TaxTMI 
TaxTMI 
Securities and Exchange Board of India (Issue and Listing of Debt Securities by Municipalities) (Amendment) Regulations, 2019.
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....lities) 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 is chosen by the issuer as a designat....
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....e 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 the offer or invitation: Pro....
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....es 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 the following criteria are complied with: (a) t....
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....e 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 earliest intimation rejecting the application for listing of municipal debt securit....
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....ft 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), appoint other registered intermediaries after the lead manager(s) have independently assessed their capability to carr....
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....nt 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 offer document complying with the observations issued by the Board and highlighting all changes made in the draft offer document and before filing the offer....
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....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-regulation (1), the following proviso will be inserted, namely,- "Provided that where the issuer is a body corporate to which the Companies Act, 2013 applies, the term sheet may be read a....
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....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 the issue, where the Board has sought any clarification or additional information from them; or c) the date of receipt of clarification or information from any regulator or agency, where the Board has sought any clarification or i....
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....rted, 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 project(s): Provided further that the merchant banker to the issue, in case of private placement, shall confirm to the bankers to the issue by way of copies of listing and trading approvals that all formalities in connection with the issue have been completed an....
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.... "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 resolution with the stock exchanges where such securities are listed, for dissemination of the same to the public on their websites. (5) The municipal debt securities issued can be rolled over subject to the following conditions: (a) the roll-over is approved by a special resolution passed by the holders of....
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....y 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 section 129 and 134 of the Companies Act, 2013 and the rules made thereunder. (2) In case of the issuer being a municipality, the accounts of the issuer shall be audited by the persons appointed by the municipal corporations, as permissible under its constitution document: Provided that in case the issuer is a body corporate to which the Comp....
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....e 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 fair and equitable manner as per the procedures as may be specified by the Board. (5) The merchant bankers shall be responsible for the due diligence in respect of assignments undertaken by them in respect of issue, offer and distribution of securities to the public. (6) There shall be no conflict of interest between the lead manager(s) and the issuer or its group c....
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....rdship 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 be disclosed. (b) All blank spaces in the draft offer document/ preliminary placement memorandum shall be filled up with appropriate data before registering the offer document /placement memorandum, as applicable, with the Registrar of Companies or filing the same with the recognised stock exchanges. (c) Plain English shall be used to enable easy understanding of the contents. Technical terms, if any, used in explaini....
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...., 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, if applicable. (c) Details of the management structure of the issuer. (d) Shareholding pattern of the issuer along with top 10 shareholders of the issuer, if applicable. (e) Resolution authorizing the borrowing and list of authorized signatories. (f) Details of necessary Resolution(s) for the allotment of municipal debt securities (g) Memorandum and Articles of Association in case the issuer is a body corporate incorporated under Companies Act, 2013, if applicable (h) Details of any Reorgan....
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....pening 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) Penal interest payable by the issuer in case of delay in listing of debt securities from the deemed date of allotment (g) Debenture Redemption Reserve and such other reserve creation - relevant regulations as applicable. (h) Application process (i) Procedure for deciding and adjusting payment dates (in response to days when payment cannot be made due to any reason such as sudden bank holiday. (j) 'Terms of payments' and procedure and time schedule for allotment and issue certificates/demat credit (k) How to apply, availability of appli....
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....lity Amt Sanctioned Principal Amt outstanding Repayment Date / Schedule Security (c) Details of Unsecured Loan Facilities:- Lender's Name Type of Facility Amt Sanctioned Principal Amt outstanding Repayment Date / Schedule (d) Details of NCDs/Bonds: - Debenture/ Bond Series Tenor/ Period of Maturity Coupon Amount Date of Allotment Redemption Date/ Schedule Credit Rating Secured/ Unsecured Security (e) List of the Top ten Debenture Holders (as on ……) Sr. No. Name of Debenture Holders Amount Note: Top ten holders' (in value terms, on cumulative basis for all outstanding debentures issues) details should be provided. (f) Details of Commercial Paper:- The total Face Value of Commercial Papers Outstanding as on the latest quarter end to be provided and its breakup in following table:- Maturity Date Amount Outstanding (g) Details of Rest of Borrowings (h) Details of any outstanding borrowings and debt securities issued for consideration other than cash, whether in whole or part, at a premium or discount, or in pursuance of an option; VI. Sufficient revenue generation and resources for tim....
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....gainst the Issuer, resulting in material liabilities, restructuring event etc) at the time of the issue which may affect the issue or the investor's decision to invest/ continue to invest in the municipal debt securities. (g) Details of non-payment of statutory dues, if any. (h) Details of all default/s and/or delay in payments of interest and principal of any kind of term loans, debt securities and other financial instrument issued by the Issuer, in the past 3 years. 10. Government approvals: (a) Investment approvals, letter of intent or industrial license from GoI, RBI, etc., as applicable and declaration of the Central Government, Reserve Bank of India or any regulatory authority about the non-responsibility for financial soundness or correctness of the statements; (b) All Government and other approvals which are material and necessary for carrying on the business and operations of the issuer and material subsidiaries. 11. Undertaking by the issuer: The following undertaking by the issuer shall be given: (a) that it shall submit the documents disclosed in the offer document or placement memorandum to the Debenture Trustee in electronic form (soft copy) (b) that....
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.... quantitative. iii. Some risks may not be material at present but may have a material impact in the future. (d) Each risk factor shall appear in the following manner: i. The risk as envisaged by the issuer. ii. Proposals, if any, to address the risk. (e) Comprehensive Disclosure regarding the Risk Factors, including project risks, operational risks, credit risks, liquidity risks, etc. (f) Management perception of risk factors specific to the project. 14. Such other details necessary for the investors to make a well informed decision making regarding their investment in the proposed issue." (XX) After Schedule I and before Schedule II, the following Schedule shall be inserted, namely,- "Schedule IA [See regulations 6 and 14A] TERM SHEET Summary of Offer This section shall contain the summary of the following information, as applicable: (a) Primary business of the issuer, in not more than 100 words each; (b) Size of the issue; (c) Objects of the issue in a tabular format; (d) Audit qualifications along with the financial statements, if any (e) Summary table of pending litigation and a cross-reference to the section titled 'Pending Litigation and M....
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....rm A FORMAT OF DUE DILIGENCE CERTIFICATE TO BE GIVEN BY THE LEAD MANAGER (S)/MERCHANT BANKER ALONG WITH DRAFT OFFER DOCUMENT/ PRELIMINARY PLACEMENT MEMORANDUM 52 To, SECURITIES AND EXCHANGE BOARD OF INDIA Dear Sirs, SUB.: ISSUE OF _________________ BY ________________(Issuer) We CONFIRM that: (1) We have examined documents pertaining to the said issue and other relevant documents. (2) On the basis of such examination and discussions with the Issuer, its directors and other officers, other agencies, and independent verification of the statements concerning the objects of the issue, contents of the documents and other papers furnished by the issuer: (a) the draft offer document/ preliminary placement 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 ....
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....der or direction passed by the Board. We also confirm that none of the intermediaries named in the offer document or placement memorandum have been debarred from functioning by any regulatory authority. 2. We CONFIRM that all the material disclosures in respect of the issuer have been made in the offer document and certify that any material development relating to the issue up to the commencement of listing and trading of the municipal debt securities offered through this issue shall be informed through public notices/ advertisements in all those newspapers in which pre-issue advertisement and advertisement for opening or closure of the issue have been given. 3. We CONFIRM that 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/ com....