TaxTMI 
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TaxTMI 
Master Circular for Debenture Trustees
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....ith consequent changes. The stipulations contained in these circulars have been detailed chapter-wise in this Master Circular. Accordingly, the list of existing circulars for Debenture Trustees which have been superseded by this Master Circular is placed at Annex-1. 4.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such rescission, - 4.1 anything done or any action taken or purported to have been done or taken under the rescinded circulars, prior to such rescission, shall be deemed to have been done or taken under the corresponding provisions of this Master Circular; and 4.2 any application made to the Board under the rescinded circulars, prior to such rescission, and pending before it shall be deemed to have been made under the corresponding provisions of these regulations. 5. The Debenture Trustees are directed to comply with the conditions laid down in this Master Circular. Further, it is reiterated that the Debenture Trustees shall have necessary systems and infrastructure in place for implementation of this circular. The Board of Directors of the Debenture Trustees shall be responsible for ensuring compliance with these provisions. 6. This Circular is issued in exercise of the powers conferred under: ....
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.... 2.1. SEBI has enabled digital mode of payment (Real Time Gross Settlement (RTGS)/ National Electronic Funds Transfer (NEFT)/ Immediate Payment Service (IMPS), etc.) for fees/ penalties/ remittance/ other payments etc. 2.2. In order to identify and account for such direct credit in the SEBI account, Debenture Trustee shall provide the information to SEBI once the payment is made as per the format specified below: Page 5 of 122 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India Date Department of SEBI Name of Intermediary/ Other Entities Type of Intermediary SEBI Registration Number (if any) Permanent Account Number (PAN) Amount (in INR) Purpose of Payment (including the period for which payment was made e.g. quarterly, annually) Bank name and Account number from which payment is remitted UTR No. 2.3. The above information should be emailed to the respective department(s) as well as to the Treasury & Accounts division at [email protected]. 3. Grant of prior approval to Debenture Trustee for change in control: 3.1.....
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....¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India 4. Effect on change in control in case of transfer of shareholdings among immediate relatives and transmission of shareholdings in case of a Debenture Trustee being an unlisted body corporate: In the following scenarios, change in shareholdings of a Debenture Trustee will not be construed as change in control: 4.1. Transfer of shareholding among immediate relatives shall not be treated as resulting in change in control; 4.2. Transfer of shareholding by way of transmission to immediate relative or not, shall not be treated as resulting in change in control; Immediate relative shall be construed as defined under Regulation 2(l) of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, which, inter-alia, includes any spouse of that person, or any parent, brother, sister or child of the person or of the spouse. 4.3. Incoming shareholders in the Debenture Trustee, pursuant to transfer of shares from immediate relative/ transmission of shares (immediate relative or not), need to satisfy the fit and pro....
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....¤ªà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India 6.2. The Debenture Trustee may, if it so desires, make a representation for dispensing with the procedure, along with the application, for surrender in terms of the first proviso to Regulation 33B of SEBI (Intermediaries) Regulations, 2008. 6.3. In all cases of transfer of business or client accounts to another registered Debenture Trustee, the clients shall not be subjected to any additional cost. 7. Designated e-mail id for regulatory communication with SEBI: 7.1. In order to facilitate the issuance of digitally signed circulars, Debenture Trustees are required to create a designated email-id for regulatory communications. This email-id shall be exclusively for the above purpose and should not be person centric. 7.2. The designated email-id shall be communicated to SEBI by emailing a file to [email protected], as prescribed below: a) The file should be an excel file; b) The name of the file and the subject of the email shall specify the type of Debenture Trustee and the name of the Debenture Trustee. F....
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....uest for surrender of certificate of registration. Thanking you, Yours faithfully, Name: (Whole time/ Managing Director/ Principal Officer) *Please strike off, if not applicable. Page 12 of 122 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India Chapter II: Due Diligence by Debenture Trustees 1. Appointment of Debenture Trustee: A Debenture Trustee shall ensure compliance with the provisions of the Regulations 13 and 13A of the DT Regulations with regard to being appointed as a Debenture Trustee in relation to an issue. 2. Due diligence in respect of secured debt securities: The Debenture Trustee shall ensure the following with regard to due diligence at the time of creation of security: 2.1. Documents/ Consents required at the time of entering into debenture trustee agreement: In order to enable the Debenture Trustee to exercise due diligence with respect to creation of security, the Issuer at the time of entering into debenture trustee agreement shall provide the following information/ documents to the De....
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....age 14 of 122 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India V. 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. e) In case of corporate guarantee or any other document/ letter with similar intent is offered as security or a part of security: i. Details of guarantor viz. holding/ subsidiary/ associate company etc .; ii. Audited financial statements (not older than 6 months from the date of debenture trustee agreement) of guarantor including details of all contingent liabilities; iii. List of assets of the guarantor along-with undertakings/ consent/ NOC as per paragraphs 2.1(b) and 2.1(c) above; iv. Conditions of invocation of guarantee including details of put options or any other terms and conditions which may impact the security created; v. Impact on the security in case of restructuring activity of the guarantor; vi. Undertaking by the guarantor that the guarantee shall b....
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....¤¯ बोरà¥à¤¡ Securities and Exchange Board of India valuer, or legal counsel shall independently carry out due diligence. The terms and conditions with respect to exercising due diligence shall also be included in the debenture trustee agreement. The due diligence to be exercised by Debenture Trustee with respect to creation of security shall, inter-alia, include the following: (a) Debenture Trustee shall verify that the assets provided by Issuer for creation of security are free from any encumbrances or necessary permissions or consents has been obtained from existing charge holders by carrying out the following checks: (i) Verify from ROC, Sub-registrar, CERSAI, IU or other sources where charge is registered/ disclosed as per terms. (ii) In case of conditional consent/ permission received as per para 2.1(c)(ii) above: (A) Verify whether such conditional consent/ permission given to Issuer by 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/....
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....ospectus/ placement memorandum by an issuer, then the Debenture Trustee shall undertake due diligence as under: (a) The Debenture Trustee may furnish a due diligence certificate, confirming that it has carried out due diligence for the clauses other than that related to security creation [clauses are specified in the formats prescribed under Regulations 40 (1) (a) and 44 (3) (a) of the NCS Regulations and Annex-IIA of this Master Circular]. (b) At the time of the issuance of the tranche prospectus/ placement memorandum when the issue structure including terms related to security has been determined and finalized, the Debenture Trustee shall issue a due diligence certificate covering all clauses of formats prescribed under Regulations 40 (1) (a) and 44 (3) (a) of the NCS Regulations and Annex-IIA of this Master Circular. 2.4. Encumbrance on securities for issuance of listed debt securities: 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 ....
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....specified in the OD/ PM, in favour of the Debenture Trustee and also execute a debenture trust deed1 with the Debenture Trustee. 2.6.2. The Stock Exchange shall list the debt securities only upon receipt of a due diligence certificate as per format specified in Annex-IIB of this Master Circular from the Debenture Trustee confirming creation of charge and execution of the debenture trust deed. 2.6.3. The charge created by Issuer shall be registered with 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 a breach of covenants/ terms of the issue by the Issuer. 2.7. Manner of change in security/ creation of additional security/ conversion of unsecured to secured in case of already listed debt securities: 2.7.1. Regulation 59 of the 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: a) A change in security, b) Creation of additional security in case of already secured listed debt securities,....
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....ereunder and bye-laws of Stock Exchanges and Depository, as applicable. f) The Depository shall assign a new ISIN to the listed debt securities pursuant to submission of documents mentioned above only and shall share the information with respect to change in ISIN of listed debt securities, with the recognized Stock Exchanges. g) It may be noted that none of the cases mentioned in paragraph 2.7.1 would constitute a change in the structure of the listed debt securities, provided there are no other changes to the terms/ nature of issue of the listed debt securities such as maturity date, coupon rate, face value, redemption schedule, nature of the debt securities (secured/ 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: 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 Debentur....
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....tifications. 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 has made adequate provisions for and/or has taken steps to provide for adequate security for the debt securities to be issued and listed. b) The Issuer has obtained the permissions / consents necessary for creating security on the said property(ies). c) The Issuer has made all the relevant disclosures about the security and also its continued obligations towards the holders of debt securities. Page 25 of 122 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India 5=3 d) Issuer has adequately disclosed all consents/ permissions required for creation of further charge on assets in offer document/ placement memorandum and all disclosures made in the offer document/ placement memorandum with respect to creation of security are in confirmation with the clauses of....
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....¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India Annex-IIC FORMAT OF DUE DILIGENCE CERTIFICATE TO BE GIVEN BY THE DEBENTURE TRUSTEE AT THE TIME OFFILING OF DRAFT OFFER DOCUMENT/ PLACEMENT MEMORANDUM To, Stock Exchange Dear Sir/ Madam, SUB .: ISSUE OF LTD. BY 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 of independent verification of the various relevant documents, reports and certifications, WE CONFIRM that: a. All disclosures made in the offer document with respect to the debt securities are true, fair and adequate to enable the investors to make a well informed decision as to the investment in the proposed issue. b. Issuer has disclosed all covenants proposed to be included in debenture trust deed (including any side letter, accelerated payment clause etc.), off....
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....l create, host, maintain and disseminate the system for security and covenant monitoring using distributed ledger technology (or similar such technologies). Further, the depositories 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. Page 31 of 122 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India 5=3 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. 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 stakeholde....
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.... Chapter II. c) In case the value 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. Page 33 of 122 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India 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. 5.2. Recording of charge creation and charge registration details on the system: a) Pursuant to creation of....
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.... of its Board of Directors. viii. Covenants with respect to related party transactions by the Issuer. ix. Monitoring of Debenture Redemption Reserve, Redemption Fund, Recovery Expense Fund. Debenture Page 35 of 122 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India X. 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 LODR Regulations. 5.6. The Issuer shall, on a periodic basis, upload the necessary and applicable documents, information within stipula....
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....stee shall update in the system the status of such payment/ repayment, within seven working Page 37 of 122 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India 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 X 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. D. Credit Rating information: 5.11. The Issuer shall upload all the credit rating information for debt securities including rating action, date of p....
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....ture. 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 Page 39 of 122 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India 5=3 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 and verify security cover thereof and take remedial action, if required. 9.2.Any event which reduces the security cover below the mandated/ stipulated limit, as per regulation 54 of the LODR Regulations, shall be updated by the issuer in the system immedi....
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....: i. For unencumbered assets, an undertaking that the assets on which charge is proposed to be created are free from any encumbrances. 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 II of this Master Circular and any other document required to be given by the Issuer to the Debenture Trustee. Page 42 of 122 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India Annex-IIIB Manner of updation of charge creation details on System: 1. Issuer shall enter the following details related to charge created on system as and when applicable: 1.1. Asset details 1.2. Type of Charge Creation 1.3. Charge holder 1.4. Amount 1.5. Date on which charge is created 1.6. Modification date 1.7. Charge Closure date i.e. redemption date. 2. System shall ensure every charge details recorded in the system shall have a unique number. Therefore, an asset with a unique asset ID shall be mapped against multiple charge IDs. 3. After registering....
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.... Actual Date for Interest Payment · Amount of interest paid · Date of last Interest Payment on continuous basis - Payment of Interest· Reason for non-payment/ delay in payment · Change in Frequency of payment (if any) · Date of Change · Details of such change · Change in Record Date Updation by Issue on continuous basis - Redemption payment· Actual Date for Redemption · Amount Redeemed · Outstanding Amount (Rs.) · Reason for non-payment/ delay in payment · Date of previous redemption (part redemption), if applicable · Change in Record Date Page 45 of 122 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India Annex-IIID Asset ID = System Code + Asset Type + Asset Sub Type + Unique Number + Check Digit System Code2 characters ('IN' - for all asset types and sub-types) Asset type2 character Alphanumeric Asset sub-type2 character Alphanumeric Unique Number5 character alphanumeric sequential (start with 00001 to 99999. Post full utilization of numbering then prefix will start from A-Z.....
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....b. PAN/CIN No. for guarantors in India c. For guarantors outside India i. Unique Identification Number provided by Regulator/ Authority of the host country ii. Issuing Regulator/ Authority d. Guarantee Amount Page 48 of 122 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India 5=31 Sr. No.Asset TypeAsset Sub TypeParameters tocompare for Duplicate check Personala. Guarantor details such as Name of the company, address, net worth etc. b. PAN No for guarantors in India c. For guarantors outside India i. Passport Number ii. PassportIssuing Country d. Any other Unique Number provided by regulator of the host country along with name of the regulator. e. Guarantee Amount Page 49 of 122 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India Chapter IV: Recovery Expenses Fund In order to enable the Debenture Trustee to take prompt action for enforcement/legal procee....
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....tion. 2.2. For the purpose of the provisions of this Chapter, Lead Debenture Trustee shall mean: 1. A Debenture Trustee who is chosen as the Lead Debenture Trustee by other Debenture Trustees; or 2. A Debenture Trustee who represents holders of more than 50% of the outstanding value of debt securities. 2.3. The Debenture Trustee shall keep a proper account of all expenses incurred out of the funds received from REF towards Legal expenses, cost for hosting meetings etc. towards enforcement/ legal proceedings in relation to the Debt securities. 3. Refund of REF to the Issuer 3.1. The balance in the REF shall be refunded to the issuer on repayment to holders of debt securities on their maturity or at the time of the exercise of call or put option, upon a 'No Objection Certificate (NOC)' being issued by the Debenture Trustee to the Designated Stock Exchange. Page 51 of 122 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India 3.2. The Debenture Trustee shall satisfy that there is no 'default' on any other listed debt ....
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.... in the security cover certificate. b) For the asset classes wherein there is no regulatory guideline on frequency of the valuation of a specific asset class then it shall be on quarterly basis. Page 53 of 122 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India 5=3 1.4. In case, the issuer has more than one Debenture Trustee for its listed debt securities, then the Issuer shall prepare such certificate separately for each Debenture Trustee. 1.5. The assets that are not paid for shall not be included as part of any security cover calculation. 1.6. In case security cover offered for the debt securities comprises the assets of the Issuer only, the security cover shall be prepared on standalone basis. 1.7. In case debt securities are secured by creation of charge on the assets of a third party/ subsidiary/ group/ holding company; or assets of the Issuer are offered for securing the debt securities issued by a third party/ subsidiary/ group/ holding company; or assets of the Issuer are offered for securing the other l....
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....ebenture Trustee shall certify the security cover in respect of the secured debt securities, to the extent that the security is held by it. 2.2. In case the Issuer has more than one Debenture Trustee for its listed debt securities, then Debenture Trustees may choose a common independent professional for preparation of security cover certificate. 2.3. In case of reduction in the computed value of security cover in comparison to the previous quarter or previously calculated security cover, the Debenture Trustee shall record the reason for such variation in the security Page 55 of 122 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India cover certificate. Clarification, if any, in this regard, may be obtained by Debenture Trustee from the Issuer. 3. Calculation of Security Cover Ratios In order to standardize calculation of security cover ratio as prescribed in Annex-VA of this Master Circular, the following formulas shall be used: 3.1. Exclusive security cover shall be calculated in the following manner: Exclusive ....
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....sets chargedis not ascertainable or applicablefor Pari-market value is not ascertainableTotal Value(=K+L+M+ certificateDebtcertificatecertificatecoveredcharge)on(For Eg.passuor applicableN) being issuedbeing issuedis issuedin columnExclusiveBankcharge Assets(For Eg. &F)basisBalance,viiiBank otherDSRA,Balance, debtmarket valueDSRA, with paripassu charge)is not applicable)market value is not applicable) being issued being issued Page 58 of 122 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 Relating to Column F Book ValueBook ValueYes/ NoBook ValueBook Value ASSETS Property, Plant and Equipment Capital Work-in Progress Right of Use Assets Goodwill Intangible Assets Intangible Assets under Development Investments Loans Inventories Page 59 of 122 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India Trade Receivables Cash and Cash Equivalents Ban....
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....ket value shall be calculated as per the total value of assets mentioned in Column O. Page 62 of 122 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India Chapter VI: Periodical/ Continuous Monitoring by Debenture Trustee A Debenture Trustee shall undertake independent periodical assessment of compliance with covenants or terms of the issue of listed debt securities. 1. Monitoring of security created/ assets on which charge is created 1.1. Chapter II of this Master Circular has prescribed the manner in which Debenture Trustees shall carry out due diligence for creation of security at the time of issuance of debt securities. As required under Regulation 15(1)(s) & 15(1)(t) of the DT Regulations, Debenture Trustee shall carry out due diligence on continuous basis. 1.2. Towards this, the issuer and the Debenture Trustee shall ensure that the terms and conditions relating to periodical monitoring are incorporated in the debenture trust deed4. These terms and conditions shall, inter-alia, entail that the Issuer shall pro....
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....listed debt securities which shall be certified by the statutory auditor of the Issuer. 2.2. Regulation 15(f) of the DT Regulations mandates the Debenture Trustee to monitor the breach of covenants. In order to ensure effective monitoring, a Debenture Trustee shall: a) Establish board approved internal policies with respect to proactive and effective monitoring of breach of covenants and such policy shall inter-alia include: i. procedure of monitoring of breach of covenants; and ii. clearly defined role and responsibilities of the employees engaged in the process of monitoring of breach of covenants including Page 64 of 122 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India delegation of authority with respect to the process of monitoring of breach of covenants. b) Formulate the category wise list of covenants applicable to the particular issuance defining the frequency of each covenant to be monitored viz. continuous, quarterly, half-yearly, annual etc. The covenants may be categorized as financial covenants, a....
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....o.CategorySub-type (As applicable)Covenant (As applicable) 1.Accounts/ funds/ reserves maintained· Debt Service Reserve amountCovenant as to amount to be maintained, manner of creation · Interest Service Reserve Account and/ or funding of account, Date till required to be maintained or date on which to be created, manner of creation including period for renewal, replenishment, invocation (amount, date, period, etc.), manner of maintenance (ratio, percentage etc.), bank account number (if applicable) etc. · Major maintenance reserve · Escrow account/ RERA account · Debenture Redemption Reserve · Debenture Reserve Fund · Recovery Expense Fund · Account details · Any other Fund/ Account 2.Financial· Debt Service Coverage Ratio (DSCR)Covenant as to maintenance as a ratio or percentage of . . (state), Not less than/ Not exceeding x, Time Bucket etc. · Interest cover . Net Debt to EBITDA . Gross Debt to EBITDA · Debt cap · Debt Equity ratio · Debt/ Tangible Net Worth . Gross Non-Performing Assets · PAR 90 and write off Net Non- Performing Assets · Tangible Net Worth · Debt to Value Ratio · CAR (Capital Adequacy Ratio) (Tier I CAR) Â....
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....is within 75 days of the end of each half-yearTable 4 of Annex-VIIA issues handled by Debenture Trustee and their status Status of information regarding breach of covenants/terms of the issue, if any action taken by debenture trusteeTable 5 of Annex-VIIA Complaints received by debenture trustee(s) including default casesTable 6 of Annex-VIIA Continuous basis within T+1 day from receipt of information cover certificate and Quarterly compliance report of the Issuer. Monitoring of security days of end of each quarter except last quarter when submission is to be made within 90 days Quarterly basis within 75 Monitoring of security Quarterly basis within 75 Table 3 of Annex-VIIA Page 69 of 122 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India DisclosuresPeriodicityFormat Status regarding maintenance accounts maintained under supervision of debenture trustee ofAnnual basis within 75 days of the end of the financial yearTable 7 of Annex-VIIA Status of information regarding any default by the Issuer and actionTable 8 ....
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....ent (Default / Delayed / Non-Cooperation, No Information etc.)Date of information given to Exchange by the debenture trusteeDate of information given to CRA by the debenture trusteeDetails of action taken by debenture trustee, if any Name of listed entity Page 72 of 122 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India 3. Monitoring of Utilization Certificate and Security Cover: Name of the listedIssue TypeIssue size (inWhether Secured/Periodical status/Utilization CertificateSecurity cover Certificate entity(Public/Rs.UnsecuredperformanceDateDelay (ifSecuritySecurityDate ofDelay (if (includingPrivatelycrores)reports/receipt ofany) &Covercover ratioSecurityany in ISIN )placedQuarterlythereasonsCertificatemaintainedcoversubmission) listed)Compliance reports/ Financial statements submitted by the listed entity (Yes/No)certificate(including follow up done by debenture trustee)provided by (debenture trustee/ statutory auditor/other pls specify)certificate& reasons (including follow up done by debenture trustee) 4. D....
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....ntenance of funds as per Companies (Share Capital and Debentures) Rules, 2014: S. N o.Name of the Listed EntityIssue Type (Public/ Privately placed listed)Type of entity (NBFC/ HFC/FI/ Other)Issue Size (in Rs. crores)ISIN (that is maturing in the current FY)Amount outstandingStatus of maintenance of DRR (15%/ 10% of the amount maturing in the year, applicable as per Companies (Share Capital and Debentures) Rules, 2014)Details action if anytaken, of Details action if any taken, of Page 75 of 122 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India b. Recovery expense fund S. N o.Name of the Listed Entity (including ISINs)Type of Issue (Public/ Privately Placed)Issue Size (in Rs. crores)Size/ Value of recovery fund maintainedAny addition in the Recovery Expense fund during the quarterDetails of usage of the funds, if any, during the quarterAdditional remarks c. Accounts/ funds to be maintained in case of Municipal Debt Securities: S. No.Name of the Listed EntityType of Issue (Public/ Privately Placed)Issue Size (....
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....fied 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: 3.1.1. The Debenture Trustee shall, at least seven days prior to the due date of payment of interest/ repayment of principal, seek ISIN-wise information from Issuers regarding the Page 78 of 122 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 payment of interest/ repayment of principal on or before the due ....
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.... 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 website of the Debenture Trustee, the issuer and the stock exchanges. It is clarified that such actions shall be taken by the Debenture Trustee promptly and in any case not later than next day of the occurrence of such events. Page 80 of 122 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and....
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.... 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 Investor Charter on their websites/through e-mail; b) displaying the Investor charter at prominent places in offices etc. 1.3. Trustee Association of India (TAI) shall also disseminate the Investor Charter on its website. 1.4. Additionally, in order to bring about transparency in the Investor Grievance Redress Mechanism, it has been de....
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....ure Trustee to whom a complaint is forwarded through SCORES, shall take immediate efforts on receipt of a complaint, for its resolution, 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 Trustee to the concerned investor Page 84 of 122 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India should also be uploaded in SCORES and preserved by the SEBI registered Debenture Trustee, for future reference. 3.5. Action taken by a Debenture Trustee will not be considered as complete if the relevant details/ supporting documents are not uploaded in SCORES and consequently, the complaints will be treated as pending. 3.6. A complaint shall be treated as resolved/ disposed/ closed only when SEBI disposes/ closes the complaint in....
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....n of rating revision/ payment of interest/ redemption information by disclosing on Trustee's website/ with Credit Rating Agencies/ Stock Exchanges and Effective resolution of investor complaints. Timely Page 86 of 122 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India . Ascertain that the debentures have been converted or redeemed in accordance with the conditions under which they were offered to the investors. · Enforcement of security as per terms of issue/ regulatory guidelines. . Appoint a nominee director on the Board of the Issuer in case of event of default. · Exercise due diligence to ensure compliance with the provisions of the Companies Act, 2013, the SEBI Regulations and the debenture trust deed by the Issuer. 3. Guidance pertaining to timelines for various services provided: S. No.Type of Activity/ ServiceTimeline (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 securities1 b.Status of ....
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.... in the meeting of investors. Page 88 of 122 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India 5. Rights and Obligations of Investors: Investor Right - Right to: a) Inspect debenture trust deed, to obtain copy of debenture trust deed and related documents as per prevailing state stamp laws. b) Receive notice of any change in terms of debt securities including rollover, redemption etc. or of breach of covenants and/ or event of default from debenture trustees. c) of compromise or arrangement, to sanction any variation in the rights of the investors and to sanction any compromise or arrangement proposed to be made between the Issuer and investor(s). d) Call for a meeting to be convened by the debenture trustee on requisition in writing signed 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 ....
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....laint. 6.6 If the investor is not satisfied with the redress/resolution of the complaint by the debenture trustee, or the issuer, investor can lodge the complaint on the SEBI Complaints Redress System - SCORES (https://scores.gov.in/) or harness the dispute resolution mechanism specified by SEBI from time to time with respect to the Issuer. Page 91 of 122 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India Annex-IXB Data of complaints against Debenture Trustee to be displayed on its website- Format for disclosing of data of complaints on its website: 1. Data for the month ending: S. No.Received fromCarried forward from previous monthReceived during the monthTotal Pending #Resol ved*Pending at the end of the month **Average Resoluti on time^ (in days) Pendin g for less than 3 month sPendin g for more than 3 month s 1Directly from Investors 2SEBI (SCORES) 3Stock Exchange s (if relevant) 4Other Sources (if any) 5Grand Total *Should include complaints of previous months resolved in the current month, if any. ** Shou....
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.... immediately when warranted. Page 94 of 122 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India Chapter X: Breach of Covenants, Default and Remedies 1. Event of default: 1.1. Regulation 51 read with the Explanation to Clause A (11) in Part B of Schedule III of the LODR Regulations defines 'default' as non-payment of interest or principal amount in full on the pre-agreed date which shall be recognized at the first instance of delay in the servicing of any interest or principal on debt. 1.2. In the manner of calling 'event of default', due to the presence of multiple ISINs which may have been issued under the same offer document or a single ISIN which may have been split across multiple offer documents it is clarified that 'event of default' shall be reckoned at the ISIN level, as all terms and conditions of issuance 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. R....
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....nd further provides for approval to be obtained from not less than three-fourth of the holders by value of such debt securities. 3.3. As the resolution plan in the ICA may involve restructuring including roll-over of debt securities, requiring the consent of the investors, the process to be followed for seeking consent for enforcement of security and/or entering into an ICA shall be as under: 3.3.1. The Debenture Trustee shall send a notice to the investors within three days of the event of default by registered post/ acknowledgement due or speed post/ acknowledgement due or courier or hand delivery with proof of delivery as also through email as a text or as an attachment to email with a notification including a read receipt, and proof of dispatch of such notice or email, shall be maintained. 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....
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.... in the meeting. 3.3.6. The consent of the majority of holders of listed debt securities shall mean the approval of not less than 75% of the holders of listed debt securities by value of the outstanding debt and 60% of the holders of listed debt securities by number at the ISIN level. 4. Conditions for signing of ICA by Debenture Trustee on behalf of holders of listed debt securities 4.1. The Debenture Trustee(s) may sign the ICA and consider the resolution plan on behalf of the holders of listed debt securities upon compliance with the following conditions: a) The signing of the ICA and agreeing to the resolution plan is in the interest of holders of listed debt securities and in compliance with the 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 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 Exchang....
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....r transactions in defaulted debt securities (debt securities where redemption amount has not been paid on maturity/ redemption date) has been outlined in Chapter XI of the NCS operational circular. The obligations of Debenture Trustee arising out of the same has been outlined below: 1. Role of Debenture Trustee: 1.1. In case the Issuer fails to intimate the status of payment of the debt securities within stipulated timelines, then Debenture Trustee shall seek status of payment from the issuer and/ or conduct independent assessment (from banks, investors, rating agencies, etc.) to determine the same. Based on such assessment, Debenture Trustee shall intimate Stock Exchange and Depositories the status of payment of debt securities within nine working days of the maturity/ redemption date. 1.2. In case intimation of the status of payment of debt securities 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 a....
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....rly compliance reportHalf-yearly basis within 75 days of the end of each half-yearAnnex-XIIIA Details of other activities carried out by Debenture Trustee(s) including type of activity, description of activity etc.- Risk-Based Supervision report- 2. The half-yearly compliance report shall be reviewed by the Board of Directors of the Debenture Trustee prior to the submission to SEBI. Page 103 of 122 531 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India Annex-XIIIA COMPLIANCE CERTIFICATE FOR THE HALF YEAR ENDED SEPTEMBER/ MARCH 20 .. a) No conflict of interests with other activities: The activities other than debenture trusteeship performed by 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: Reporting of changes in status or constitution' of Debenture Trustee including the following: i. Amalgamation, demerger, consolidation or any other kind of c....
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....य पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India Chapter XIV: Guidelines on Outsourcing of Activities by Debenture Trustee 1. DT Regulations requires Debenture Trustees to render high standards of service and exercise due diligence and ensure proper care in its operations. It has been observed that often intermediaries resort to outsourcing with a view to reduce costs, and at times, for strategic reasons. 2. Outsourcing may be defined as the use of one or more than one third party - either within or outside the group - by a registered intermediary to perform the activities associated with services which the intermediary 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....
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....adequately perform the activity on the financial, reputational and operational performance of the Debenture Trustee and on the investors/ clients; Page 107 of 122 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India b) Ability of the Debenture Trustee to cope up with the work, in case of non-performance or failure by a third party by having suitable back-up arrangements; c) Regulatory status of the third party, including its fitness and probity status; d) Situations involving conflict of interest between the Debenture Trustee and the third party 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 disclos....
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.... impair the ability of SEBI/ SRO or auditors to exercise its regulatory responsibilities such as supervision/ inspection of the Debenture Trustee. 4. The Debenture Trustee shall conduct appropriate due diligence in selecting the third party and in monitoring of its performance: 4.1 It is important that the Debenture Trustee exercises due care, skill, and diligence in the selection of the third party to ensure that the third party has the ability and capacity to undertake the provision of the service effectively. 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; Page 109 of 122 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securit....
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....ontract and also after the expiry of the contract; g) specifies the responsibilities of the third party with respect to the IT security and contingency plans, insurance cover, business continuity and disaster recovery plans, force majeure clause, etc .; h) provides for preservation of the documents and data by third party; i) provides for the mechanisms to resolve disputes arising from implementation of the outsourcing contract; j) provides for termination of the contract, termination rights, transfer of information and exit strategies; k) addresses additional issues arising from country risks and potential obstacles in exercising 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; l) 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 ....
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....third party to ensure that the employees of the third party have limited access to the data handled and only on a "need to know" basis and the third party shall have adequate checks and balances to ensure the same. Page 112 of 122 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange Board of India 7.3 In cases where the third party is providing similar services to multiple entities, the Debenture Trustee shall ensure that adequate care 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 113 of 122 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥....
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....¤µà¤¿à¤¨à¤¿à¤®à¤¯ बोरà¥à¤¡ Securities and Exchange Board of India the various provisions contained in SEBI Act/ Rules/ Regulations etc. and shall be liable for action. The Compliance Officer shall also be held liable for breach of duty in this regard. Page 115 of 122 à¤à¤¾à¤°à¤¤à¥€à¤¯ पà¥à¤°à¤¤à¤¿à¤à¥‚ति और विनिमय बोरà¥à¤¡ Securities and Exchange 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 co....
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....g in securities on behalf of others 4.10. not in any way contribute to manipulate the demand for or supply of securities in the market or to influence prices of securities; 4.11. not have an incentive structure that encourages sale of products not suiting the risk profile of their clients; 4.12. not share information received from clients or pertaining to them, obtained as a result 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 117 of 122 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 118 of 122 à¤à¤¾à¤°à¤¤à¥€à¤¯ ....