SEBI Proposes To Bring Rules for Non-Convertible Securities Issuance

In a significant step to enhance the ease of doing business, SEBI is planning to introduce measures to simplify disclosure requirements for Non-Convertible Securities(NCS) issuance. These measures, announced yesterday, will eliminate the need to disclose the PAN and personal addresses of issuers’ promoters in the offer document. This initiative is part of SEBI’s broader effort to ease disclosure regulations.

Relaxation of Disclosure Requirements for NCS Issuance

Currently, the Issue and Listing of NCS mandate issuers to furnish detailed profiles of their promoters, including sensitive personal data. However, this recently published consultation paper by SEBI indicates a potential relaxation of these requirements. The proposal suggests replacing extensive disclosures with information about the issuer’s branches etc, accessible via a static QR code and a web-link. This data would also be shared with the debenture trustee and be open for inspection, diverging from the current mandate of explicitly stating such details in the offer document.

Revisions in Timeline and Signatory Flexibility

Additionally, SEBI has proposed modifications in the timeline for disclosing critical operational and financial parameters to align with the period for disclosing financial information in the offer document. Furthermore, the regulator is asking for increased flexibility concerning the authorized signatories responsible for attesting these documents.

In a related measure aimed at ensuring communication with stock exchanges, entities with listed commercial paper will now need to confirm their fulfillment of payment obligations within one working day after a payment becomes due, a change from the existing two-day mandate.

Public Feedback and Anticipated Impact

Public feedback on these proposals has been welcomed until May 30, 2024. These adjustments come from the Union government’s budget declaration for FY 2023-24, which prioritized simplifying, easing, and diminishing compliance expenses for stakeholders in the financial sector through a consultative process. SEBI’s proposals aim to enhance India’s financial markets by reducing hurdles and increasing transparency and making it appealing for issuers and investors.

Conclusion: With this move, SEBI aims to safeguard investor interests and provide issuers with a streamlined and simple regulatory framework. These changes are expected to positively impact India’s capital markets, reflecting a recognition of the need for regulatory adaptation in market developments and stakeholder needs.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.