TaxTMI 
TaxTMI 
Securities and Exchange Board of India (Issue and Listing of Debt Securities by Municipalities) (Amendment) Regulations, 2019.
X X X X Extracts X X X X
X X X X Extracts X X X X
....of Debt Securities by Municipalities) Regulations, 2015, (I) In the title, the words "Issue and Listing of Debt Securities by Municipalities" shall be substituted by the words "Issue and Listing of Municipal Debt Securities". (II) In the opening para, for the words "debt securities by municipalities", the words, "municipal debt securities" shall be substituted; (III) In regulation 1, in sub-regulation (1), the words "Issue and Listing of Debt Securities by Municipalities" shall be substituted by the words "Issue and Listing of Municipal Debt Securities". (IV) In regulation 2, in sub-regulation (1), clause (d) to (q) shall be substituted by the following clauses, namely,- "(d) "constitution document" shall mean the Central or State Act, Rules, Regulations or charter under which the issuer has been established or incorporated or notified; (e) "credit enhancement" shall mean any arrangement including subordination, insurance, letter of credit, over-collateralization, undertakings, guarantees, letter of comfort etc.; (f) "designated stock exchange" shall mean a recognized stock exchange in which securities of an issuer are listed or proposed to be listed and which ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d by the Central Government from time to time; (p) "no lien escrow account" shall mean the account created for the specific purpose of receiving and disbursing funds towards discharge of contractual obligations; (q) "offer document" shall mean any document including an electronic document described or issued as an offer document or prospectus or shelf offer document and include any document or advertisement, whereby the subscription to municipal debt securities are invited by the issuer from public; (r) "placement memorandum" shall mean any document including an electronic document which is serially numbered and copies of which are circulated only to select investors and is related to an issue made on private placement basis; (s) "private placement" shall mean any offer of municipal debt securities or invitation to subscribe to municipal debt securities to a select group of persons by an issuer through issue of a placement memorandum to not more than two hundred persons in a financial year, which shall not intend to result in, directly or indirectly, the municipal debt securities becoming available for subscription or purchase by persons other than those receiving....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and listing of municipal debt securities by an issuer by way of public issuance; and (b) issuance and listing of municipal debt securities by an issuer on private placement basis which are intended/disclosed to be listed on a recognised stock exchange." (VII) In Chapter II, in the Chapter heading, after the word "ELIGIBILITY", the words and symbol, "AND CONDITIONS", shall be inserted. (VIII) In Chapter II, - (i) before regulation 4, the following regulation shall be inserted, namely, - "Reference date 3A. Unless otherwise provided in these Regulations, an issuer making an offer of municipal debt securities shall satisfy the conditions of these Regulations as on the date of filing of the draft offer document or preliminary placement memorandum with the Board and also as on the date of filing the offer document or placement memorandum with the Board or upon registering the offer document or placement memorandum with the Registrar of Companies, as the case may be." (ii) regulation 4 shall be substituted by the following regulation, namely,- "Eligible issuers. 4. No issuer shall be eligible to issue municipal debt securities under these regulations, unless th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed from more than one credit rating agency, all the ratings, including the unaccepted ratings, shall be disclosed in the offer document or placement memorandum, as applicable. Dematerialisation 4C. The issuer shall enter into an arrangement with a depository registered with the Board for dematerialisation of the municipal debt securities that are proposed to be issued, in accordance with the Depositories Act, 1996, rules and regulations made thereunder. Debenture trustee 4D. The issuer shall appoint a debenture trustee registered with the Board in accordance with the provisions of the Securities and Exchange Board of India (Debenture Trustees) Regulations, 1993. Mandatory Listing 4E. (1) The issuer shall make an application for listing to one or more recognised stock exchanges in the manner specified by the Board. (2) In case the issuer fails to obtain listing or trading permission from any of the recognized stock exchanges where the municipal debt securities were proposed to be listed, it shall refund the entire monies received within seven days of receipt of intimation from stock exchange or in case of multiple stock exchange(s) within seven days from the ear....
X X X X Extracts X X X X
X X X X Extracts X X X X
....orporate to which the Companies Act, 2013 applies, the issuer and the lead manager shall ensure that the draft offer document and the offer document also contain the disclosures as mandated by the Companies Act, 2013 and the Companies (Prospectus and Allotment of Securities) Rules, 2014. (3) The lead manager(s) shall exercise due diligence and satisfy themselves about all aspects of the issue including the veracity and adequacy of disclosures in the draft offer document and the offer document." (iii) after regulation 6 and before regulation 7, the following regulation shall be inserted, namely, - "Appointment of Merchant Banker and other intermediaries 6A. (1)The issuer shall appoint one or more merchant bankers, which are registered with the Board, as lead manager(s) to the issue. (2) Where the issue is managed by more than one lead manager, the rights, obligations and responsibilities, relating to disclosures, allotment, refund and underwriting obligations among other things, if any, of each lead manager shall be predetermined and be disclosed in the draft offer document and the offer document. (3) The issuer shall, in consultation with the lead manager(s....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the date of filing the draft offer document with such exchange and shall be available for download in PDF / HTML formats. (5) The draft offer document shall also be displayed on the website of the issuer, lead manager(s) and the stock exchanges where the municipal debt securities are proposed to be listed. (6) The lead manager shall ensure that the draft offer document specifies the names and contact details of the compliance officer of the lead manager, the officer concerned and the project officer, wherever applicable, of the issuer including their postal and email address, telephone and fax numbers. (7) The lead manager shall after expiry of the period stipulated in sub-regulation (4) file with the Board the details of the comments received by them or the issuer from the public in respect of the draft offer document, during the period stipulated in sub-regulation (4), alongwith the consequential changes, if any, that are required to be made in the draft offer document. (8) If the Board specifies any changes or issues observations, the issuer and lead manager(s) shall carry out such changes in the draft offer document and shall submit to the Board the updated draft o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....de copies of the offer document to the public as and when requested and may charge a reasonable sum for providing a copy of the same." (v) regulation 8, shall be substituted by the following regulation, namely, - "Period of subscription 8. (1) Except as otherwise provided in these regulations, public issue of municipal debt securities shall be kept open for at least three working days. (2) The issuer may extend the bidding period disclosed in the offer document, in case of force majeure, banking strike or similar circumstances, for a minimum period of three working days." (vi) in regulation 9, sub-regulation (5) shall be omitted. (vii) in regulation 9, in sub-regulation (6), the words "revenue bonds" shall be substituted by the words, "municipal debt securities". (viii) in regulation 10, including the heading to the regulation, the words, "abridged prospectus" wherever found, shall be substituted by the words "term sheet". (ix) in regulation 10, the word, "prospectus" shall be substituted by the words "offer document". (x) in regulation 10, the word, "lead merchant banker" shall be substituted by the words "lead manager". (xi) in regulation 10, in sub-....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y the following regulation, namely,- "Listing on private placement basis 14. An issuer may list its municipal debt securities issued on private placement basis through placement memorandum." (ii) Regulation 15 shall be substituted by the following regulations, namely,- "Preliminary Placement Memorandum 14A (1) Prior to making a private placement of municipal debt securities which are proposed to be listed, the issuer shall file the preliminary placement memorandum with the Board and stock exchange(s) through the merchant banker registered with the Board: (2) The merchant banker to the issue shall submit the following to the Board along with the preliminary placement memorandum,- (a) disclosures as specified in Schedule I and Schedule IA of these regulations; and (b) a due diligence certificate as per Form A of Schedule II. (3) The Board may issue observations, if any, on the preliminary placement memorandum within fifteen days from the later of the following dates: a) the date of receipt of the preliminary placement memorandum under sub-regulation (1); or b) the date of receipt of satisfactory reply from the issuer and/or merchant banker to t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ght of the circumstances under which they are made" shall be omitted. (d) in sub-regulation (2), the words "abridged prospectus" shall be substituted by the words "term sheet"; (e) after the sub-regulation (2), the following sub-regulation shall be inserted, namely,- "(3) The offer document or placement memorandum shall contain all material disclosures which are true, correct and adequate to enable the applicants to take an informed investment decision". (v) after regulation 18 and before regulation 19, the following regulations shall be inserted, namely,- "Utilization of issue proceeds. 18A. (1) The funds raised from issue of municipal debt securities shall be used only for the purposes indicated under the objects stipulated in the offer document or placement memorandum. (2) Where the proceeds of the issue are earmarked for a defined project or a set of projects, prior requisite approvals, if applicable shall be obtained from the concerned authorities. (3) The issuers shall maintain a bank account in which the amount raised from the issue shall be immediately transferred after the closure of the issue and such amount shall only be utilised for the indicated....
X X X X Extracts X X X X
X X X X Extracts X X X X
....c) indemnifying the debenture trustees or the issuer for loss or damage caused by their act of negligence or commission or omission. (4) The issue proceeds shall not be utilised until the Trust deed is executed" (viii) regulation 21 shall be substituted by the following regulation, namely,- "Redemption and roll-over. 21. (1) The issuer shall redeem the municipal debt securities in terms of the offer document or placement memorandum. (2) Where the issuer desires to roll-over the municipal debt securities issued, it shall do so only upon passing of a special resolution to that effect and give twenty one days' notice of the proposed roll over to the holders of municipal debt securities: Provided that, if the holders of municipal debt securities do not provide consent for the proposed roll over within the notice period, the issuer shall redeem the municipal debt securities of such holders. (3) The notice referred to in sub- regulation (2) shall contain disclosures with regard to credit rating and the rationale for roll-over. (4) The issuer shall, prior to sending the notice to holders of municipal debt securities, file a copy of the notice and proposed re....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... (2) Where the issuer is a body corporate to whom the Companies Act, 2013 applies, one-third of its Board shall comprise of independent directors, as defined in section 149 of the Companies Act, 2013. (3) Any change in rating shall be promptly disseminated in such manner as the stock exchange where such securities are listed may determine from time to time. (4) The issuer, the respective debenture trustees, and stock exchanges shall disseminate all information and reports regarding municipal debt securities including compliance reports filed by the issuers and the debenture trustees, to the investors and the general public by placing them on their websites. (5) The information referred to in sub-regulation (3) shall also be placed on the websites of the debenture trustee, the issuer and the stock exchanges." (ii) regulation 24 shall be substituted by the following regulation, namely,- "Accounting and audit. 24. (1) An issuer shall prepare accounts in any of the manner specified in clause (b) of regulation 4: Provided that in case the Issuer is a body corporate to which the Companies Act, 2013 applies, the accounts shall be prepared in accordance with sectio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rvise the implementation of the obligations cast in terms of provisions of these regulations." (ii) in regulation 27, shall be substituted by the following, namely, - "Obligations of the issuer and merchant banker. 27. (1) The issuer shall disclose all the material facts in the offer documents issued or distributed to the public and shall ensure that all the disclosures made in the offer document are true, fair and adequate and there is no mis-leading or untrue statements or mis-statement in the offer document. (2) The merchant banker(s) shall verify and confirm that the disclosures made in the offer documents are true, fair and adequate and ensure that the issuer is in compliance with these regulations. (3) The merchant banker(s) shall ensure that all transaction specific disclosures required in Schedule I of these regulations are complied with: Provided that where the issuer is a body corporate to which the Companies Act, 2013 applies, the merchant banker(s) shall also ensure that the disclosures under Companies Act, 2013 and rules made thereunder are complied with. (4) The issuer shall treat the applicants in a public issue of municipal debt securities in a ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....owing regulations shall be inserted, namely, - "Power to relax strict enforcement of Regulations 30. The Board may, in the interest of investors or for the development of the securities market, relax the strict enforcement of any requirement of these regulations, if the Board is satisfied that, - (a) the requirement is procedural or technical in nature; or (b) the requirement may cause undue hardship to investors; or (c) the disclosure requirement is not relevant for a particular industry or class of issuers; or (d) the non-compliance was caused due to factors beyond the control of the issuer ;or (e) such relaxation will be in the interest of securities market." (XIX) Schedule I shall be substituted by the following Schedule, namely- "SCHEDULE I [See regulations 6 and 27] DISCLOSURES IN THE OFFER DOCUMENT AND PLACEMENT MEMORANDUM All disclosures specified under this schedule shall be made in the draft offer document or the preliminary placement memorandum or offer document or placement memorandum, as applicable. 1. Instructions: (a) All information shall be relevant and updated. The source and basis of all statements and claims shall....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uer (j) Arrangers, if any, of the instrument (k) Debenture trustee of the issue (l) Registrar to an issue (m) Credit Rating Agency (-ies) of the issue and (n) Auditors of the Issuer (o) Names, addresses, telephone numbers, contact person, website addresses and e-mail addresses of the lead manager(s), registrars to the issue, bankers to the issue, brokers to the issue and syndicate member(s); alongwith URL of SEBI website listing out the details of self-certified syndicate banks, registrar to the issue and depository participants, etc., if applicable. (p) Names, addresses, telephone numbers and e-mail addresses of the Company Secretary, legal advisor, underwriters and bankers to the issuer. (q) Names of the debenture trustee(s) shall be mentioned with a statement to the effect that the debenture trustee(s) has given his consent to the Issuer for his appointment. This also needs to be mentioned in all subsequent communications sent to the holders of debt securities. (r) Investor grievances redressal mechanisms 4. About the issuer and Capital structure of the issuer: (a) The constitution document (b) Details of the capital structure of the issuer, i....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (d) Legal Advisors (e) Advertising and marketing expenses (f) Regulators including stock exchanges (g) Printing and distribution of issue stationary (h) Others, if any (to be specified). 6. Tax Benefits: Any special tax benefits (under direct and indirect tax laws) for the issuer and its investors 7. Issue specific Information: (a) Issue/instrument specific regulations - relevant details (Relevant Act, RBI guidelines, etc.). (b) The detailed rating rationale (s) adopted (not older than one year on the date of opening of the issue)/ credit rating letter issued (not older than one month on the date of opening of the issue) by the rating agencies shall be disclosed. Names of all the credit rating agencies from which credit rating including unaccepted rating has been obtained. (c) Credit Enhancement Mechanisms if any, with complete details, if any. (d) Names of all the recognised stock exchanges where the debt securities are proposed to be listed clearly indicating the designated stock exchange. (e) Additional interest to be paid, above the Coupon Rate, in case of default in payment of Interest and/or principal redemption on the due dates (f) Pen....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Final Cash / Bank balance Loan repayment from sinking fund Initial Sinking fund balance Change in sinking fund Final sinking fund balance Total debt Ratio of Total Expenditure /Total Revenue Cash surplus / total revenue Ratio of Debt Service / Total Revenue II. Details of top five revenue sources for the previous three years Revenue Receipt type Actual Actual Actual FY FY FY XYZ 1 XYZ 2 XYZ 3 XYZ 4 XYZ 5 III. Details of property tax collection Particulars Demand Raised Collections Overall Collection ratio Current Collection ratio Arrears Current Total Curren....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Pending litigations and material developments: Pending Litigations involving the issuer/ its directors/ promoters/ subsidiaries: (i) All criminal proceedings; (ii) All actions by regulatory and statutory authorities; (iii) Disciplinary action including penalty imposed by SEBI or stock exchanges against the promoters during the previous five financial years including outstanding action; (iv) Claims related to direct and indirect taxes, in a consolidated manner, giving the number of cases and total amount; (v) Other pending litigation - As per the policy of materiality defined by the Board of Directors of the Issuer and disclosed in the offer document/placement memorandum. (b) Outstanding dues to creditors: (i) Based on the policy on materiality defined by the Board of Directors of the Issuer, details of creditors which include the consolidated number of creditors and the aggregate amount involved (ii) Consolidated information on outstanding dues to micro, small and medium enterprises, separately giving details of number of cases and amount involved; (iii) Complete details about outstanding dues to material creditors along with the name and amount invol....
X X X X Extracts X X X X
X X X X Extracts X X X X
....teps for completion of the necessary formalities for listing and commencement of trading at all stock exchanges where the securities are to be listed are taken within the period specified by the Board; (d) Declaration signed by the Mayor and Commissioner of the concerned Municipal Body stating that the offer document/placement memorandum contains true, fair and adequate information to enable investors to make a well informed decision regarding their investment in the proposed issue. (e) Declaration signed by the Director(s) of the Issuer, if it is a body corporate to which the Companies Act, 2013 applies, stating that offer document/placement memorandum contains true, fair and adequate information to enable investors to make a well informed decision making regarding their investment in the proposed issue. (f) a statement to be given by the Board of the Issuer or Standing Committee thereof that all monies received out of the issue shall be transferred to a separate bank account. (g) the details of all utilized and unutilised monies out of the monies collected in the previous issue made by way of public offer shall be disclosed and continued to be disclosed in the balance....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ors' (g) Summary table of contingent liabilities and a cross-reference to contingent liabilities of the issuer as disclosed in the restated financial statements. (h) Summary of related party transactions for the previous three years and cross-reference to related party transactions as disclosed in financial statements. (i) Details of escrow payment mechanism for the repayment of the interest/principal. Summary term sheet shall be provided which shall include following information (where relevant) pertaining to the issue of municipal debt securities (or a series thereof) and any other substantial information deemed relevant:- Security name Issuer Type of instrument Seniority Mode of issue Eligible investors Listing ( including name of the stock exchange(s) where it would be listed and the timeline for listing) Rating of the instrument Issue size Option to retain oversubscription (amount) Objects of the issue Details of the utilization of the proceeds Coupon rate Taxable/tax free S....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... memorandum filed with the Board is in conformity with the documents, materials and papers which are material to the issue; (b) all material legal requirements relating to the issue as specified by the Board, the Central Government and any other competent authority in this behalf have been duly complied with; and (c) the material disclosures made in the draft offer document/preliminary placement memorandum are true and adequate to enable the investors to make a well informed decision as to the investment in the proposed issue and such disclosures are in accordance with the requirements of the Companies Act, 2013, these regulations and other applicable legal requirements. (3) All intermediaries named in the draft offer document/ preliminary placement memorandum are registered with the Board and that till date, such registration is valid and that none of these intermediaries have been debarred from functioning by any regulatory authority. (4) Necessary arrangements shall be made to ensure that the monies received pursuant to the issue are credited or transferred to in a separate bank account. (5) We shall comply with the provisions pertaining to advertisements i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the offer document or placement memorandum contains all disclosures as specified in the Securities and Exchange Board of India (Issue and Listing of Municipal Debt Securities) Regulations, 2015. 4. We CONFIRM that all relevant provisions of the Companies Act, 2013, if applicable, Securities Contracts, (Regulation) Act, 1956, Securities and Exchange Board of India Act, 1992 and the Rules, Regulations, Guidelines, Circulars issued thereunder have been complied with. 5. We CONFIRM that all comments/ complaints received on the draft offer document/ preliminary placement memorandum filed with the ________ (designated stock exchange) have been suitably addressed. (SIGNATURE WITH OFFICIAL SEAL) LEAD MANAGER / MERCHANT BANKER PLACE: DATE: Form C FORMAT OF DUE DILIGENCE CERTIFICATE TO BE GIVEN IN THE EVENT OF DISCLOSURE OF MATERIAL EVENTS AFTER THE FILING OF THE OFFER DOCUMENT/PLACEMENT MEMORANDUM BY THE LEAD MANAGER(S)/MERCHANT BANKER(S) To, SECURITIES AND EXCHANGE BOARD OF INDIA Dear Sirs, SUB.: ISSUE OF _________________ BY ________________(Issuer) We CONFIRM that all material disclosures in respect of the issue as on date have been....