Introduction of General Information Document (GID) and Key Information Document (KID)
The Securities and Exchange Board of India (SEBI) recently introduced significant changes through the Second Amendment Regulations of 2023, affecting the issuance and listing of Non-Convertible Securities (NCS). One of the key highlights of this amendment is the introduction of the General Information Document (GID) and Key Information Document (KID). In this article, we will delve into the background, timeline, disclosures, filing process, and validity of GID and KID.
Background:
SEBI vide notification dated July 3, 2023 had announced the Securities and Exchange Board of India (Issue and Listing of Non- Convertible Securities) (Second Amendment) Regulations, 2023 (Second amendment) to further amend the Securities and Exchange Board of India (Issue and Listing of Non-Convertible Securities) Regulations, 2021 [SEBI (NCS) Regulations].
SEBI has inserted Chapter VA in the SEBI (NCS) Regulations through Second amendment which deals with Issuance and Listing of NCS issued on Private Placement basis and which mandates an issuer making a private placement of NCS and seeking listing thereof on stock exchange(s) to file a general information document with the stock exchange(s).
The aforesaid amendment introduced the concept of General Information Document (GID) and Key Information Document (KID) to avoid repetitive and numerous filings of documents by issuers of debt securities.
Timeline for applicability of GID and KID :
The provisions of this regulation shall be applicable on ‘comply or explain*’ basis until March 31, 2024 and on a mandatory basis thereafter.
* Issuer shall endeavor to file GID instead of a placement memorandum for private placement of NCS sought to be listed, until March 31, 2024.
Disclosures under GID and KID:
GID replaces shelf placement memorandum (SPM) for first issuance of NCS issued on private placement basis and will contain the information and disclosures specified in the Schedule I of Second amendment Regulations and will be filed with the stock exchanges at the time of the first issuance.
Schedule I can be accessed at below mentioned link:
SEBI further clarified that the GID may indicate the size of the issue i.e., the amount of monies which the issuer proposes to raise during the period of validity of the GID.
KID replaces placement memorandum for second or subsequent issues of NCS. It shall contain following information:
- details of the offer of non-convertible securities in respect of which the key information document is being issued;
- financial information, if such information provided in GID is more than six month old.
- material changes, if any, in the information provided in GID.
- material development not mentioned in GID, since the issuance of GID relevant to the offer of NCS in respect of which the KID is being issued and
- disclosures applicable in case of private placement of NCS as specified in schedule I, in case the second or subsequent offer is made during the validity of the shelf prospectus for which no general information document has been filed.
Filing of GID and KID
As mentioned above, issuer making private placement of NCS and seeking listing thereof shall file GID with stock exchanges.
Further, issuers making second or subsequent offers of NCS, during the validity of the SPM filed prior to the date of this regulation coming into force, shall not be required to file the GID for such second or subsequent issuances so long as the KID is filed in accordance with these regulations.
Issuer which has filed shelf prospectus in case of public issue of NCS and subsequently intends to issue NCS on private placement during the validity of such shelf prospectus, shall not be required to file a GID so long as the KID is filed in accordance with these regulations.
Validity of GID
SEBI has mentioned in the notification that GID will have a validity period of one year from the date of opening of the first offer of NCS made under that GID.
Thereafter, for subsequent private placements of NCS within the validity period of such GID, only a KID will be required to be filed with the stock exchanges, containing material changes.
Conclusion:
SEBI’s introduction of the General Information Document (GID) and Key Information Document (KID) is a significant step towards simplifying the disclosure process for issuers of Non-Convertible Securities. These documents aim to reduce redundancy, improve transparency, and provide investors with essential information. Issuers must comply with the phased applicability, ensuring that the required documents are filed correctly and within the specified timelines. Understanding and adhering to the regulations surrounding GID and KID is vital for all entities involved in NCS issuance and listing, contributing to a more efficient and transparent financial market.
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