TaxTMI 
TaxTMI 
Master Circular for Debenture Trustees (DTs)
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....orporate applicable provisions of existing circulars issued by other Departments of SEBI relevant to Debenture Trustees. Yours faithfully, Surabhi Gupta Deputy General Manager Phone No. 022-26449315 Email id: [email protected] Table of Contents Section 1: Terms of Registration 1.1 Online Registration Mechanism for Debenture Trustees 1.2 Digital Mode of Payment 1.3 Grant of prior approval for change in control to Debenture Trustees 1.4 Surrender of Certificate of Registration 1.5 Designated e-mail ID for regulatory communication with SEBI Section 2: Obligations, Disclosures and Reporting requirements 2.1 Contents of Trust Deed 2.2 Sharing of information regarding Issuer Companies between Debenture Trustees and Credit Rating Agencies 2.3 Monitoring of Interest/ Principal repayment and sharing of such information with Credit Rating Agencies by Debenture Trustees 2.4 Dissemination of Information on Debentures 2.5 Centralized Database for Corporate Bonds/ Debentures 2.6 Periodic Reporting by the Debenture Trustees Section 3: Redressal of Investor Grievances 3.1 Exclusive e-mail ID for redressal of Investor Complaints R....
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....ount such direct credit in the SEBI account, it has been decided that Debenture Trustees shall provide the information as mentioned in Annexure to SEBI once the payment is made. 1.2.4 The above information should be emailed to the respective department(s) as well as to Treasury & Accounts division at [email protected]. Annexure Date Department of SEBI Name of Intermediary/ Other Entities Type of Intermediary SEBI Registration Number (if any) PAN Amount (in) Purpose of Payment (including the period for which payment was made e.g. quarterly, annually) Bank name and Account number from which payment is remitted UTR No 1.3 Grant of prior approval for change in control to Debenture Trustees ^SEBI Circular CIR/MIRSD/14/2011 dated August 02, 2011. 1.3.1 Debenture Trustees are required to obtain prior approval of SEBI in case of change in control. With a view to expedite the process of granting prior approval, SEBI has adopted a 'single window clearance at SEBI', for the Debenture Trustees in case of their having multiple registrations with SEBI. 1.3.2 Therefore, in case a Debenture Trustee holds multiple registrations with SEBI, it shal....
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...., 2008 in the prescribed format placed as Annexure. 1.4.3 In all cases of transfer of business or client accounts to another registered Debenture Trustee, the clients shall not be subjected to any additional cost. Annexure Letter of Representation for Debenture Trustee To Securities and Exchange Board of India Dear Sir, Sub: Surrender of Certificate of Registration as Debenture Trustee, Registration No. __ . 1. We hereby surrender our certificate of registration as Debenture Trustee. 2. We enclose the original certificate of registration (or indemnity in case the certificate is lost or stolen) for cancellation. 3. We hereby confirm that: a. no complaint /disciplinary proceeding is pending against us; b. no investigation / inquiry by SEBI is pending against us with respect to our activities as a Debenture Trustee; c. as on date of application, we have paid all fees; d. we shall continue to be liable for all liabilities/obligations (including monetary penalties, if any) for violations, if any, of the provisions of the SEBI Act and the SEBI (Debenture Trustee) Rules and Regulations, 1993 that have taken place before our surrender of certificat....
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.... with the provisions of the Regulations. It may be noted that such clauses in the existing or new trust deeds shall not be applicable and shall stand null and void. 2.2 Sharing of information regarding Issuer Companies between Debenture Trustees and Credit Rating Agencies^ Circular CIR/MIRSD/3/2013 dated March 15, 2013 2.2.1 SEBI (Debenture Trustee) Regulations, 1993 require the Debenture Trustees (DTs) to share information regarding the issuer companies that are their clients, with Credit Rating Agencies (CRAs). The purpose of the Regulations is to enable Credit Rating Agencies to perform their obligations effectively. 2.2.2 Debenture Trustees have also expressed the need to receive relevant information on issuer companies from Credit Rating Agencies. 2.2.3 In consultation with Debenture Trustees and Credit Rating Agencies, it has been decided that Debenture Trustees and Credit Rating Agencies shall share information with each other as specified in the Annexure. Debenture Trustees and Credit Rating Agencies shall share any other information from time to time in respect of issues/issuer companies which would help them in effective discharge of their duties. 2.2.4 Fur....
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....ave adequate systems to ascertain the status of payment of interest/ principal by issuer companies on due dates in timely manner and efficiently share such information with the Credit Rating Agencies in order to comply with the abovementioned provisions, which shall include the following: i) The Debenture Trustees shall, at least 7 days prior to the due date of interest/ principal payment, seek ISIN-wise information from issuer companies under intimation to Credit Rating Agencies advising them to confirm the status of payment of interest/ principal on or before the due date. ii) If the issuer company confirms the status of payment or where no information is received from the issuer company on or before the due date, the Debenture Trustees shall accordingly provide ISIN-wise information to the Credit Rating Agencies latest by one day after such due date which shall state the following: • Information about payment made on or before the due date or; • Information about delay/ default in payment or; • No information forthcoming from the issuer company on the payment status. iii) In cases where the Credit Rating Agencies ....
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....e Debenture Trustees by due date or such information is not disclosed by the issuer company on the stock exchange website, then, the Debenture Trustees shall make reference to SEBI accordingly and disclose the non-availability of such information on their website. It is further clarified that failure to make such reference to SEBI in this regard and non-disclosure on its website shall be considered as aiding and abetting the issuer company in suppression of material information and may attract provisions of Section 12A of the Securities and Exchange Board of India Act, 1992 and SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003. 2.4 Dissemination of Information on Debentures ^SEBI Circular No. SEBI/HO/MIRSD/MIRSD3/CIR/P/2017/ 72 dated June 30, 2017. 2.4.1 The -Debenture Trustees shall disclose the information to the investors and the general public by issuing a press release regarding default by Issuer Company to pay interest on debentures or redemption amount, failure to create a charge on the assets and revision of rating assigned to the debentures. Further, such information shall also be placed on the website of the ....
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....rustees are required to furnish Half Yearly Report to SEBI in the format placed as Annexure in electronic form only (one file in pdf format and the other in excel format). The Compliance Officer of the -Debenture Trustee shall send the report to SEBI at [email protected] on half yearly basis within three months of the expiry of the corresponding half year. 2.6.2 The Debenture Trustees shall also report compliance of Regulation 15 (1) (c) of SEBI (Debenture Trustee) Regulations, 1993, and the provisions mentioned under Paras 2.3 and 2.4 in the Half Yearly Reports.^ Circular No. SEBI/HO/MIRSD/MIRSD3/CIR/P/2017/ 72 dated June 30, 2017 2.6.3 The board of directors of Debenture Trustee shall review the report and record its observations on (i) the deficiencies and non-compliances, and (ii) corrective measures initiated to avoid such instances in future. ANNEXURE - FORMAT OF HALF - YEARLY REPORT REPORT OF DEBENTURE TRUSTEES FOR THE HALF YEAR ENDED MARCH/ SEPTEMBER 20.. NAME: REGISTRATION NO.: DATE OF REGISTRATION (in dd/mm/yy) SECTION I: ACTIVITIES A. Details of Debenture Issues (Public (P) / Rights (R)/ Privately Placed Listed (PPL) / Privately Placed Unlisted (P....
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....etails of action taken * Type of Default: 1. Non-payment of interest; 2. Non-payment of redemption; 3. Delay in payment of interest/redemption; 4. Any other (like non-creation of security) Name of Compliance Officer Email ID Section IV-COMPLIANCE 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. Ac....
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....o. CIR/ OIAE/ 1/ 2014 dated Dec 18, 2014 3.2.1 SEBI launched a centralized web based complaints redress system 'SCORES' in June 2011. The purpose of SCORES is to provide a platform for aggrieved investors, whose grievances, pertaining to securities market, remain unresolved by the concerned listed company or SEBI registered Debenture Trustees after a direct approach. SCORES also provides a platform, overseen by SEBI through which the investors can approach the concerned listed company or SEBI registered Debenture Trustees in an endeavor towards speedy redressal of grievances of investors in the securities market. It would, however, be advisable that investors may initially take up their grievances for redressal with the concerned listed company or SEBI registered Debenture Trustees, who are required to have designated persons/ officials for handling issues relating to compliance and redressal of investor grievance. 3.2.2 The salient features of SCORES are: i) Centralized database of all complaints. ii) Online movement of complaints to the concerned SEBI registered Debenture Trustees iii) Online upload of Action Taken Reports (ATRs) by the concerned ....
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....ding against them. 3.2.9 Failure by Debenture Trustees to file ATR under SCORES within thirty days of date of receipt of the grievance shall not only be treated as failure to furnish information to SEBI but shall also be deemed to constitute non-redressal of investor grievance. 3.2.10 The Board of Directors/ Proprietor/ Partner of the Debenture Trustees shall be responsible for ensuring compliance with the provisions of this Circular. FORM - B AUTHENTICATION FOR SCORES BY SEBI REGISTERED DEBENTURE TRUSTEES 1. Name of SEBI registered Debenture Trustee: 2. Nature of registered intermediary: 3. SEBI registration no. 4. PAN of SEBI registered Debenture Trustee: 5. Date of SEBI registration of Debenture Trustee: 6. SEBI registration valid up to: 7. Office address of the intermediary: 8. The details of the concerned person of the Debenture Trustee to whom User id and password will be sent: Name: Designation: Email id: (corporate and permanent email id) Mobile no. Telephone No. : Fax No. : Place: Signature: Date: Name: Designation: Seal: Note: A scanned copy to be sent by email to scor....
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....nexure). These principles shall be followed by all intermediaries registered with SEBI. 4.1.5 The Debenture Trustees desirous of outsourcing their activities shall not, however, outsource their core business activities and compliance functions. A few examples of core business activities may be - execution of orders and monitoring of trading activities of clients in case of stock brokers; dematerialization of securities in case of depository participants; investment related activities in case of Mutual Funds and Portfolio Managers. Regarding Know Your Client (KYC) requirements, the Debenture Trustees shall comply with the provisions of SEBI {KYC (Know Your Client) Registration Agency} Regulations, 2011 and Guidelines issued thereunder from time to time. 4.1.6 The Debenture Trustees shall be responsible for reporting of any suspicious transactions / reports to FIU or any other competent authority in respect of activities carried out by the third parties. Annexure PRINCIPLES FOR OUTSOURCING FOR INTERMEDIARIES 1. An intermediary seeking to outsource activities shall have in place a comprehensive policy to guide the assessment of whether and how those activities can be ap....
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....to act as the third party, systems shall be put in place to have an arm's length distance between the intermediary and the third party in terms of infrastructure, manpower, decision-making, record keeping, etc. for avoidance of potential conflict of interests. Necessary disclosures in this regard shall be made as part of the contractual agreement. It shall be kept in mind that the risk management practices expected to be adopted byan intermediary while outsourcing to a related party or an associate would be identical to those followed while outsourcing to an unrelated party. 2.3 The records relating to all activities outsourced shall be preserved centrally so that the same is readily accessible for review by the Board of the intermediary and / or its senior management, as and when needed. Such records shall be regularly updated and may also form part of the corporate governance review by the management of the intermediary. 2.4 Regular reviews by internal or external auditors of the outsourcing policies, risk management system and requirements of the regulator shall be mandated by the Board wherever felt necessary. The intermediary shall review the financial and operational ca....
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....5. Outsourcing relationships shall be governed by written contracts / agreements / terms and conditions (as deemed appropriate) {hereinafter referred to as "contract"} that clearly describe all material aspects of the outsourcing arrangement, including the rights, responsibilities and expectations of the parties to the contract, client confidentiality issues, termination procedures, etc. 5.1 Outsourcing arrangements shall be governed by a clearly defined and legally binding written contract between the intermediary and each of the third parties, the nature and detail of which shall be appropriate to the materiality of the outsourced activity in relation to the ongoing business of the intermediary. 5.2 Care shall be taken to ensure that the outsourcing contract: a) clearly defines what activities are going to be outsourced, including appropriate service and performance levels; b) provides for mutual rights, obligations and responsibilities of the intermediary and the third party, including indemnity by the parties; c) provides for the liability of the third party to the intermediary for unsatisfactory performance/other breach of the contract ....
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.... plans shall be separately developed for each outsourcing arrangement, as is done in individual business lines. 6.2 An intermediary shall take appropriate steps to assess and address the potential consequence of a business disruption or other problems at the third party level. Notably, it shall consider contingency plans at the third party; co-ordination of contingency plans at both the intermediary and the third party; and contingency plans of the intermediary in the event of non-performance by the third party. 6.3 To ensure business continuity, robust information technology security is a necessity. A breakdown in the IT capacity may impair the ability of the intermediary to fulfill its obligations to other market participants/clients/regulators and could undermine the privacy interests of its customers, harm the intermediary's reputation, and may ultimately impact on its overall operational risk profile. Intermediaries shall, therefore, seek to ensure that third party maintains appropriate IT security and robust disaster recovery capabilities. 6.4 Periodic tests of the critical security procedures and systems and review of the backup facilities shall be undertaken by the....
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....umours can do considerable damage to the normal functioning and behaviour of the market and distort the price discovery mechanisms. 4.2.3 In view of the above facts, Debenture Trustees are directed that: i) Proper internal code of conduct and controls should be put in place. ii) Employees/temporary staff/voluntary workers etc. employed/working in the Offices of SEBI registered Debenture Trustees do not encourage or circulate rumours or unverified information obtained from client, industry, any trade or any other sources without verification. iii) Access to Blogs/Chat forums/Messenger sites etc. should either be restricted under supervision or access should not be allowed. iv) Logs for any usage of such Blogs/Chat forums/Messenger sites (called by any nomenclature) shall be treated as records and the same should be maintained as specified by the respective Regulations which govern the concerned intermediary. v) Employees should be directed that any market related news received by them either in their official mail/personal mail/blog or in any other manner, should be forwarded only after the same has been seen and approved by the concer....
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....e that their personal interest does not, at any time conflict with their duty to their clients and client's interest always takes primacy in their advice, investment decisions and transactions; v) make appropriate disclosure to the clients of possible source or potential areas of conflict of interest which would impair their ability to render fair, objective and unbiased services; vi) endeavor to reduce opportunities for conflict through prescriptive measures such as through information barriers to block or hinder the flow of information from one department/ unit to another, etc.; vii) place appropriate restrictions on transactions in securities while handling a mandate of issuer or client in respect of such security so as to avoid any conflict; viii) not deal in securities while in possession of material non - published information ix) not to communicate the material non-published information while dealing in securities on behalf of others x) not in any way contribute to manipulate the demand for or supply of securities in the market or to influence prices of securities; xi) not have an incentive structure that encoura....