When a “Private Placement” Becomes a Public Issue: SEBI Settlement Order – Tata Motors Finance Limited
Key Takeaways From Sebi’s Settlement Order Against Tata Motors Finance Ltd (Order No.: SO/AS/PSD/2025-26/8429).
Private placement of debt securities is often perceived as a simpler and faster route for fund raising. However, recent regulatory actions reiterate that form cannot override substance.
In its Settlement Order dated October 7, 2025, SEBI settled proceedings against Tata Motors Finance Limited concerning the issuance of Tier II perpetual Non-Convertible Debentures (NCDs). The case offers important compliance lessons for issuers, intermediaries, and compliance professionals.
What happened?
Tata Motors Finance Limited undertook five issuances of NCDs on a private placement basis, initially allotting the securities to a limited number of investors. However, within six months of allotment, these NCDs were down-sold to more than 200 investors.
Under securities law, such down-selling changes the character of the issue. SEBI treated the issuances as deemed public issues, triggering violations of:
- Companies Act, 2013
Sections 23(1), 26, 33(1) and 40
- SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021
Regulations 6, 11, 25(1), 27, 28, 29(1), 30, 32, 34 and 37
- SEBI (Issue and Listing of Debt Securities) Regulations, 2008
Regulations 4(3), 5(2)(b), 6, 7, 8, 9, 12 and 26
Regulatory stance
SEBI reiterated a settled principle:
If securities issued through private placement reach more than 200 investors within the prescribed period, the issue loses its private character and is deemed to be a public issue.
This brings with it stricter disclosure, listing, and compliance requirements.
Settlement outcome
- The company filed a suo-motu settlement application under the SEBI (Settlement Proceedings) Regulations, 2018.
- The matter was settled on a “neither admit nor deny” basis.
- A settlement amount of ₹32 lakh was paid.
- SEBI agreed not to initiate enforcement action, while retaining the right to act in case of misrepresentation or breach of settlement terms.
Why this matters
This order is a timely reminder that:
- Down-selling is not a neutral act—it can have serious regulatory consequences.
- Issuers must track post-allotment transfers, especially within the six-month window.
- Compliance responsibility does not end at allotment; it continues through the life cycle of the security.
Final thought
In an evolving regulatory environment, intent alone is not enough—outcomes matter. Robust internal controls and continuous monitoring are essential to ensure that private placements remain private in both letter and spirit.
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