escrow account to be transferred to IEPF.||Event based||—|
|27||62 (4)||Maintenance and updation of functional websites by the issuer.||Ongoing||atleast 2 working days from the date of such change in content.|
|SEBI DP Regulations 2018|
|28||76||Reconciliation of Share Capital Audit Report.||Quarterly||Within 30 days from end of Quarter.|
|29||—||Disclosure of large corporate entity||Annually||Within 30 days from beginning of Financial Year.|
Note: Compliances mentioned in regulation 17 to 27 shall be applicable only to High Value Debt Listed Entities.
A debt listed security holds moderate risk with no voting rights to its debt security holder but create a more liability on the Company. Listing gives an added collateral value to the securities held by investors, for banks in making loans and advances prefer a security quoted on the stock exchange(s).
Non-compliances of the listing agreement or applicable regulations have an impact in the form of quantifiable penalties and in some cases, it forces for delisting of securities by the stock exchange(s). Hence, it is very important for a listed company to ensure timely compliances of the applicable enactments/provisions/guidelines.
Author: Nisha Jhawar, Associate.
Disclaimer: The content of this article is intended to provide a general guide to the subject matter and that the same shall not be treated as legal advice. For any queries, the author can be reached at firstname.lastname@example.org