The regulator had merged the ILDS rules (issuance and listing of debt securities) and the NCRPS rules (redeemable non-convertible preferred shares) into a single regulation which will be called Sebi (issue and listing of non-convertible securities).
In a notification issued on Tuesday, Sebi said corporate governance arrangements, including the composition of the board of directors, related party transactions and the audit committee, will apply to a listed entity. which has listed its non-convertible debt securities and has an outstanding value of those securities. Debt securities of Rs 500 crore and more.
The other provisions that will apply to these listed entities are the corporate governance requirements with regard to subsidiaries of listed entities; obligations to directors and independent employees, including key officers and promoters; and composition of the nomination and remuneration committee, the stakeholder relations committee and the risk management committee.
If an entity that has registered its non-convertible debt securities triggers the specified threshold of Rs 500 crore during the year, it must ensure compliance with these provisions within six months from the date of this trigger, Sebi said.
He further stated that these provisions would be applicable to a “high-value listed entity” on a “comply or explain” basis until March 31, 2023 and on a mandatory basis thereafter.
Explaining further, Sebi said that if the entity is not able to fully comply with the provisions, until then it will 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.
High-value debt listed entities would be determined on the basis of the outstanding principal value of the listed debt securities as of March 31, 2021.
In the case of a “high value publicly traded entity” which is a Real Estate Investment Trust (REIT) and an Infrastructure Investment Trust (InvIT), the board of directors of the manager of the respective trust will comply rules related to corporate governance.
In the case of a high value publicly traded entity that is a legal person, Sebi has stated that the non-executive directors of its board will be treated as independent directors.
In the case of a high value publicly traded entity that is a trust, the non-employee trustees of its board of directors will be treated as independent directors.
The listed entity shall notify the exchange at least two working days in advance of the board meeting at which the proposals, including financial results and fundraising by issuance of non-convertible securities, will be examined.
Other proposals include changing the form or nature of listed non-convertible securities or the rights or privileges of their holders; a change in the date of payment of interest or dividends or of redemption of these securities and any matter affecting the interests of holders of non-convertible securities.
The listed entity must apply to the stock exchange at the latest on the date of the start of the sending of invitations, in the case of any annual general meeting or extraordinary general meeting that it is proposed to hold to obtain the approval. shareholders for financial results and fundraising via non-convertible securities.
Regarding the financial results, Sebi said the listed entity will prepare and submit independent quarterly and annual unaudited or audited financial results on a quarterly basis within 45 days of the end of the quarter on the exchange.
In the case of entities that have listed their debt securities, a copy of the financial results submitted to the exchanges will also be provided to the bond trustees on the same day.
In addition, the regulator has put in place various disclosure frameworks for these entities.
To give effect to these, the regulator amended the LODR (Listing Obligations and Disclosure Requirements) rules, which came into effect on September 7, according to the notification.