TaxTMI 
TaxTMI 
Master Circular for Debenture Trustees
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....compilation of the existing circulars as on May 16, 2024, with consequent changes. The stipulations contained in these circulars have been detailed chapter-wise in this Master Circular. Accordingly, the list of existing circulars for DTs which have been superseded by this Master Circular is placed Annex-1. 4. Notwithstanding such rescission, - 4.1 anything done or any action taken or purported to have been done or taken under the rescinded circulars, prior to such rescission, shall be deemed to have been done or taken under the corresponding provisions of this Master Circular; and 4.2 any application made to the Board under the rescinded circulars, prior to such rescission, and pending before it shall be deemed to have been made under the corresponding provisions of these regulations; 5. Debenture Trustees are directed to comply with the conditions laid down in this Master Circular and it is reiterated that Debenture Trustees shall have necessary systems and infrastructure in place for implementation of this circular. The Board of Directors of the Debenture Trustee shall be responsible for ensuring compliance with these provisions 6. This Circular is issu....
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.... registered market intermediaries through various modes of communication...... .109 Chapter XVI: General Guidelines for dealing with Conflicts of Interest by Debenture Trustee and its Associated Persons in Securities Market.. .111 Chapter XVII: Registration with the FINNET 2.0 system of Financial Intelligence Unit – India (FIU-India)... - .114 Glossary Annex-1. .115 .117 Page 4 of 117 5331 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India Chapter I: Terms of Registration 1. Online Registration Mechanism for Debenture Trustees 1.1. The SEBI Intermediary Portal is available at https://siportal.sebi.gov.in for SEBI registered intermediaries including Debenture Trustees to submit registration applications online. SEBI Intermediary Portal shall inter-alia include online application for registration, processing of application, grant of final registration, application for surrender/ cancellation, submission of periodical reports, requests for ch....
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....of Debt and Hybrid Securities, SEBI" accompanied by the following information: a) Whether any application was made in the past to SEBI seeking registration in any capacity but it was not granted? If yes, details thereof. Page 6 of 117 5331 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India b) Whether any action has been initiated/ taken under SCRA/ SEBI Act or rules and regulations made thereunder? If yes, status thereof along with corrective action taken to avoid such violations in the future. c) The acquirer shall also confirm that it shall honour all past liabilities/ obligations of the applicant, if any. d) Whether any investor complaint is pending? If yes, steps taken and confirmation that the acquirer shall resolve the same. e) Details of litigation, if any. f) That all the fees due to SEBI have been paid. g) That there will not be any change in the Board of Directors of incumbent or in its management team, till the time prior approval is granted. h) That th....
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....arified: 5.1. The transferee shall obtain fresh registration from SEBI in the same capacity before the transfer of business if it is not registered with SEBI in the same capacity. SEBI shall issue new registration number to transferee different from transferor's registration number in the following scenario: a) "Business is transferred through regulatory process (pursuant to merger/ amalgamation/corporate restructuring by way of order of primary regulator/ govt./ NCLT, etc.) or non-regulatory process (as per private agreement/ MOU pursuant to commercial dealing/ private arrangement) irrespective of transferor continues to exist or ceases to exist after the said transfer. b) In case of change in control pursuant to both regulatory process and non- regulatory process, prior approval and fresh registration shall be obtained. Page 8 of 117 5331 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India While granting fresh registration to same legal entity pursuant to change in con....
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....¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India Annex-IA Application form for surrender of certificate of registration by Debenture Trustee Το Securities and Exchange Board of India Sir/Ma'am, 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, Rules and the SEBI (Debenture Trustee) Regulations, 1993 that have taken place before our surrender of certificate of regist....
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.... (original/ certified true copy by issuers/ certified true copy by existing charge holders, as available) or title reports issued by a legal counsel/ advocates, copies of the relevant agreements/ Memorandum of Understanding, copy of evidence of registration with Sub-registrar, Registrar of Companies, Central Registry of Securitization Asset Reconstruction and Security Interest (CERSAI) etc. b) For unencumbered assets, an undertaking that the assets on which charge is proposed to be created are free from any encumbrances. Page 13 of 117 5331 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India c) For encumbered assets, on which charge is proposed to be created, the following consents along-with their validity as on date of their submission: Ä°. Details of existing charge over the assets along with details of charge holders, value amount, copy of evidence of registration with Sub- registrar, Registrar of Companies, CERSAI, Information Utility (IU) registered with Insolven....
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....activity of the guarantor; Undertaking by the guarantor that the guarantee shall be disclosed as vii. "contingent liability†in the “notes to accounts" forming part of the financial statements of the guarantor; vi. viii. Copy of Board resolution of the guarantor for the guarantee provided in respect of the debt securities of the Issuer; ix. List of previously entered agreements for providing guarantee to any other person along with an undertaking that there are no agreements other than those provided in the list, if any. f) In case of any other contractual comforts/ credit enhancements provided for or on behalf of the issuer, it shall be required to be legal, valid and enforceable at all times, as affirmed by the issuer. In all other respects, it shall be dealt with as specified above with respect to guarantees. g) In case securities (equity shares, etc.) are being offered as security then a holding statement from the depository participant along with due pledge of such securities in favour of Debenture Trustee in the depository system shall be ensured. h) Details of any other form of security being offered viz. D....
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....y existing charge holders is valid as per terms of transaction documents; and (B) Intimate existing charge holders through necessary and appropriate means (including via e-mail) about the proposal to create further charge on assets by Issuer seeking their comments/ objections, if any, to be communicated to the Debenture Trustee within next five working days. (b) In case of personal guarantee, corporate guarantee and any other guarantees/ form of security, the Debenture Trustee shall verify the relevant filings made on websites of Ministry of Corporate Affairs, Stock Exchange(s), CIBIL, IU etc. and obtain appraisal report, necessary financial certificates from professionals as referred earlier in this Chapter. 2.2.3. A Debenture Trustee, by itself or by engaging professionals, shall prepare one or more reports viz. valuation report, ROC search report, title search report/ appraisal report, security cover certificate, any other report/ certificate as applicable etc. and shall independently assess that the assets for creation of security are adequate for the proposed issue of debt securities. 2.2.4. A Debenture trustee shall iss....
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....र विनिमय बोरà¥à¤¡ Securities and Exchange Board of India 2.4.1. Creation of encumbrance on the securities for securing the listed debt securities shall be through the depository system only in accordance with the Depositories Act, 1996, the SEBI (Depositories and Participants) Regulations, 2018, Depository bye laws and other applicable regulations and circulars. 2.4.2. Encumbrance for the above shall mean the following: (a) Pledge, hypothecation, mortgage, lien, negative lien, non-disposal undertaking or non-disposal agreement; (b) Any restriction on the free and marketable title to the asset, by whatever name called, whether executed directly or indirectly; (c) Any covenant, transaction, condition or arrangement in the nature of encumbrance, by whatever name called, whether executed directly or indirectly. 2.5. Disclosures in the OD/PM and filing of OD/ PM by the Issuer 2.5.1. The Issuer, in addition to disclosures made under Schedule I of SEBI NCS Regulations and circulars issued thereunder, shall also disclose the following in the OD/PM: (a) "Debt securities shall....
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.... listed debt securities: 2.7.1. Regulation 59 of SEBI LODR Regulations provides for a change in terms of listed debt securities. A change in the structure of debt listed debt securities, inter-alia, may include: 1 Form SH 12 of Companies (Share Capital and Debentures) Rules, 2014 Page 20 of 117 5331 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India a) A change in security, b) Creation of additional security in case of already secured listed debt securities or c) Creation of security in case of unsecured listed debt securities. 2.7.2. In order to harmonize the process of creation of security pursuant to listing, the following directions are issued: a) Before initiating due diligence, the Debenture Trustee and the Issuer shall ensure compliance with the paras 2.1 and 2.2 of this Chapter. b) Pursuant to carrying out of due diligence as per paras 2.1 and 2.2 of this Chapter, the Debenture Trustee shall issue a no-objection certificate (NOC) to the issuer for going ah....
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.... unsecured), etc. Accordingly, the Depository shall not assign a new ISIN in such cases. However, where there is a change in the underlying security, the Debenture Trustee shall ensure compliance with the provisions of Regulation 15(1)(i) of DT Regulations. 2.8. Engagement of Independent professionals by Debenture Trustee: Page 22 of 117 5331 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India 2.8.1. For the purpose of availing the services of an independent professional for carrying out due diligence and continuous monitoring under the provisions of this Master Circular, the Debenture Trustee shall: a) Put in place a criterion/ policy for engagement of an independent professional/ availing the services of an independent professional as approved by its board of Directors and shall disclose the same on its website b) Formulate a policy on mitigating conflict of interest and shall disclose the same on its website; the policy shall, inter-alia, include a requirement tha....
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....enants proposed to be included in debenture trust deed (including any side letter, accelerated payment clause etc.), offer document/ placement memorandum. f) Issuer has given an undertaking that charge shall be created in favour of debenture trustee as per terms of issue before filing of listing application. We have satisfied ourselves about the ability of the Issuer to service the debt securities. PLACE: DATE: DEBENTURE TRUSTEE TO THE ISSUE WITH HIS STAMP Page 25 of 117 5331 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India Annex-IIB FORMAT OF DUE DILIGENCE CERTIFICATE TO BE GIVEN BY THE DEBENTURE TRUSTEE AT THE TIME OF FILING OF LISTING APPLICATION BY ISSUER To, Stock Exchange Dear Sir/Madam, SUB.: ISSUE OF BY LTD. We, the debenture trustee(s) to the above mentioned forthcoming issue state as follows: 1) We have examined documents pertaining to the creation of charge over assets of Issuer. 2) On the basis of such examination and of the discuss....
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....s shall: 3.1. Provide secure login credentials to Issuers, CRAs, Debenture Trustees etc. for recording and/or verifying and/or viewing requisite information on the system. 3.2. Put in place adequate safeguards to ensure the integrity and security of the data on the system. 3.3. Share information with the other Depository for integrating and maintaining a compatible system. 3.4. Develop an alert mechanism to be sent to the stakeholders on submission, acceptance and rejection of information, and alerts for periodic and event based compliances. Page 28 of 117 5331 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India 3.5. Wherever necessary, provide the feature of document upload by the various stakeholders on the system. 3.6. Provide functionality of maintaining a trail/ log of all the communication/ interaction amongst various stakeholders viz. CRAs, Debenture Trustees, Issuers, Depositories etc. and also in the system on account of recording and/or verification an....
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....ue and details of assets recorded are not in line with the terms of proposed issue of debt securities, the Debenture Trustee shall not validate the same and shall reject the same on the system and make due remarks explaining the same. The system shall send an intimation to the Issuer to rectify any discrepancy or record additional details regarding assets offered as security before initiating issuance of temporary ISIN/ ISIN which shall also require being validated and verified by the Debenture Trustee. d) The Debenture Trustee shall also upload the reports/ documents viz. valuation report, ROC search report, title search report/ appraisal report, security cover certificate, due diligence certificate as per Annex-IIA of this Master Circular and other related reports/ certificates as applicable etc. on the system. Page 30 of 117 5331 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India 5.2. Recording of charge creation and charge registration details on the system: a) P....
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....ants as to any change in nature and conduct of business or disposal of assets vii. Covenants with respect to changes in the composition of its Board of Directors viii. Covenants with respect to related party transactions by the issuer ix. Monitoring of X. Debenture Redemption Reserve, Redemption Fund, Recovery Expense Fund Debenture Other non-financial covenants such as credit rating, negative lien undertaking, etc. b) Debenture Trustee shall validate the covenants so entered by the Issuer within seven working days of signing the Debenture Trust Deed. B. Periodic monitoring of Security Cover and Covenants 5.5. The Issuer shall provide the half yearly certificate by the statutory auditor certifying the security cover and upload the same on the system in the format as per Annex-VA of this Master Circular. The periodicity of filing this certificate on the system shall be co-terminus with that of the financial results as per regulation 52 of the SEBI LODR Regulations. Page 32 of 117 5331 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनि....
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.... intimate the status of payment of interest or repayment of principal, the Debenture Trustee shall seek status of such payment/ repayment from the Issuer and/ or conduct independent assessment (from banks, investors, etc.) to determine the same. b) Based on such assessment, the Debenture Trustee shall update in the system the status of such payment/ repayment, within seven working days of the interest payment becoming due or nine working days of the maturity/ redemption date. c) The Debenture Trustee shall update the details in the system and initiate necessary action as per provisions of Chapter IX to this Master Circular. 5.10. Redemption of debt securities: a) Issuer shall initiate the release of charges and update the system with the relevant documents including but not limited to Statutory Certificate, No dues from the holders of debt securities (applicable only in case of private placement), ISINS Extinguishment letter, ROC Charge Satisfaction forms/ certificate. b) The Debenture Trustee shall release charges in case any debt is repaid and update/ validate the same in the platform. Page 34 of 117 5331 à¤à¤¾à....
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....ure that the entry of the asset is made only once in the system for generation of the unique Asset ID, which shall be verified by the Debenture Trustee. 7. The following assets shall be tracked at portfolio level and no specific parameters for the underlying assets would be captured: 7.1.movable assets viz furniture, equipment, inventory etc. 7.2.current assets viz portfolio of advances/ receivables, etc. 7.3.any other asset of similar nature. 8. On detection of a duplicate asset, an alert shall be generated and sent to the Issuer and Debenture Trustee to cross check and verify the details entered into the system for recording the details of asset. The Issuer and the Debenture Trustee should verify and address the alert before overriding the same. 9. Monitoring/ Trigger events: 9.1. While the Depository shall ensure that there is only one unique asset ID assigned to an asset of the issuer, Debenture Trustee, on a yearly basis, shall reconcile the list of assets recorded in the system for an Issuer and in case any duplicate entry is found for an asset, shall take necessary steps to eliminate such duplicate entries in the system a....
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..... Asset ownership details b. Value of security offered: Issuer shall submit documents as required under Chapter II of this Master Circular and other documents given by Issuer for ascertaining the existence, veracity and value of assets. C. Documents related to existing encumbrance on assets/security offered: Issuer shall record following details in the system and/or submit documents: i. For unencumbered assets, an undertaking that the assets on which charge is proposed to be created are free from any encumbrances. Page 38 of 117 5331 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India ii. For encumbered assets, on which charge is proposed to be created, the Issuer shall submit documents in system as per para 2.1. (c) of Chapter Il of this Master Circular and any other document required to be given by the Issuer to the Debenture Trustee. Page 39 of 117 5331 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और à....
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.... Redemption payment - By Face Value Redemption - By Quantity Redemption If Redemption is based on Quantity, specify whether on: - - Lot Basis Pro-rata basis Page 41 of 117 5331 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India • • Reason for redemption Redemption due to PUT option (if any) Redemption due to CALL option (if any) Quantity and Amount Redeemed Due date for Redemption/ Maturity Date of early Redemption (if any) 2. Issuers shall fill all the following requisite fields to update the status of payment within one working day of payment/ redemption date or a change in the due date of interest payment/ redemption payment as under: Actual Date for Interest Payment Amount of interest paid Date of last Interest Payment Updation by Issue on continuous basis — Payment of Interest Updation by Issue on - continuous basis – Redemption payment Reason for non-payment/ delay in payment ....
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.... Parameters to compare for Duplicate check a. Area of the property Property (Residential, b. Geographical Coordinates Commercial (Latitude, Longitude). Page 44 of 117 5331 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India Industrial, Agriculture, etc.) 2. Current Assets Specific accounts maintained (DSRA, 3. Securities/ other financial assets 4. Guarantees DRR, MRR etc.) Securities in a. Details related to account maintained such as Bank Name, account number, IFSC code etc. b. Mode of maintenance of account (Current account/ Fixed Deposit/ Bank Guarantee etc.) and details thereof. a. Demat Account Number Demat form b. ISIN Number c. Quantity c. Pledgee and pledger details Government a. Issuing Authority Corporate b. Government order number c. Government order date d. Guarantee Amount a. Guarantor details such as Name of the company, address, net worth etc. b. PAN/CIN....
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....maturity date of the listed debt security. The issuer shall keep the bank guarantee in force and renew the Bank Guarantee at least seven working days before its expiry, failing which the Designated Stock Exchange shall invoke such Bank Guarantee. Page 47 of 117 5331 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India 1.3. In case of any change in status of issuer of the listed debt securities on account of corporate restructuring by way of Scheme of Arrangement etc., the Designated Stock Exchange shall ensure that the amount maintained in the REF is available as per paragraph 1.1 before issuing the 'No-objection letter' in that regard. Manner of utilization of Recovery Expense Fund: 2.1. In the event of default, the Debenture Trustee/ Lead Debenture Trustee shall obtain the consent of holders of debt securities for enforcement/ legal proceedings and shall inform the same to the Designated Stock Exchange. The Designated Stock Exchange shall release the amount lying in the RE....
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....ons, Issuers are required to disclose security cover to Stock Exchange and Debenture Trustee. The obligations of the Issuer and the Debenture Trustee with respect to preparation and submission of security cover certificate are given as under: 1. Manner of preparation of security cover certificate by the Issuer: 1.1 The Issuer shall be required to prepare the security cover certificate on quarterly basis and the statutory auditor of the Issuer shall certify the book values of the assets provided in such certificate. 1.2The Issuer shall provide the values in the format under the market values column including the reference date based on which the market value has been arrived at and the certificate shall be submitted to the Debenture Trustee. In case of loans/ receivables or any other asset offered as security and the market value is not ascertainable in the specific quarter, then the Issuer may provide the carrying value/ book value as per the format for security cover is enclosed at Annex-VA of this Master Circular. However, the Issuer shall provide the justification for not providing the market value along with the certificate in tha....
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....ompany assets, the security cover certified by the statutory auditor of the concerned third party/ subsidiary/ group/ Page 51 of 117 5331 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India holding company shall include details of such assets including the book value of such assets. c) In case, security cover comprises pari-passu charge/ second/ third charge on third party/ subsidiary/ group/ holding company assets, the security cover certified by the statutory auditor of the concerned third party entity shall include the detail of all encumbrances on such assets. 1.9 Further, in order to adequately capture details regarding other debt securities, viz. unsecured debentures, subordinated debt, other debt issuances which fall in the lower priority order in the waterfall mechanism for liquidation/resolution proceeds, an additional column named “Debt not backed by any assets offered as security" shall be incorporated in the security cover certificate and the same shall....
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....तीय पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India The Debenture Trustee shall ensure that the qualifications/ disclaimer (by whatever name called), does not impair the rights of holders of debt securities in terms of security provided. Further, if the Debenture Trustee is of the opinion that such qualifications/ disclaimer are affecting the rights of holders of debt securities, the Debenture Trustee shall take corrective action in this regard. Page 54 of 117 5-31 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India Format of Security Cover Certificate Annex-VA Column B Column A Colum n Colum n Dii C Exclusive Exclusive Charge Charge Colum n Eiii Pari- Passu Charge Particulars Charge Column Column Fiv GV PariPassu Pari- Passu Charge Colum Column n Hvi Ivii Assets Elimination ....
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.... Debt securities to which this certificate pertains Other debt sharing paripassu charge with above debt Other Debt Page 57 of 117 Sebordinated Borrowings Bank Debt Securities not to be filled Others Trade payables Lease Liabilities Provisions Others Total à¤à¤¾à¤°à¤¤à¥€à¤¯ SZ31 पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India Cover on Book Value Machete" ☠San Pat Page 58 of 117 SZ31 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India Ratio Cover Ratio i. ii. iii. iv. V. vi. vii. viii. This column shall include book value of assets having exclusive charge and outstanding book value of debt for which this certificate is issued. This column shall include book value of assets having exclusive charge and outstandi....
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....corporated in the debenture trust deed³. These terms and conditions shall, inter-alia, entail that the Issuer shall provide relevant documents/ information within a considerable timeline so as to enable the Debenture Trustee shall submit the following reports/ certification to Stock Exchange within the timelines specified: Reports/Certificate Periodicity Security cover Certificate (in the format as Quarterly basis within 75 days specified in Annex-VA to this Master Circular) from end of each quarter except last A statement of value of pledged securities A statement of value for Debt Service Reserve Account or any other form of security offered quarter when submission is to be made within 90 days. Net worth certificate of guarantor in case debt Half yearly basis within 75 days securities are secured by way of personal from end of each half-year. guarantee) 33 For existing debt securities as on November 12, 2020 vide circular SEBI/HO/MIRSD/CRADT/CIR/P/2020/230, listed entities and debenture trustee(s) were given 120 days to enter into supplemental/amended debenture trust deed incorporating the changes in the debenture trust ....
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....ly, half-yearly, annual etc. The covenants may be categorized as financial covenants, affirmative covenants, negative covenants etc. A guidance notes for the list of covenants prepared in consultation with Debenture Trustees is enclosed as Annex-VIA of this Master Circular. c) Initiate action in case of breach of covenants viz. accelerated payment, borrowing restriction, not to declare dividend before payment, declaration of event of default, etc. in accordance with the terms of issue/ Offer Document/ Debenture Trust Deed. d) Independently monitor any breach of covenants from continuous monitoring of any public disclosure on Stock Exchange, company filings, news articles in electronic/ print media or any information available in public domain apart from periodical information/ documents submitted by the issuer. e) Furnish a status report on its website and to the Stock Exchange for further dissemination on a quarterly basis. Such status report shall contain the covenants breached in the preceding quarter and the actions taken by the Debenture Trustee for the same as per the format prescribed under Chapter VI of this Master Circular. ....
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....g period for renewal, replenishment, invocation (amount, date, period, etc.), manner of maintenance (ratio, percentage etc.), bank account number (if applicable) etc. Covenant as to maintenance as a ratio or percentage of .... (state), Not less than/ Not exceeding X, Time Bucket etc. • Tangible Net • Worth • Debt to Value Ratio • CAR (Capital Adequacy Ratio) (Tier I CAR) • Current Ratio Page 64 of 117 531 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ fafafafats Securities and Exchange Board of India • Dividend ratio (Dividend/PAT) • Liquidity • Asset liability mismatch Any other ratio (state the ratio and define the formula) Payment of Interest on due dates • Payment of principal on due dates 3. Affirmative • 4. Affirmative or restrictive 5. Negative Security Cover as per terms of • Issue • Title of Security/asset Credit rating Credit downgrade Purpose/end-us....
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....ervision of debenture trustee Annual basis within 75 Table 7 of Annex-VIIA days of the end of the financial year Page 66 of 117 5331 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India Status of information regarding any default by the Issuer and action taken by debenture trustee Monitoring of Utilization Certificate Table 8 of Annex-VIIA Table 3 of Annex-VIIA 2. Disclosure of compensation arrangement with clients by Debenture Trustee on its websites A Debenture Trustee shall disclose the nature of compensation arrangement with its clients on its website, including the minimum fee to be charged (in absolute terms or as a percentage of the issue size) and factors determining the same. 3. Calendar of interest/ redemptions, due and paid, to be displayed on the website of Debenture Trustee for the financial year 3.1. A Debenture Trustee shall display on its website the ISIN wise details of interest/ redemption due to the holders of listed debt s....
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.... reports/Financial certificat reasons (includin statements e g follow Security Cover Certificate provided by (debenture cover ratio maintaine d submitted by the listed entity (Yes/No) up done trustee/ by statutory debenture auditor/othe trustee) r pls specify) Security cover Certificate Security Date of Security cover certificat e Delay (if any in submission ) & reasons (including follow up done by debenture trustee) 4. Details of Debenture issues handled by debenture trustee and their status Type Debenture issues accepted during Debenture issues at end of last half half year ended March / Sep 20... year ended March / Sep 20... Debenture issues fully redeemed during half year ended March / Sep 20... Debenture issues outstanding as on last day of half year ended March / Sep 20... Cumulating issues handled up to the half Page 69 of 117 Public Rights Privately Placed Listed Total S31 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति à....
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.... maturing in the current Amount outstanding FY) Status of maintenance of DRR (15%/ 10% of the amount maturing in the year, applicable as per Details of action taken, if any placed Other) Companies Page 71 of 117 listed) b. Recovery expense fund 53 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India (Share Capital and Debentures) Rules, 2014) S.N Name of the Type of Issue 0. Listed Entity (including ISINS) (Public/ Privately Placed) Issue Size (in Rs. crores) Size/ Value Any addition in the of recovery fund maintained Recovery Expense during the quarter fund Details of usage of the funds, if any, during the quarter Additional remarks c. Accounts/ funds to be maintained in case of Municipal Debt Securities S.No. Name of the Listed Entity Type of Issue Issue Size Size/ Value of Fund/account maintained Action (Public/ Privately Placed) (in taken ....
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....ding the Issuers that are their clients, with CRAs. The purpose of the said requirement is to enable CRAS to perform their obligations effectively. 2.2. Towards this, Debenture Trustees and CRAS shall share information including but not limited to, as specified in Annex-VIIIA of this Master Circular, in respect of issues/ issuers which would help them in effective discharge of their duties. 2.3. Debenture Trustees and CRAS shall assign designated email addresses for sending and receiving such information and ensure appropriate action, if any, based on the information received. 3. Monitoring of payment of Interest/ repayment of Principal and sharing of such information with CRAs by Debenture Trustees 3.1. Debenture Trustee shall have adequate systems to ascertain the status of payment of interest/ repayment of principal by the Issuer on due dates in timely manner and efficiently share such information with the CRAS which shall include the following: Page 74 of 117 5-31 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥....
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.... 3.4. If no information regarding payment/ repayment by the Issuer is received by the Debenture Trustee by due date or such information is not disclosed by the Issuer on the Stock Exchange website, then, the Debenture Trustee shall make reference to SEBI accordingly and disclose the non-availability of such information on its website. Failure to make such reference to SEBI and nondisclosure on the website shall be considered as aiding and abetting the Issuer 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. 4. Dissemination of Information on Listed Debt Securities The Debenture Trustee shall disclose the information to the holders of debt securities and the general public by issuing a press release regarding default by Issuer to pay interest on listed debt securities or redemption amount, failure to create a charge on the assets and revision of rating assigned to the listed debt securities. Further, such information shall also be placed on the ....
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....eceipt. Page 77 of 117 5-31 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India Chapter IX: Redress of Investors' Grievances The primary obligation on resolution of complaints is that of the issuer. The dispute resolution mechanism administered by stock exchanges covers such listed companies and the holders of debt securities. 1. Investor Charter 1.1. In order to facilitate investor awareness about various activities where an investor has to deal with Debenture Trustees for availing various services, SEBI has developed an Investor Charter for Debenture Trustees, inter-alia detailing the services provided to Investors, timelines for various Debenture Trustee services provided, Rights and Obligations of Investors and Grievance Redress Mechanism. 1.2. In this regard, all the registered Debenture Trustees shall take necessary steps to bring the Investor Charter, as provided at Annex-IXA of this Master Circular to the notice of investors by way of: a) disseminating the Invest....
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....sion of SEBI which has granted them registration to operate in the securities market. SCORES user id and password of the Debenture Trustee shall be created only after receiving approval from the concerned Department/ Division of SEBI. 3.3. The Debenture Trustee shall review its investors' grievances redress mechanism so as to further strengthen it and correct the existing shortcomings, if any. The SEBI registered Debenture Trustee to whom a complaint is forwarded through SCORES, shall take immediate efforts on receipt of a complaint, for its resolution, Page 79 of 117 5-31 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India within thirty days. The SEBI registered Debenture Trustee shall keep the complainant duly informed of the action taken thereon. 3.4. The Debenture Trustee shall update the ATR along with supporting documents, if any, electronically in SCORES. ATR in physical form need not be sent to SEBI. The proof of dispatch of the reply of the SEBI registered Debenture T....
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....ision: • Strive to protect the interest of investors in debt securities by acting as a trusted Debenture Trusteeship service provider. Mission: • To safeguard the interests of the investors in listed debt securities through adherence to regulatory guidelines. To achieve highest level of operational efficiencies through well-defined internal processes and domain expertise. 2. Details of services provided by Debenture Trustee. • • • • • • • Facilitating documentation, exercising due diligence and timely creation of security for debt securities. Ensuring creation of securities by the Issuer and holding of security including safe custody of documents. Monitoring of payment of interest/redemption of principal. Monitoring security cover and other financial covenants. Dissemination of rating revision/ payment of interest/ redemption information by disclosing on Trustee's website/ with Credit Rating Agencies/ Stock Exchanges Timely and Effective resolution of investor complaints. Ascertain that the debentures have been converted or redeemed in accordance....
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....atus of information regarding any default by the Issuer and action taken by debenture trustee 75 d. Utilization Certificate submitted by the Issuer 75 Once in three years Valuation report and title search report for the immovable/movable a. 75 assets, if any. 2. Other services/activities a. Providing copy of debenture trust deed to investor 7 b. Redress of Investor Grievances by Debenture Trustee 30 Notice to be issued by Debenture Trustees in case of change in C. terms of debt securities including rollover, redemption of debt 15 securities etc. 4. Guidance pertaining to special circumstances BREACH OF COVENANT AND/OR EVENT OF DEFAULT The Debenture Trustee shall take following steps in case of breach of covenants or terms of issue and/or event of default: a) send a notice to the investors within 3 days of breach of covenants or terms of issue and/or event of default. b) convene the meeting of investors within 30 days of breach of covenants or terms of issue and/or event of default. c) to enforce security or enter into the Inter Creditor Agreement or as decided in the meeting of investors....
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....nd any enquiry. Page 85 of 117 5-31 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India 6.2 For lodging the grievance, the investor can write to the debenture trustee's dedicated grievance email ids or letter or can directly lodge complaints on the link provided by Debenture Trustee on its website. 6.3 While lodging a complaint it is necessary for investor to mention following: a) Nature of Complaint b) Name of Issuer Company c) Holding details including ISIN d) Full Name of Debenture Holder e) PAN f) Correct Email ID 6.4 Upon receipt of the complaint, the Debenture Trustee after due verification shall send intimation of redress/ resolution of complaint via email / letter as applicable within the timeline. 6.5 In case a complaint is required to be escalated to the issuer by the debenture trustee, the same shall be escalated within seven days of receipt of complaint. 6.6 If the investor is not satisfied with the redress/resolution of the complaint by the debentur....
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....117 5-3 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India Annex-IXC AUTHENTICATION FOR SCORES BY SEBI REGISTERED DEBENTURE TRUSTEE 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: Date: Signature: Name: Designation: Seal: Note: A scanned copy to be sent by email to [email protected] followed by hard copy to the concerned Department/Division of Securities and Exchange Board of India, Plot No. C4-A, 'G' Block, Bandra Kurla Complex, Mumbai -400 051 Important: Please note that SCORES has the provision fo....
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....ee, or, in case of multiple Debenture Trustees, in consultation with all the Debenture Trustees. Page 90 of 117 523 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ 5=31 Securities and Exchange Board of India 3. Process of convening meeting of holders of debt securities and consent of investors for enforcement of security and for signing the Inter Creditor Agreement (ICA) 3.1. The Reserve Bank of India ("RBI"), vide Circular dated June 07, 2019, issued the Reserve Bank of India (Prudential Framework for Resolution of Stressed Assets) Directions 2019 which inter alia specified the mechanism for resolution of stressed assets by Lenders [viz. Scheduled Commercial Banks, All-India Term Financial Institutions, Small Finance Banks, Systemically Important Non-Deposit Taking Non-Banking Finance Companies (NBFCs) as well as Deposit Taking NBFCs]. In terms thereof, investors in debt securities, being financial creditors, are approached by other lenders to sign an agreement, referred to as the ICA, under specific ter....
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....ted debt securities within 30 days of the event of default: Provided that in case the default is cured between the date of notice and the date of meeting, then the convening of such a meeting may be dispensed with. 3.3.4. In view of Regulation 15(2)(b) of SEBI (Debenture Trustees) Regulations, 1993, in case of debt securities issued by way of public issue, the notice sent by the Debenture Trustee shall not contain the consent as per para 3.3.2.a) and the requirement to convene a meeting for enforcement of security, as per para 3.3.3, shall not be applicable. 3.3.5. The Debenture Trustee shall take necessary action to enforce security or enter into the ICA or as decided in the meeting of investors, subject to the following: a) In case(s) where the majority of holders of listed debt securities express dissent, i.e. against enforcement of the security, the DEBENTURE TRUSTEE shall not enforce security. Page 92 of 117 5-31 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of Indi....
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....t be binding on the Debenture Trustee(s). c) The resolution plan shall be finalized within 180 days from the end of the review period. If the resolution plan is not finalized within 180 days from the end of the review period, then the Debenture Trustee shall be free to exit the ICA altogether with the same rights as if it had never signed the ICA and the resolution plan shall not be binding on the Debenture Trustee. However, if the finalization of the resolution plan extends beyond 180 days, the Debenture Trustee may consent to an extension beyond 180 days subject to the approval of the investors regarding the total timeline. The total timeline shall not exceed 365 days from the date of commencement of the review period. d) If any of the approved Resolution Plan are contravened by any of the signatories to the ICA, the Debenture Trustee shall be free to exit the ICA and seek appropriate legal recourse or any other action as deemed fit in the interest of the investors. 4.2. The Debenture Trustee shall ensure that the conditions mentioned in paragraphs 3.1 (b), (c) and (d) are suitably incorporated in the ICA, before signing of the ICA.....
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....f each financial year. Page 95 of 117 5-31 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India 2.2. In case of any developments that impact the status of default of the debt securities (including restructuring of debt securities, NCLT/ NCLAT proceedings relating to insolvency/ bankruptcy, repayment, etc.), the Issuer/ Debenture Trustee shall intimate the Stock Exchanges and Depositories within one working day of such development. 2.3. The process explained above shall be followed either till full payment on these securities is made by the Issuer or the Issuer has been liquidated and money has been realised after completion of recovery proceedings. Page 96 of 117 5-3 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India Chapter XII: Centralised Database - Responsibilities of Debenture Trustee Debenture Trustee shall....
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....or/ whole-time director Change in shareholding not resulting in change in control ii. iii. If there is no change during the relevant quarter, it shall be indicated in the report. c) Other Information i. Details of arrest /conviction of key officials of Debenture Trustee ii. iii. iv. Details of prosecution cases or criminal complaints filed by investors against the Debenture Trustee Details of any fraudulent activity by the employees associated with Debenture Trustee activities and action taken by the Debenture Trustee Details of conviction of any offence involving moral turpitude or any economic offence by employees of Debenture Trustee V. Action taken by the Debenture Trustee on the above issues d) Compliance with registration requirements: Certified that the requirements specified for SEBI registration as Debenture Trustee are fulfilled, the details are as under; i. Net worth (audited) as defined in the Regulations as on FY ended (as per the latest audited financials) ii. Any change in infrastructure since the last report/ registration/ renewal Page 99 of 117 iii. 5-31 à¤à¤¾à¤°à¤¤à¥....
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....ure Trustee 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. Page 101 of 117 5-31 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India Annex-XIVA PRINCIPLES OF OUTSOURCING FOR DEBENTURE TRUSTEES 1. A Debenture Trustee seeking to outsource activities shall have in place a comprehensive policy to guide the assessment of whether and how those activities can be appropriately outsourced. The Board/ partners (as the case may be) {hereinafter referred to as the "the Board"} of the intermediary shall have the responsibility for the outsourcing policy and related overall responsibility for activities undertaken under that policy. 1.1 The policy shall cover activities or the nature of activities that can be outsourced, the authorities who can approve outsourcing of such activities, and the selection of third party to whom it can be outsourced. For example, an....
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....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 by a Debenture Trustee 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 Debenture Trustee 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 Debenture Trustee. 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 Debenture Trustee shall review the Page 103 of 117 3. 5-31 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और....
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....outsourcing work within the timelines fixed; b) compatibility of the practices and systems of the third party with the Debenture Trustee's requirements and objectives; c) market feedback of the prospective third party's business reputation and track record of their services rendered in the past; d) level of concentration of the outsourced arrangements with a single third party; and e) the environment of the foreign country where the third party is located. 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 Debenture Trustee 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....
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....e choice-of-law provisions and agreement covenants and jurisdictional covenants that provide for adjudication of disputes between the parties under the laws of a specific jurisdiction; 1) neither prevents nor impedes the Debenture Trustee from meeting its respective regulatory obligations, nor the regulator from exercising its regulatory powers; and m) provides for the Debenture Trustee and /or the regulator or the persons authorized by it to have the ability to inspect, access all books, records and information relevant to the outsourced activity with the third party. Page 106 of 117 5-31 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India 6. The Debenture Trustee and its third parties shall establish and maintain contingency plans, including a plan for disaster recovery and periodic testing of backup facilities. 6.1 Specific contingency plans shall be separately developed for each outsourcing arrangement, as is done in individual business lines. 7. 6.2 A Debentur....
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....urity and confidentiality. 8. Potential risks posed where the outsourced activities of multiple intermediaries are concentrated with a limited number of third parties. In instances, where the third party acts as an outsourcing agent for multiple intermediaries, it is the duty of the third party and the Debenture Trustee to ensure that strong safeguards are put in place so that there is no co-mingling of information /documents, records and assets. Page 108 of 117 5-31 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India Chapter XV: Unauthenticated news circulated by SEBI registered market intermediaries through various modes of communication 1. It has been observed by SEBI that unauthenticated news related to various scrips are circulated in blogs/ chat forums/ e-mail etc. by employees of Broking Houses/ Other Intermediaries without adequate caution as mandated in the Code of Conduct. 2. Further, in various instances, it has been observed that the Intermediaries do not hav....
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.... Board of India Chapter XVI: General Guidelines for dealing with Conflicts of Interest by Debenture Trustee and its Associated Persons in Securities Market 1. All intermediaries, recognised stock exchanges, recognised clearing corporations and depositories (hereinafter collectively referred to as "such entities") are presently governed by the provisions for avoidance of conflict of interest as mandated in the respective regulations read with relevant circulars issued from time to time by SEBI. On the lines of Principle 8 of the International Organisation of Securities Commissions (IOSCO) Objectives and Principles of Securities Regulations, it has been decided to put in place comprehensive guidelines to collectively cover such entities and their associated persons, for elimination of their conflict of interest, as detailed hereunder. 2. The Debenture Trustee shall adhere to these guidelines for avoiding or dealing with or managing conflict of interest. It shall be responsible for educating its associated persons for compliance of these guidelines. 3. For the purpose of these guidelines, "associated persons" have the same meaning as define....
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....t of their dealings, for their personal interest; 5. The boards of the Debenture Trustee shall put in place systems for implementation of the provisions of this chapter and provide necessary guidance enabling identification, elimination or management of conflict of interest situations. Page 112 of 117 5-31 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India 6. The said guidelines shall be in addition to the provisions, if any, contained in respective regulations/ circulars issued by the Board from time to time regarding dealing with conflict of interest, in respect of Debenture Trustee. Page 113 of 117 5-31 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India Chapter XVII: Registration with the FINNET 2.0 system of Financial Intelligence Unit - India (FIU-India)4 1. FIU-India, vide letter dated April 19, 2023, addres....