Public issue threshold for debentures applies across tranches, triggering disclosure, listing and redemption reserve obligations.

An issue of non-convertible debentures structured in multiple tranches was treated as a public issue because the aggregate number of subscribers crossed the statutory threshold of fifty or more persons. On that basis, the obligations applicable to public issues, including disclosure, listing and redemption reserve requirements, applied, and tranche-wise structuring could not change the legal character of the offer. SEBI was also stated to have jurisdiction under the statutory framework governing issue and transfer of securities, as clarified by the cited Supreme Court precedent. Reliance on private placement, trusteeship arrangements and RoC treatment did not displace those statutory obligations.

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Issues: Whether the issue of non-convertible debentures, though structured in multiple tranches, amounted to a public issue attracting the provisions of the Companies Act, 1956 and SEBI regulations, and whether SEBI had jurisdiction to proceed against the company for the alleged non-compliances.

Analysis: The issue was examined on the basis of the number of subscribers and the statutory scheme governing public issues. It was found that an offer to fifty or more persons constitutes a public issue, and the use of multiple tranches could not alter the character of the issue when the aggregate subscribers crossed the statutory threshold. On that footing, the statutory obligations applicable to public issues, including compliance with disclosure, listing and redemption reserve requirements, applied. It was further held that SEBI had jurisdiction under the statutory framework governing issue and transfer of securities, as clarified by the Supreme Court in the cited precedent, and that the company's reliance on private placement, trusteeship arrangements and RoC treatment did not displace those obligations.

Conclusion: The debenture issue was correctly treated as a public issue, SEBI had jurisdiction, and the findings of violation of the Companies Act, 1956 and the SEBI regulations were upheld.

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