TaxTMI 
TaxTMI 
TaxTMI 
Master Circular for Debenture Trustees
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....t 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 Accordingly, the list of existing circulars for DTs which have been superseded by this Master Circular is placed Annex-1. 4.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such rescission, - 4.1 anything done or any action taken or purported to have been done or taken under the rescinded circulars, prior to such rescission, shall be deemed to have been done or taken under the corresponding provisions of this Master Circular; and 4.2 any application made to the Board under the rescinded circulars, prior to such rescission, and pending before it shall be deemed to have been made under the corresponding provisions of these regulations; 5.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 issued in exercise of powers conferred under: 1.1 Section 11(1) of Securities and Exchange Boa....
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....ities 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 change of name/ address/ other details, etc. The Link for SEBI Intermediary Portal is also available on SEBI website - www.sebi.gov.in. 1.2. All applications for registration/ surrender/ other requests will be made through SEBI Intermediary Portal only. The applic....
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....र 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 the incumbent shall inform all its existing investors/ clients in order to enable them to take informed decisions regarding their continuance or otherwise with the entity with new management. 3.3. Further, in case the incumbent is a registered stock broker and/ or depository participant, in addition to the above, it shall obtain approval/ NOC from all the Stock Exchanges/ Deposit....
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....ry 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 control, same registration number shall be retained. c) If the transferor ceases to exist, its certificate of registration shall be surrendered. d) In case of complete transfer of business by transferor, it shall surrender its certificate of registration. e) In case of partial transfer of business by transferor, it can continue to hold certificate of registration. 6. Surrender of Certificate of Registration 6.1.If a Debenture Trustee wishes to surrender the certificate of regis....
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.... 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 registration; e. all our current assignments as a Debenture Trustee have been either duly terminated or transferred to another registered Debenture Trustee with registration no. f. we have issued a public notice in a widely circulated national and a regional daily dated informing surrender of our registration as Debenture Trustee (Please enclose a clipping of the said public notice); Page 11 of 117 5331 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exch....
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....®à¤¯ 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 Insolvency and Bankruptcy Board of India (IBBI) etc. as applicable; ii. iii. Consent/ No-objection certificate (NOC) from existing charge holders for further creation of charge on the assets or relevant transaction documents wherein existing charge holders have given conditional consent/permission to the Issuer to create further charge on the assets, along-with terms of such conditional consent/ permission, if any; and Consent/ NOC from existing unsecured lenders, in case, negative lien is created by Issuer in favour of unsecured lenders. d) In case of personal guarantee or any other document/ letter with similar intent is offered as security or a part of security: i. Details of guarantor viz. relationship with ....
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....h 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. Debt Service Reserve Account, etc. Page 15 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 i) Any other information, documents or records required by the Debenture Trustee with regard to creation of security and perfection of security. 2.2. Due diligence by a Debenture Trustee for creation of security 2.2.1. Regulation 15(6) of DT Regulations inter-alia requires a Debenture Trustee, to exercise independent due diligence to ensure that security is free from encumbrances, adequate consent has been taken from existing charge holders, if any, etc. Regulation 15(1)(i) of DT Regulations places obligations on the Debenture Trustee to ensure that the assets of the Issuer....
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....cate, 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 issue 'due-diligence certificate' to the Issuer, as per format specified in Annex-IIA of this Master Circular, subject to the following: (a) Information on consents/ permissions required for creation of further charge on assets is adequately disclosed in Offer Document ('OD')/ Placement Memorandum ('PM'). (b) All disclosures made in the OD/PM with respect to creation of security are in conformity with the clauses of debenture trustee agreement. Page 17 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) All covenants proposed to be included in debenture trust deed (including any side letter, accelerated payment clause etc.) are disclosed in OD/PM. 2.2.5. A Debenture Trustee shall maintain records and documents pertaining to due diligence exercised for a period of five years....
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....and circulars issued thereunder, shall also disclose the following in the OD/PM: (a) "Debt securities shall be considered as secured only if the charged asset is registered with Sub-registrar and Registrar of Companies or CERSAI or Depository etc., as applicable, or is independently verifiable by the Debenture Trustee."; and (b) Terms and conditions of debenture trustee agreement including fees charged by Debenture Trustee, details of security to be created and process of due diligence carried out by the Debenture Trustee; and (c) Due diligence certificate as per the format specified in Annex-IIA of this Master Circular. 2.5.2. An Issuer proposing to make an issue of debt securities by way of a public issue or offer debt securities by way of a private placement, shall submit to Page 19 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 the Stock Exchange, a due diligence certificate from the Debenture Trustee as per the format specified in Annex-IIA and update the same into the Security an....
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....head with proposed change in the structure/ creation of security. c) Thereafter, the issuer shall create the proposed security and the charge in favour of Debenture Trustee and the same shall be registered with the sub-registrar, Registrar of Companies, CERSAI, Depository etc., as applicable, within 30 days of creation of such charge. In case the charge is not registered anywhere or is not independently verifiable, then the same shall be considered as a breach of the covenants/ terms of the issue by the Issuer. d) Pursuant to the creation and registration of charge, the issuer and Debenture Trustee shall enter into a supplemental/ amended debenture trust deed including all the terms and conditions arising out of the due diligence carried out by the Debenture Trustee as well as of the security created by Issuer. Page 21 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 e) The issuer, pursuant to execution of supplemental/ amended debenture trust deed, shall submit the following to the Depo....
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....e of opening of the issue. c) The Debenture Trustee shall directly compensate/ remunerate the professional who is engaged. 2.8.2. While a Debenture Trustee may avail the services of independent professionals, the responsibility shall rest with the Debenture Trustee. Page 23 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-IIA FORMAT OF DUE DILIGENCE CERTIFICATE TO BE GIVEN BY THE DEBENTURE TRUSTEE AT THE TIME OF FILING THE DRAFT OFFER DOCUMENT/ PLACEMENT MEMORANDUM 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 said issue and other such relevant documents, reports and certifications. 2) On the basis of such examination and of the discussions with the Issuer, its directors and other officers, other agencies and on independent verification of the various relevant documents, reports and certifications, WE CONFIRM that: a) The Issuer ....
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....rms of offer document/ placement memorandum and debenture trustee agreement. (b) Issuer has executed the debenture trust deed as per terms of offer document/ placement memorandum and debenture trustee agreement. (c) The Issuer has given an undertaking that charge shall be registered with Sub- registrar, Registrar of Companies, Central Registry of Securitization Asset Reconstruction and Security Interest (CERSAI), Depository etc., as applicable, within 30 days of creation of charge. Page 26 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 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 27 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 III: Security and Covenant Monitoring System 1. In order to s....
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....or versions of such changes. 3.8. Be responsible for the effective and smooth functioning of the system and shall develop a mechanism to establish accountability/ responsibility for the rectification of various issues and glitches that may hamper the effective functioning of the system. 3.9. Have in place operational guidelines for the system after consultation with various stakeholders. 4. In line with current market practices, related to issuance of debt securities, the system, as per the nature of the debt securities, shall enable various stakeholders to record information for the following aspects: 4.1. Security creation, security cover and covenants; 4.2. Periodical monitoring of security cover and covenants; 4.3. Interest and redemption payment (part and full) of debt securities; 4.4. Credit Rating information 5. Accordingly, the role and responsibilities of various stakeholders in the system have been defined below. Page 29 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. Rec....
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....ty of IBBI or any other independently verifiable source and shall confirm the same on the system and update any subsequent changes, in case of any discrepancy. c) Pursuant to the issuance of due diligence certificate by the Debenture Trustee to the Stock exchange as per Annex-IIB of this Master Circular, the same shall be uploaded on the system by the Issuer. 5.3. Modification in the information recorded on the system: Any change in already recorded information on the system related to charge creation, registration details etc. due to any discrepancy or any modification in the value or details of the security provided on account of provision of additional security by the Issuer or reduction or substitution of existing security provided by the Issuer, shall be made after verification and validation by Debenture Trustee and information regarding requisite documents and permission/ consent obtained shall also be recorded on the system. 5.4. Recording of covenants in the system: Page 31 of 117 5331 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à....
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.... the Debenture Trustee, by itself or through professionals in terms of provisions of Chapter II of this Master Circular c) Upload the title search reports, valuation reports etc., in terms of provisions of Chapter II of this Master Circular d) The Debenture Trustee shall release charges in case any debt is repaid and update/validate the same in the platform. C. Interest and redemption payment 5.8. Interest and principal payment: a) The Issuer shall record information pertaining to payment of interest and repayment of principal on the system at the time of creation of ISIN/ temporary ISIN. The issuer shall also record the status of such payment/ repayment within one working day of payment/ redemption due date after taking requisite details from Registrar and Transfer Agent. The format for the same is as specified in Annex-IIIC of this Master Circular. b) Once such information is recorded on the system, the Debenture Trustee shall validate the status of such payment/ repayment in the system after receiving the requisite details from the Registrar and Transfer Agent including file prepared for payment of interest and repayment of principal, Bank confirmation etc. Suc....
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.... carried out by CRAS shall be recorded in the system by the Issuer within one working day of the press release, which shall inter-alia comprise rating action including rating outlook, date of press release and hyperlink for press release of credit rating. In case of discrepancy, Issuer and/ or CRAS shall notify the same on system and CRAS shall update the correct information in the system within two working days of such notification. 6. Unique asset identifier: 6.1. As the backbone of the system is the uniqueness of the record of assets, a system generated unique identifier (Asset ID) shall be allotted for each asset offered by the Issuer as security for the debt securities. For data exchange and verification across Depositories, format for unique Asset ID shall be a 12 digit alphanumeric string, which will be generated as provided in Annex-IIID of this Master Circular. 6.2. To ensure that there is only one unique asset ID assigned to an asset of the issuer for effective asset creation as well as tracking, the system will provide an alert to the Issuer and the Debenture Trustee by having appropriate validation/ duplicate checks in the system for identifying possibl....
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.... ISIN (in case of re-issuance), as applicable, only after confirming recording of information in the system. 11. For existing outstanding debt securities, issuers were required to enter the details in the system on or before January 31, 2023 and Debenture Trustees were required to verify the same by February 28, 2023. 12. Issuers, Debenture Trustees, CRAs, etc. shall have such mechanism to execute such functions as required for the system. 2 Applicable for all issues made on or after April 01, 2022 Page 37 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-IIIA Registration of assets for initial due diligence 1. Type and nature of security offered a. Immovable Property b. Movable Fixed Assets C. Current Assets viz., receivables, book debts d. Intangible viz., IPRs, etc., Securities/Other Financial Asset e. f. Assignment of rights g. Guarantee viz personal corporate, corporate guarantee, government guarantee etc. 2. Details related to security offered – The required dat....
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....tails of any receipt or challan obtained by Issuer after filing. 3.3. List of documents submitted to Agency 3.4. Certificate/ document obtained from statutory/ government authority after successful registration of charge. 4. An individual charge created maybe required to be registered with more than one agency, hence depository may enable Issuer to upload the above mentioned information for more than one agency. Page 40 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-IIIC Interest and principal payment details 1. Issuers shall fill all the requisite fields in at the time of creation of ISIN/ temporary ISIN as specified by filling in the following details: Item Details • Name of Instrument Date of Information Memorandum • Issue Size • No. of Instrument • Face Value (Rs.) Interest Payment • • Rate of Interest Interest Amount to be paid on due date Record Date Frequency • Due date for Interest Payment • Name of Instrume....
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....¥à¤¡ Securities and Exchange Board of India Annex-IIIE 1. Common parameters across asset types: The following is an indicative list of parameters which shall be captured for all categories of asset types and subtypes to assign Asset ID: a) Asset name b) Short description of Asset c) Asset type & sub-type d) Address details of the assets including PIN Code for assets located in India, wherever available. e) Ownership details of the asset f) Valuation details of the asset g) Unique Identification Number, if any, provided by regulator/agencies and the agency identifier. h) Code along with Code Description in ERP (Enterprise Resource Planning) system of the issuer, wherever available. i) Code along with Code Description in FAR (Fixed Asset Register) of the issuer, wherever available. j) Validity/Expiry date, if any. k) Encumbrance/lien details, if any. 2. Specific additional parameters for certain asset types: In addition to the above, following parameters shall also be captured for these specific asset types and subtypes. Sr. Asset Asset Sub No. Type 1. Immovable Type All Parameters to compare for Duplicate check a. Area of the property Proper....
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....ation of REF 1.1. The issuer proposing to list debt securities shall deposit an amount equal to 0.01% of the issue size subject to maximum of Rs. 25 lakhs per issuer towards REF with the 'Designated Stock Exchange', as identified and disclosed in its Offer Document. 1.2. The REF shall be created and maintained in the following form: a. The issuer shall deposit cash or cash equivalent(s) including Bank Guarantees towards contribution to this fund at the time of making the application for listing of debt securities. b. The Designated Stock Exchange shall invest such cash in the REF in Government Securities or Treasury Bills or Fixed Deposits with a Scheduled commercial bank or gilt or overnight mutual fund schemes and the income/interest earned thereof shall be added to the REF of the issuer. c. The issuer shall ensure that the Bank Guarantee remains valid for a period of six months post the 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¤....
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.... Debenture Trustee shall take confirmation from Designated Stock Exchange or any other independent source in writing regarding the creation of REF by the issuer and shall not rely solely upon the communication by the issuer. 4.2. The Stock Exchange shall disclose on their websites, the amount of REFs created by the issuers on a half yearly basis. Such disclosure shall also include the details of the Debenture Trustee for the debt securities. Page 49 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 V: Security Cover Certificate In terms of regulation 54 read with regulation 56(1)(d) of SEBI LODR Regulations, 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 certificat....
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....ecurity cover on standalone basis for the Issuer and; b) Table on net summary basis on consolidated level in order to provide the overall/ holistic picture of the borrowings and security cover provided by the Issuer. 1.8 Obligations of the Issuer in case of third party/ subsidiary/ group/ holding company assets being offered as underlying security: a) The book value for security cover shall be certified by the statutory auditor of the third party/ subsidiary/ group/ holding company with respect to third party/ subsidiary/group/ holding company assets being offered as underlying security. b) In case, security cover comprises exclusive charge on third party/ subsidiary/group/ holding company 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....
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....curity cover shall be calculated in the following manner: Pari-passu Security Cover= Value of assets having pari-passu charge outstanding value of corresponding debt + Interest accrued 4. Affixing Unique Document Identification Number (UDIN) to the security cover certificates: The security cover certificates as required under the provisions of this Master Circular shall contain, as applicable, the UDIN generated in the manner prescribed by the relevant regulatory authority. 5. Qualifications/ disclaimers in security cover certificates: Page 53 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 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 ....
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....रतिà¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India LIABILITIE S 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 colu....
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....nitoring are incorporated 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 deed Page 60 of 117 5....
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....e 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. 3. Disclosures by Debenture Trustee: 3.1. In order to enhance transparency with respect to the no-objection certificate (NOC)/ ....
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....eding 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-use Change in nature and conduct of business Change in management Fund raising/ borrowing/ encumbrance Covenant as to Ratio or percentage, not less than, third party interest/title, rentals, negative lien, insurance, ROC and CERSAI filing etc. Covenant as to minimum rating (Rating symbol), Standalone basis, consolidated, CE/SO rating, notch....
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....nex-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 securities in respect of all issues during a financial year within five working days of start of financial year. 3.2. A Debenture Trustee shall also update such details for any new issue of debt securities handled during the financial year within five days of closure of the Issue. 3.3. A Debenture Trustee shall also update the status of payment ISIN-wise against such issuers not later than one day from the due date. In case the payment is made with a delay by the issuer, Debenture Trustee shall update the calendar specifying the date of such payment, with....
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..../ 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 और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India year ended March/ Sep 20... Secured Unsecured Total Secured Unsecured Total Secured Unsecured Total Secured Unsecured Total No. Amt. No. Amt. No. Amt. No. Amt. No. Amt. No. Amt. No. Amt. No. Amt. No. Amt. No. Amt. No. Amt. No. Amt. No. Amt. 5. Status of information regarding breach of covenants/terms of the issue, if any action taken by debenture trustee S. No. Name of the Listed Covenants Entity / terms of issue (if Security to be Date of enforced due to actual breach of breach Date of detecting (ISIN) any covenant/terms ) breached of issue during the including the breach by the debenture trustee Date of intimation given to debenture holders, stock exchanges, SEBI, etc. (if applicable) Delay if any (in no. of da....
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.... shortfall etc.) Page 72 of 117 531 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India No lien Interest escrow payment Sinking fund account account account 8. Status of information regarding any default by listed entity and action taken by Debenture Trustee Name of Issue the listed Type entity (Public/ (including Privately crores) Issue Secured size (in z / Unsecured Default of Year interest/ of redemption default Date of Result of the voting (receipt of Date of intimating/consents), if applicable convening amount (1st/ ISIN) placed (Yes/ No) 2nd/ listed) along with 3rd/..) the amount outstanding sending notice to the debenture holders Negative consent for enforcement of security Positive consent Other consents, meeting the for signing if any the ICA of Date of enforcement of security (Filing with DRT/NCLT Date details and of conclusion Date of any actions other of recovery proceedings (Appointment debenture holders as of applicable) nomin....
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....on or before the due date. While seeking such information, the Debenture Trustee shall also intimate to CRAS. 3.1.2. If the Issuer confirms the status of such payment/ repayment or where no information is received from the Issuer on or before the due date, the Debenture Trustee shall accordingly provide ISIN-wise information to the CRAS latest by one day after such due date which shall state the following: a) Information about payment made on or before the due date or; b) Information about delay/ default in payment or; c) No information forthcoming from the Issuer on the payment status. 3.1.3. In cases where the CRAs have been informed as per point no. 3.1.2 above that no information is forthcoming from the Issuer on the payment/ repayment status, the Debenture Trustee shall update the payment/ repayment status to CRAS as and when any such information is available with the Debenture Trustee. 3.2. The Debenture Trustee shall also ascertain the status of payment/ repayment by the Issuer on the due dates from various independent sources available at its disposal which, inter alia, include the websites of Stock Exchanges, holders of listed debt securities and quarterly....
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....¿à¤®à¤¯ बोरà¥à¤¡ Securities and Exchange Board of India Annex-VIIIA Sharing of information between Debenture Trustees and Credit Rating Agencies 1. Information from Credit Rating Agencies to Debenture Trustees a) Rating assigned/revised for debt securities along with the rationale for the same. b) Press release, outstanding ratings etc. in respect of debt securities. c) Non-cooperation by the issuers with respect to sharing necessary information for monitoring the credit quality of the rated instrument with Credit Rating Agencies. d) Press release and separate communication to Debenture Trustee on withdrawal of rating post redemption of entire amount due towards. 2. Information from Debenture Trustees to Credit Rating Agencies a) Whether the asset in respect of which security has been created is free from any encumbrance and adequate to ensure security cover for the debt securities or if there is any breach of the terms of creation of the security. This information shall be shared on a half yearly basis. b) Funds transferred to Debenture Redemption Reserve (DRR), depletion of the DRR /invocation of guarantee which could affect the pay....
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....respect of debt securities issues dealt by them and redress thereof, latest by seventh of the succeeding month, as per the format enclosed at Annex-IXB to this Master Circular. Page 78 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. Exclusive e-mail ID to redress of Investor Complaints In order to address the issue of having a direct and quicker forum for enabling investors to register their complaints expeditiously, a Debenture Trustee shall designate an e- mail ID of the grievance redress division/compliance officer exclusively for the purpose of registering complaints by investors. It shall display the email ID and other relevant details prominently on its website and in the various materials/ pamphlets/ advertisement campaigns initiated by it for creating investor awareness. 3. Redress of investor grievances through SEBI Complaints Redress System (SCORES) platform 3.1. The Debenture Trustee shall send its details, in the format specified in Annex-IXC of this Master Circular to SEBI ....
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....t the complaint is not pending against them. 3.7. Failure by a Debenture Trustee to file ATR under SCORES within thirty days of date of receipt of the grievance shall not only be treated as failure to furnish information to SEBI but shall also be deemed to constitute non-redress of investor grievance. 4. Dissemination of Information regarding Grievance Redress Mechanism For information of all investors who deal/ invest/ transact in the market, the following shall be prominently displayed in the offices of Debenture Trustees: Dear Investor, In case of any grievance / complaint against the Intermediary: Page 80 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 Please contact Compliance Officer of the Intermediary (Name and Address) / email-id ([email protected]) and Phone No. - 91-XXXXXXXXXX. You may also approach CEO / Partner / Proprietor (Name) / email id ([email protected]) and Phone No. - 91-XXXXXXXXXX. If not satisfied with the response of the intermediary, you can lodge your grievances with....
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....tivity/ Service No. Timeline (within no. of days) 1. Disclosure by Debenture Trustee on Website or Stock Exchanges, as applicable On continuous basis a. Revision in Credit ratings of debt securities 1 b. Status of payment of interest/ repayment of principal by the Issuer 1 On quarterly basis a. Monitoring of Security Cover Certificate for secured debt listed debt securities 75/90 b. Statement of value of pledged securities to Stock Exchange 75/90 C. Status of Quarterly compliance report submitted by the Issuer 75/90 On half yearly basis Details of issuances of listed debt securities handled by Debenture a. 75 Trustee and their status b. Status of information regarding breach of covenants/ terms of the issue, if any action taken by debenture trustee 75 Complaints received by debenture trustee(s) including default C. 75 cases d. Net worth certificate of guarantor to stock exchange (in case listed debt securities are secured by way of personal guarantee) On annual basis 75 a. Financials/value of guarantor prepared on basis of audited financial statement etc. of the guarantor(in case listed debt securities are secured by way of corporate gu....
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....by investors holding at least 1/10th in value of the debentures for the time being outstanding. e) To lodge complaints with respect to their debt securities including non-receipt of interest and or principal etc. with Debenture Trustee. f) Receive information from Issuers as per SEBI Regulations and Companies Act, 2013. Investor Obligations – under obligation to - a) Read the information memorandum and debenture trust deed carefully before taking investment decision. b) Keep updated record with Depository Participant including bank details, address, email ID of first holder, PAN etc. at all times. c) Keep themselves updated with all information on public domain such as, debenture trustee website, Stock Exchange, India bond Info etc. and any other platform introduced from time to time. d) Participate in the meeting called by the Debenture Trustee. e) Cooperate with debenture trustee and provide information to debenture trustee f) Respond to debenture trustee's requests/letters/ notices with clear and specific mandate within the time period specified in the letter/ notice by the debenture trustee. 6. Details of grievance redress mechanism 6.1 Investor shal....
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....vant) 4 Other Sources (if any) 5 Grand Total *Should include complaints of previous months resolved in the current month, if any. **Should include total complaints pending as on the last day of the month, if any. ^Average resolution time is the sum total of time taken to resolve each complaint in the current month divided by total number of complaints resolved in the current month. Page 87 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. Month - wise complaints data on half yearly basis: S Month No. 1 July, 2021 2 August, 2021 3 September, 2021 4 October, 2021 5 CO November, 2021 6 December, 2021 Grand Total Carried forward from previous month Received Resolved Pending 3. Trend of annual (Financial Year) disposal of complaints (for 5 years on rolling basis) S No. Year 1 2017-18 2 2018-19 3 2019-20 4 2020-21 5 2021-22 Grand Total Carried forward Received Resolved Pending from previous year Page 88 of 117 5-3 à¤à¤¾à¤°à¤¤à¥€à¤¯ à....
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....nce of security are same under a single ISIN even though it might have been issued under multiple offer documents. 2. Appointment of Director nominated by the Debenture Trustee on boards of issuers 2.1. Regulation 23(6) of the SEBI NCS Regulations obligates an issuer which is a company under the Companies Act, 2013 to ensure that its Articles of Association requires its Board of Directors to appoint as director, the person nominated by the debenture trustee(s) in terms of clause (e) of sub-regulation (1) of regulation 15 of the SEBI (Debenture Trustees) Regulations, 1993. 2.2. Issuers other than those mentioned in para 2.1 above shall submit an undertaking to their Debenture Trustees that in case of events as mentioned in Regulation 15(1)(e) of SEBI (Debenture Trustees) Regulations, 1993, a non-executive / independent director / trustee / member of its governing body shall be designated as nominee director for the purposes of Regulation 23(6) of NCS Regulations, in consultation with the Debenture Trustee, 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¥....
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....µà¤¿à¤¨à¤¿à¤®à¤¯ बोरà¥à¤¡ Securities and Exchange Board of India 3.3.2. The notice shall contain the following: a) A provision for negative consent for proceeding with the enforcement of security; and b) A provision for positive consent for signing the ICA (in case the Debenture Trustee is approached by other lenders for signing/ joining the ICA); and c) the time period within which the consent needs to be provided, viz. consent to be given within 15 days from the date of notice; and d) the date of meeting to be convened. e) A disclosure to the effect that in case requisite consents are not received either for enforcement of security or for signing ICA, then the Debenture Trustee shall take further action, if any, as per the decision taken in the meeting of the holders of listed debt securities. 3.3.3. Debenture Trustee shall convene the meeting of holders of listed 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 (Debe....
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....rculars issued thereunder from time to time. b) If the resolution plan imposes conditions on the Debenture Trustee that are not in accordance with the provisions of Companies Act, 2013 and the rules made thereunder, the Securities Contracts (Regulations) Act, 1956 and the Securities and Exchange Board of India Act, 1992 and the rules, regulations and circulars Page 93 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 issued thereunder from time to time, then the Debenture Trustee shall be free to exit the ICA altogether with the same rights as if it had never signed the ICA. Under these circumstances, the resolution plan shall not 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 p....
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....es is not received by Stock Exchanges and Depositories within stipulated timeline, transactions in such debt securities shall continue to be restricted and such restrictions shall continue until any further intimation is received from Issuer/ Debenture Trustee regarding the status of payment of such debt securities. 2. Continuous assessment of default status: 2.1. In case the Issuer fails to intimate the updated status of payment of the concerned debt securities within the stipulated timelines, the Debenture Trustee shall carry independent assessment as given at paragraph 1 above and intimate the status of payment of debt securities to the Stock Exchange and Depositories by the seventh working day of April of 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, et....
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....ormed by Debenture Trustee are not in conflict with Debenture Trustee activities and appropriate systems and policies have been put in place to protect the interests of debenture holders. b) Change in status or constitution i. Reporting of changes in status or constitution' of Debenture Trustee including the following: Amalgamation, demerger, consolidation or any other kind of corporate restructuring falling within the scope of section 391 of the Companies Act, 1956 (1 of 1956) or the corresponding provision of any other law for the time being in force Change in Director, including managing director/ 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 m....
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....ary offers. 3. The principles for outsourcing to be followed by Debenture Trustee are specified at Annex-XIVA of this Master Circular. 4. A Debenture Trustee desirous of outsourcing its activities shall not, outsource its core business activities and compliance functions. 5. The Debenture Trustee shall comply with the provisions of SEBI {KYC (Know Your Client) Registration Agency} Regulations, 2011 and guidelines issued thereunder from time to time. 6. The Debenture 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....
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....rty and the measures put in place by the Debenture Trustee to address such potential conflicts, etc. 2.2 While there shall not be any prohibition on a group entity/ associate of the Debenture Trustee to act as the third party, systems shall be put in place to have an arm's length distance between the Debenture Trustee and the third party in terms of infrastructure, manpower, decision-making, record keeping, etc. for avoidance of potential conflict of interests. Necessary disclosures in this regard shall be made as part of the contractual agreement. It shall be kept in mind that the risk management practices expected to be adopted 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 intern....
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....¤¿à¤®à¤¯ बोरà¥à¤¡ Securities and Exchange Board of India 4.2 The due diligence undertaken by an Debenture Trustee shall include assessment of: a) third party's resources and capabilities, including financial soundness, to perform the 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 ....
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....cising oversight and management of the arrangements when Debenture Trustee outsources its activities to foreign third party. For example, the contract shall include 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 plan....
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....is taken by the third party to build safeguards for data security 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 th....
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....al 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 defined in Securities and Exchange Board of India Certification of Asso....
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....tation 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, addressed to designated directors and principal officers of Debenture Trustees, has specified guidelines including red flag indicators for detecting suspicious tra....