SEBI Update: Corporate Governance requirements to become applicable to Debt Listed Companies

KEY AMENDMENTS:

(1) SEBI has merged SEBI ILDS (Issue and Listing of Debt Securities) Regulations and SEBI NCRPS (Non-Convertible Redeemable Preference Shares) Regulations into a single regulation to be called SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021.

(2) SEBI has amended SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 to include Corporate Governance requirements for listed companies which have listed their debt securities.

✓ Corporate Governance provisions such as Composition of Board, Related Party Transactions and Audit Committee, shall also apply to a listed entity which has listed its non-convertible debt securities and has an outstanding value of such debt securities of INR 500 Crore and above.

✓ In case an entity crosses specified threshold of Rs 500 crore later on during the year, it shall ensure compliance with these provisions within six months from such date.

✓ These provisions shall be applicable to a 'high value debt listed entity' on a 'comply or explain' basis until March 31, 2023 and on a mandatory basis thereafter. Such listed entities would be determined on basis of value of principal outstanding of listed debt securities as on March 31, 2021.

✓ Further, in case the entity is not able to achieve full compliance with the provisions, till such time, it shall explain the reasons for such non-compliance/ partial compliance and the steps initiated to achieve full compliance in the quarterly compliance report filed on Corporate Governance.

✓ Board of the manager of the trust shall comply with the rules related to corporate governance, in case of a 'high value debt listed entity' is a Real Estate Investment Trust (REIT) and Infrastructure Investment Trust (InvIT), 

✓ In case of a high value Debt Listed Company which is a body corporate, the non-executive directors on the board of such Company shall be treated as independent directors and in case such entity which is a trust, the non-employee Trustees on its board will be treated as Independent Directors.

✓ Listed Company shall inform the exchanges at least two working days in advance about the board meeting in which proposals, including financial results and fund raising by way of issuance of non-convertible securities, are to be considered.

✓ The listed entity shall intimate the exchanges not later than the date of commencement of dispatch of notices, in case of any annual general meeting or extraordinary general meeting that is proposed to be held for obtaining shareholder approval for financial results and fund raising via non-convertible securities.

✓ Listed Company shall prepare and submit unaudited or audited quarterly and year-to-date standalone financial results on a quarterly basis within 45 days from the end of the quarter to the stock exchange.

✓ In case of entities which have listed their debt securities, a copy of the financial results submitted to stock exchanges shall also be provided to debenture trustees on the same day.

✓ Aforementioned amendments shall be effective from September 7, 2021.

✓ To view, the amendments regulations, please click here.