On 29th June, 2021, the Board of SEBI met in Mumbai. In the said meeting, the Board took the following decisions:

Review and Merger of SEBI (Issue and Listing of Debt Securities) Regulations, 2008 and SEBI (Non-Convertible Redeemable Preference Shares) Regulations, 2013 into a single Regulation – SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021

The Board considered and approved the resolution.
Major provisions:

1. Issuers other than unlisted Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) who are in existence for less than 3 years, have been facilitated to tap the bond market, provided:

a. Issuance of their debt securities is made only on a private placement basis;

b. The issue is made on the Electronic Book Mechanism (EBP) platform irrespective of the issue size; and

c. The issue is open for subscription only to QIBs.

This will enable Special Purpose Vehicles (SPVs) created for specific infrastructure purposes/ NBFCs/ listed REITs/ listed InvITs and other companies who propose to list debt securities purely on private placement basis but who do not have a three-year existence history, to list their debt securities issued on private placement basis, while, all other requirements under the proposed NCS Regulations and operating stipulations of the EBP mechanism shall continue to apply to such issuers.

2. Parameters for identification of risk factors have been introduced to assist issuers in disclosing pertinent risk factors.

3. Credit Rating: The requirement to have a minimum rating of AA- for a public issuance of NCRPS has been done away with in requirement as is the case for a public issue of debt securities.

4. Minimum tenure requirement: The requirement of a minimum tenure of 3 years for a public issuance of NCRPS has been removed thus providing flexibility to the issuers to structure their issuance as per their resource requirement and raise funds through an issue of NCRPS.

5. Prospectus: To enable issuers to raise funds quickly without filing a separate prospectus each time, the restriction of not more than four issuances of debt securities in a year through a single shelf prospectus has been done away with.

6. Call & Put option: The option for call and put has been introduced in case of debt securities issued on private placement basis. This will provide greater flexibility to the issuers and investors of debt securities and NCRPS as well. Further, the period for exercise of call and put option has been brought down to 12 months from 24 months in order to provide increased flexibility, both to issuers and investors.

7. Making default good: Issuers who have cured the default in payment of interest / dividend / redemption amount to raise funds through non-convertible securities, have been permitted to file shelf prospectus post such curing of default provided they have cured the default at least 30 days prior to filing the draft shelf prospectus.

8. Minimum issue size: In order to encourage public issuances of debt securities, the present stipulation that the minimum size of ₹100 crore has been done away with.

9. Electronic Book Provider: The Electronic Book Provider (EBP) platform has been made mandatory for issuance of eligible securities on private placement basis proposed to be listed amounting to ₹100 crore or above in a financial year which will improve price discovery and transparency.

10. Charge creation: The provision of creation of charge on the assets and properties of the issuer has been harmonized with the Companies Act, 2013 thus allowing issuer to have an option to create charge over its properties or assets (movable, immovable, tangible, intangible), shares or any interest thereon, of the issuer or its subsidiaries or its holding companies or its associate companies. This will provide greater flexibility to the issuers for creation of charge.

11. Abridged Prospectus: The requirement of abridged prospectus has been streamlined to around 10 pages from over 50 pages, in order to enhance readability for the investor.

12. E-voting: In case an issuer wishes to roll over the debt securities, the provision of e-voting has been introduced in addition to postal ballot to facilitate issuers to seamlessly obtain voting for passing the resolution. This will also encourage wider investor participation in the voting.


Introduction of Framework for Accredited Investors in securities market
The Board considered and approved the proposal to introduce a framework for Accredited Investors in the Indian securities market.

1. Eligibility criteria for Accredited Investors who may be Individuals, HUFs, Family Trusts, Sole Proprietorships, Partnership Firms, Trusts and Body Corporates based on financial parameters and information as may be specified by SEBI.

2. Accreditation Agencies to grant accreditation status and issue Accreditation Certificate to Accredited Investor.

3. Modalities of accreditation and procedure to avail benefits linked to accreditation.

Benefits of accreditation:

1. Accredited Investors shall have flexibility to participate in investment products with an investment amount lesser than the minimum amount mandated in the Alternative Investment Funds (AIF) Regulations and Portfolio Managers (PMS) Regulations.

2. AIF for Accredited Investors where each investor invests minimum investment amount of ₹70 Crores may avail relaxation from regulatory requirements such as portfolio diversification norms, conditions for launch of schemes and extension of tenure of the AIF.

3. Accredited Investors with minimum investment of ₹10 Crores with registered PMS provider, may avail relaxation from regulatory requirement with respect to investment in unlisted securities and can enter into bilaterally negotiated agreements with the PMS provider.

4. Accredited Investors who are clients of Investment Advisers will have the flexibility to determine the limits and modes of fees payable to the Investment Adviser through bilaterally negotiated contractual terms.


Review of Regulatory provisions related to Independent Directors
The Board approved amendments to Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR Regulations) pertaining to regulatory provisions related to Independent Directors (IDs).
Applicability: w.e.f. 1st January, 2022.

1. Appointment/Re-appointment and Removal of IDs:

– Appointment/Re-appointment and Removal of IDs shall be through a Special Resolution (SR) of shareholders for all listed entities.

  • The process to be followed by Nomination and Remuneration Committee (NRC), while selecting candidates for appointment as IDs, has been elaborated and made more transparent including enhanced disclosures regarding the skills required for appointment as an ID and how the proposed candidate fits into that skillset.
  • The composition of NRC has been modified to include 2/3rd IDs instead of existing requirement of majority of IDs.
  • Shareholder approval for appointment of all directors including IDs shall be taken at the next general meeting, or within 3 months of the appointment on the Board, whichever is earlier.

2. Eligibility requirement:

  • A cooling off period of 3 years has been introduced for Key Managerial Personnel (and their relatives) or employees of the promoter group companies, for appointment as an ID.
  • Relatives of employees of the company, its holding, subsidiary or associate company have been permitted to become IDs, without the requirement of a cooling off period, in line with Companies Act, 2013.

3. Resignation of IDs:

  • The entire resignation letter of an ID shall be disclosed along with a list of her/his present directorships and membership in board committees.
  • A cooling-off period of 1 year has been introduced for an ID transitioning to a whole-time director in the same company/ holding/ subsidiary/ associate company or any company belonging to the promoter group.

4. Audit Committee:

  • At least 2/3rd of the members of the audit committee shall be independent directors and all related party transactions shall be approved by only Independent Directors on the Audit Committee.

5. Directors and Officers insurance:

The requirement of undertaking Directors and Officers insurance has been extended to the top 1000 companies (by market capitalization).

6. The Board also agreed to make a reference to the Ministry of Corporate Affairs (MCA), for giving greater flexibility to companies while deciding the remuneration for all directors (including IDs), which may include profit linked commissions, sitting fees, ESOPs, etc., within the overall prescribed limit specified under Companies Act, 2013.


SEBI (Infrastructure Investment Trusts) Regulations, 2014
The Board considered and approved the amendments to SEBI (Infrastructure Investment Trusts) Regulations, 2014.
Introduction of minimum unit-holders requirement for unlisted InvITs. The minimum number of unit holders, other than sponsor, its related parties and its associates shall be 5 together holding not less than 25% of the total unit capital of the InvIT.


SEBI (Infrastructure Investment Trusts) Regulations, 2014 and

SEBI (Real Estate Investment Trusts) Regulations, 2014

The Board considered and approved the amendments to SEBI (Infrastructure Investment Trusts) Regulations, 2014 and SEBI (Real Estate Investment Trusts) Regulations, 2014.
Revision in minimum subscription and trading lot for publicly issued REITs and InvITs. The revised minimum application value shall be within the range of ₹10,000-15,000 and the revised trading lot shall be of one unit.


Permitting Resident Indian fund managers to be constituents of FPIs
The Board approved the proposal to amend the SEBI (Foreign Portfolio Investors) Regulations, 2019.
Permitting eligible Resident Indian Fund Managers (other than individuals) to be constituents of Foreign Portfolio Investors (FPIs). Such FPIs shall be investment funds approved by Central Board of Direct Taxes (CBDT) under Section 9A of the Income-Tax (IT) Act, 1961, read with the IT Rules, 1962. These amendments shall bring the SEBI (Foreign Portfolio Investors) Regulations, 2019 in line with the recent amendments in Section 9A of the IT Act, thereby facilitating Indian fund managers in managing investment funds incorporated/established/ registered outside India.


SEBI (Mutual Funds) Regulations, 1996

The Board approved amendment to SEBI (Mutual Funds) Regulations, 1996.
Providing for investment of a minimum amount as skin in the game in the Mutual Fund (MF) schemes by Asset Management Companies (AMCs) based on the risk associated with the scheme, instead of the current requirement of 1% of the amount raised in New Fund Offer or an amount of ₹50 lakhs, whichever is less.


SEBI (Credit Rating Agencies) Regulations, 1999

The Board approved amendment to SEBI (Credit Rating Agencies) Regulations, 1999.
To define a Credit Rating Agency (CRA) in terms of rating of securities that are listed or proposed to be listed on a recognized stock exchange and to provide for an explanation in clause (f) of Regulation 9 specifying that ratings undertaken by a CRA under the respective guidelines of a financial sector regulator or authority shall be under the purview of the concerned financial sector regulator or authority.


SEBI (Bankers to an Issue) Regulations, 1994
The Board approved amendment to SEBI (Bankers to an Issue) Regulations, 1994
To permit such other banks, other than scheduled banks, as may be specified by SEBI from time to time, to register as a Banker to an Issue.


SSecurities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015
The Board considered and approved certain amendments to SEBI (Prohibition of Insider Trading) Regulations, 2015.

1. The maximum amount of reward has been increased from ₹1 Crore, at present, to ₹10 Crore.

2. If the total reward payable to the informant is less than or equal to ₹1 Crore, then the reward may be granted by SEBI, after the final order is issued.

3. If the total reward payable to the informant is more than ₹1 Crore, then an interim reward not exceeding ₹1 Crore may be granted by SEBI, after the final order is issued. The remaining reward amount will be granted only upon receipt of the monetary sanctions amounting to at least twice the balance of the reward amount payable by SEBI.


Disclaimer: The author is based in Jabalpur and is a Practicing Company Secretary dealing in Corporate, Legal & Taxation services. The information contained in this write up, as provided by the author, is a tabular re-production of the FAQs released by the NSE and is to provide a general guidance to the intended user. The information should not be used as a substitute for specific consultations. Author recommends that professional advice is sought before taking any action on specific issues.

The author can also be reached at [email protected]


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October 2021