SEBI/ HO/ MIRSD/ DOP2/ CIR/ P/ 2018/ 0000000063

April 09, 2018

To,

All Debenture Trustees

Dear Sir / Madam,

Subject: Master Circular for Debenture Trustees (DTs)

Securities and Exchange Board of India (SEBI) has been issuing various circulars/directions from time to time. In order to enable the users to have an access to all the applicable circulars/directions at one place, Master Circular for Debenture Trustees (DTs) has been prepared.

This Master Circular is a compilation of the circulars/communications issued by SEBI up to March 31, 2018 and shall come into force from the date of its issue.

In case of any inconsistency between the Master Circular and the applicable circulars, the contents of the relevant circular shall prevail.

The Master Circular is a compilation of all the existing/ applicable circulars issued by the Market Intermediaries Regulation and Supervision Department of SEBI to Debenture Trustees. Efforts have been made to incorporate applicable provisions of existing circulars issued by other Departments of SEBI relevant to Debenture Trustees.

Yours faithfully,

Surabhi Gupta
Deputy General Manager
Phone No. 022-26449315
Email id: surabhig@sebi.gov.in

Contents

Table of Contents

Section 1: Terms of Registration

1.1 Online Registration Mechanism for Debenture Trustees

1.2 Digital Mode of Payment

1.3 Grant of prior approval for change in control to Debenture Trustees

1.4 Surrender of Certificate of Registration

1.5 Designated e-mail ID for regulatory communication with SEBI

Section 2: Obligations, Disclosures and Reporting requirements

2.1 Contents of Trust Deed

2.2 Sharing of information regarding Issuer Companies between Debenture Trustees and Credit Rating Agencies

2.3 Monitoring of Interest/ Principal repayment and sharing of such information with Credit Rating Agencies by Debenture Trustees

2.4 Dissemination of Information on Debentures

2.5 Centralized Database for Corporate Bonds/ Debentures

2.6 Periodic Reporting by the Debenture Trustees

Section 3: Redressal of Investor Grievances

3.1 Exclusive e-mail ID for redressal of Investor Complaints Redressal of investor grievances through SEBI Complaints Redress System (SCORES) platform

3.3 Dissemination of Information regarding Grievance Redressal Mechanism

Section 4: Others

4.1 Guidelines on Outsourcing of Activities by Debenture Trustees

4.2 Unauthenticated news circulated by SEBI registered market intermediaries through various modes of communication

4.3 General Guidelines for dealing with Conflicts of Interest of Debenture Trustees and their Associated Persons in Securities Market

Section 1: Terms of Registration

1.1 Online Registration Mechanism for Debenture Trustees 1

1.1.1 SEBI has decided to operationalize SEBI Intermediary Portal (https://siportal.sebi.gov.in) for the SEBI registered Debenture Trustees to submit all the registration applications online. The SEBI Intermediary Portal shall include online application for registration, processing of application, grant of final registration, application for surrender / cancellation, submission of periodical reports, requests for change of name/ address/ other details, etc. Link for SEBI Intermediary Portal is also available on SEBI website – www.sebi.gov.in.

1.1.2 SEBI Intermediary Portal has been made operational for Debenture Trustees.

1.1.3 Henceforth, all applications for registration/ surrender/other requests will be made through SEBI Intermediary Portal only. The applicants will be separately required to submit relevant documents viz. declarations/ undertakings required as a part of application forms prescribed in relevant regulations, in physical form, only for records without impacting the online processing of applications for registration.

1.1.4 In case of any queries and clarifications with regard to the SEBI Intermediary Portal, Debenture Trustees may contact on 022-26449364 or may write at portalhelp@sebi.gov.in.

1.2 Digital Mode of Payment2

1.2.1 SEBI has notified the SEBI (Payment of Fees and Mode of Payment) (Amendment) Regulations, 2017 on March 06, 2017 to enable digital mode of payment

(RTGS/NEFT/IMPS etc.) of fees/penalties/remittance/other payments etc.

1.2.2 Pursuant to above, SEBI has been receiving direct credit of amounts from various intermediaries / other entities.

1.2.3 In order to identify and account such direct credit in the SEBI account, it has been decided that Debenture Trustees shall provide the information as mentioned in Annexure to SEBI once the payment is made.

1.2.4 The above information should be emailed to the respective department(s) as well as to Treasury & Accounts division at tad@sebi.gov.in.

Annexure

Name of Intermediary/ Type of SEBI Registration
Date Department
of SEBI
Other Entities Intermediary Number (if any)

PAN Amount (in `) Purpose of Payment Bank name and UTR No
(including the period for which payment was
made e.g. quarterly,
annually)
Account number
from which payment is remitted

1.3 Grant of prior approval for change in control to Debenture Trustees3

1.3.1 Debenture Trustees are required to obtain prior approval of SEBI in case of change in control. With a view to expedite the process of granting prior approval, SEBI has adopted a ‘single window clearance at SEBI’, for the Debenture Trustees in case of their having multiple registrations with SEBI.

1.3.2 Therefore, in case a Debenture Trustee holds multiple registrations with SEBI, it shall make only one application to SEBI addressed to “Chief General Manager, MIRSD, SEBI” accompanied by the following information about itself, the acquirer and the directors/ partners of the acquirer;

♦ Whether any application was made in the past to SEBI seeking registration in any capacity but it was not granted? If yes, details thereof.

♦ Whether any action has been initiated / taken under SCRA/SEBI Act or rules and regulations made thereunder? If yes, status thereof along with corrective action taken to avoid such violations in the future. The acquirer shall also confirm that it shall honour all past liabilities / obligations of the applicant, if any.

♦ Whether any investor complaint is pending? If yes, steps taken and confirmation that the acquirer shall resolve the same.

♦ Details of litigation, if any.

♦ That all the fees due to SEBI have been paid.

♦ That there will not be any change in the Board of Directors of incumbent, till the time prior approval is granted.

♦ That the incumbent shall inform all its existing investors / clients in order to enable them to take informed decision regarding their continuance or otherwise with the entity with new management.

1.3.3 Further, in case the incumbent is a registered stock broker and / or depository participant, in addition to the above, it shall obtain approval / NOC from all the Stock Exchanges / Depositories, where the incumbent is a member / Depository Participant and forward a self-attested copy of the same to SEBI.

1.3.4 The prior approval granted by SEBI shall be valid for a period of 180 days from the date of communication.

1.4 Surrender of Certificate of Registration4

1.4.1 If a Debenture Trustee wishes to surrender the registration voluntarily, it shall transfer, wherever relevant, it’s existing business/ client accounts to another SEBI registered debenture trustee, before they make request to SEBI for accepting the surrender the certificate of registration.

1.4.2 The Debenture Trustee may, if he so desires, make a representation for dispensing with the procedure, along with the application, for surrender in terms of the first proviso to Regulation 33B of Securities and Exchange Board of India (Intermediaries) Regulations, 2008 in the prescribed format placed as Annexure.

1.4.3 In all cases of transfer of business or client accounts to another registered Debenture Trustee, the clients shall not be subjected to any additional cost.

Annexure  

Letter of Representation for Debenture Trustee

To

Securities and Exchange Board of India

Dear Sir,

Sub: Surrender of Certificate of Registration as Debenture Trustee, Registration No. __ .

1. We hereby surrender our certificate of registration as Debenture Trustee.

2. We enclose the original certificate of registration (or indemnity in case the certificate is lost or stolen) for cancellation.

3. We hereby confirm that:

a. no complaint /disciplinary proceeding is pending against us;

b. no investigation / inquiry by SEBI is pending against us with respect to our activities as a Debenture Trustee;

c. as on date of application, we have paid all fees;

d. we shall continue to be liable for all liabilities/obligations (including monetary penalties, if any) for violations, if any, of the provisions of the SEBI Act and the SEBI (Debenture Trustee) Rules and Regulations, 1993 that have taken place before our surrender of certificate of registration;

e. all our current assignments as a Debenture Trustee have been either duly terminated or transferred to another registered Debenture Trustee _____ with registration no.___ ;

f. we have issued a public notice in a widely circulated national and a vernacular daily dated___________ informing surrender of our registration as Debenture Trustee (Please enclose a clipping of the said public notice);

g. we have notified the Depositories and all the stock exchanges where our client companies are listed about the surrender of our registration.

4. *We hereby request SEBI to dispense with the procedure laid down in Regulation 33B of Securities and Exchange Board of India (Intermediaries) Regulations, 2008 while processing our request for surrender of certificate of registration.

Thanking you,
Yours faithfully,

Name:

(Whole time/ Managing Director/ Principal Officer)

*Please strike off, if not applicable.

1.5 Designated e-mail ID for regulatory communication with SEBI5

1.5.1 SEBI has been communicating with the Debenture Trustees through circulars, letters, directions etc. In order to facilitate the issuance of digitally signed circulars, Debenture Trustees are required to create a designated email id for regulatory communications. This email id shall be an exclusive email id only for the above purpose and should not be a person centric email id.

1.5.2 The Designated e-mail ID shall be communicated to SEBI by emailing a file to intermediary@sebi.gov.in, as per the format prescribed below:

i. The file should be an excel file.

ii. The name of the file and the subject of the email shall specify the type of intermediary and the name of the intermediary. For example – “Debenture Trustee – ABC co. Ltd.”

iii. The file shall contain the following details:

Name Address Category Registration No. Designated email id Name of compliance officer

 

Section 2: Obligations, Disclosures and Reporting requirements

2.1 Contents of Trust Deed6

2.1.1 It has been observed during inspections that certain clauses are included in the trust deed that limit or extinguish the obligations of Debenture Trustees in relation to any rights or interests of investors or are in conflict with the provisions of the Regulations. It may be noted that such clauses in the existing or new trust deeds shall not be applicable and shall stand null and void.

2.2 Sharing of information regarding Issuer Companies between Debenture Trustees and Credit Rating Agencies7

2.2.1 SEBI (Debenture Trustee) Regulations, 1993 require the Debenture Trustees (DTs) to share information regarding the issuer companies that are their clients, with Credit Rating Agencies (CRAs). The purpose of the Regulations is to enable Credit Rating Agencies to perform their obligations effectively.

2.2.2 Debenture Trustees have also expressed the need to receive relevant information on issuer companies from Credit Rating Agencies.

2.2.3 In consultation with Debenture Trustees and Credit Rating Agencies, it has been decided that Debenture Trustees and Credit Rating Agencies shall share information with each other as specified in the Annexure. Debenture Trustees and Credit Rating Agencies shall share any other information from time to time in respect of issues/issuer companies which would help them in effective discharge of their duties.

2.2.4 Further, the Debenture Trustees and Credit Rating Agencies shall assign designated email addresses for sending and receiving such information and ensure appropriate action, if any, based on the information received.

Annexure

Sharing of information between Debenture Trustees (DTs) and Credit Rating Agencies (CRAs)

A. Information from Credit Rating Agencies to Debenture Trustees

1. Rating assigned/revised for debt securities along with the rationale for the same.

2. Press release, outstanding ratings etc. in respect of debt securities.

3. Non-cooperation by the issuers with respect to sharing necessary information for monitoring the credit quality of the rated instrument with Credit Rating Agencies.

4. Press release and separate communication to Debenture Trustee on withdrawal of rating post redemption of entire amount due towards.

B. Information from Debenture Trustees to Credit Rating Agencies

1. Whether the asset in respect of which security has been created is free from any encumbrance and adequate to ensure asset cover for the debentures or if there is any breach of the terms of creation of the security. This information shall be shared on half yearly basis.

2. Funds transferred to Debenture Redemption Reserve (DRR), depletion of the DRR /invocation of guarantee which could affect the payment of debenture obligations. This information shall be shared annually.

3. Details of redemption of the issue.

4. Any default committed including the default in payment of interest or redemption of debentures or delay in creation of security.

5. Any change or restructuring of the terms of the issue.

6. Periodic reports from lead banks about the progress of the project for which funds have been raised through debentures and certificate from issuer’s auditors in respect of utilization of funds.

7. Details of grievances filed by debenture-holders and action taken to resolve them.

8. Non-cooperation by the issuer with respect to furnishing required reports/ certificates/ information. Information pertaining to points 3 to 8 shall be shared as and when available.

2.3 Monitoring of Interest/ Principal repayment and sharing of such information with Credit Rating Agencies by Debenture Trustees8

2.3.1 It is clarified that the Debenture Trustees shall have adequate systems to ascertain the status of payment of interest/ principal by issuer companies on due dates in timely manner and efficiently share such information with the Credit Rating Agencies in order to comply with the abovementioned provisions, which shall include the following:

i) The Debenture Trustees shall, at least 7 days prior to the due date of interest/ principal payment, seek ISIN-wise information from issuer companies under intimation to Credit Rating Agencies advising them to confirm the status of payment of interest/ principal on or before the due date.

ii) If the issuer company confirms the status of payment or where no information is received from the issuer company on or before the due date, the Debenture Trustees shall accordingly provide ISIN-wise information to the Credit Rating Agencies latest by one day after such due date which shall state the following:

♦ Information about payment made on or before the due date or;

♦ Information about delay/ default in payment or;

♦ No information forthcoming from the issuer company on the payment status.

iii) In cases where the Credit Rating Agencies have been informed as per point no. 2(ii) above that no information is forthcoming from the issuer company on the payment status, the Debenture Trustees shall update the payment status to Credit Rating Agencies as and when any such information is available with the Debenture Trustees.

2.3.2 In addition to the above, it is reiterated that the Debenture Trustees shall also ascertain the status of payment by the Issuer Company on the due dates from various sources available at their disposal which, inter alia, include the websites of stock exchange & Issuer Company, debenture holders and quarterly reports submitted by Issuer Companies.

2.3.3 The SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 require the listed entity to submit a certificate to the stock exchange within two days of the interest or principal of the listed debt securities becoming due that it has made timely payment [Regulation 57(1)] and the Debenture Trustee Regulations mandate the Debenture Trustees to exercise due diligence to ensure compliance by the body corporate, with the provisions of the Companies Act, the listing agreement of the stock exchange or the trust deed [Regulation 15(1)(i)].

In this regard, it is clarified that the Debenture Trustees in their communication to the Issuer Companies as mentioned in point no. 2.3.1(i) above shall inform them that non-furnishing of information regarding status of payment by due date or non-disclosure of information with respect to timely payment by them on stock exchange website may be considered as suppression of material information and may attract provisions of Section 12A of the Securities and Exchange Board of India Act, 1992 and SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003

2.3.4 The Debenture Trustee Regulations also mandate that the Debenture Trustees shall not make untrue statement or suppress any material fact in any documents, reports, papers or information furnished to the Board [Clause 19 of Code of Conduct read with Regulation 16] and adequate disclosures are made to the debenture holders, in a comprehensible and timely manner so as to enable them to make a balanced and informed decision [Clause 15 of Code of Conduct read with Regulation 16].

It is clarified that if no information regarding payment by Issuer Company is received by the Debenture Trustees by due date or such information is not disclosed by the issuer company on the stock exchange website, then, the Debenture Trustees shall make reference to SEBI accordingly and disclose the non-availability of such information on their website. It is further clarified that failure to make such reference to SEBI in this regard and non-disclosure on its website shall be considered as aiding and abetting the issuer company in suppression of material information and may attract provisions of Section 12A of the Securities and Exchange Board of India Act, 1992 and SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003.

2.4 Dissemination of Information on Debentures9

2.4.1 The –Debenture Trustees shall disclose the information to the investors and the general public by issuing a press release regarding default by Issuer Company to pay interest on debentures or redemption amount, failure to create a charge on the assets and revision of rating assigned to the debentures. Further, such information shall also be placed on the website of the Debenture Trustee, the issuer company and the stock exchanges. It is clarified that such actions shall be taken by the Debenture Trustee promptly and in any case not later than next day of the occurrence of such events.

2.5 Centralized Database for Corporate Bonds/ Debentures10

2.5.1 SEBI, in consultation with various stakeholders, decided to create a centralized database regarding corporate bonds which are available in demat form for public dissemination. Both the depositories’ viz. NSDL and CDSL, jointly, made the repository of information pertaining to the corporate bonds/ debentures.

2.5.2 Contents of Database: The data field for which the information has to be made available in the centralized database of bonds/ debentures by Debenture Trustees is:

i. Default History Information:

Default history details: Whether there have been any defaults/delays in servicing any other debentures/bonds issued by the Issuer? If yes details thereof:

Nature    of the Issue
Issue size
Due date of interest / redemption
Actual payment date and details
Default details

2.5.3 The depositories shall obtain requisite information regarding bonds/ debentures from Issuers, Stock Exchanges, Credit Rating Agencies and Debenture Trustees. Such information providers are provided with secure logins by the depositories for verification and updation of the requisite information in the database.

2.5.4 The Debenture Trustees shall access the database to verify and update the information regarding default history by the issuer and other relevant information pertaining to Debenture Trustees, within the time stipulated as below:

S.No Activity Timeline
1. Updation of default history information about the instrument, as applicable in the database Within 7 days of knowledge of default.
2. Updation/verification of the relevant information in respect of legacy data for bonds/debentures with its records and confirmation to depositories Within 7 days from the receipt of the information

2.5.5 The Debenture Trustees shall update the information in the database on an ongoing basis, as mentioned above.

2.6 Periodic Reporting by the Debenture Trustees11

2.6.1 The Debenture Trustees are required to furnish Half Yearly Report to SEBI in the format placed as Annexure in electronic form only (one file in pdf format and the other in excel format). The Compliance Officer of the –Debenture Trustee shall send the report to SEBI at dt@sebi.gov.in on half yearly basis within three months of the expiry of the corresponding half year.

2.6.2 The Debenture Trustees shall also report compliance of Regulation 15 (1) (c) of SEBI (Debenture Trustee) Regulations, 1993, and the provisions mentioned under Paras 2.3 and 2.4 in the Half Yearly Reports.12

2.6.3 The board of directors of Debenture Trustee shall review the report and record its observations on (i) the deficiencies and non-compliances, and (ii) corrective measures initiated to avoid such instances in future.

ANNEXURE FORMAT OF HALF YEARLY REPORT

REPORT OF DEBENTURE TRUSTEES FOR THE HALF YEAR ENDED MARCH/ SEPTEMBER 20..

NAME:

REGISTRATION NO.:

DATE OF REGISTRATION (in dd/mm/yy)

SECTION I: ACTIVITIES

A. Details of Debenture Issues (Public (P) / Rights (R)/ Privately Placed Listed (PPL) / Privately Placed Unlisted (PPUL)

Type No. of debenture issues accepted during the half year ended March / Sep 20.. Cumulative No. of debenture issues handled up to the half year ended March / Sep 20.. Size (in Rs. crores) of debenture issues accepted during the half year ended March / Sep 20.. Cumulative Size (in Rs. crores) of debenture issues handled up to the half year ended March / Sep 20..
Secured Unsecured Total Secured Unsecured Total
Public
Rights
Privately Placed Listed
Privately Placed Unlisted
Total

B. Activities other than debenture trusteeship

Activity Type Description of the activity Number of clients

Name of Compliance Officer

Email ID

Name of the Debenture Trustee

Section II – REDRESSAL OF INVESTOR GRIEVANCES

For the Half – year ended Mar/ Sep 20…

A. Status of Investor grievances

Name of the issuer (tranche wise) Pending complaints at the end of the previous half year No. of complaints received during the half year No. of complaints resolved during the half year No of complaints pending at the end of half year

B. Details of the complaints pending for more than 30 days

Name of the Issuer No. of complaints pending for more than 30 days Nature of the Complaint (s) Steps taken for redressal Status of the complaint (if redressed, date of redressal)
Delay in payment of interest Delay in payment of redemption Any other

Name of Compliance Officer
Email ID

Section IIIDEFAULT DETAILS

Information regarding default by the Issuer Companies in Public (P) / Rights (R) / Privately Placed Listed (PPL) Issues of Debentures up to the half year ended March/September 20..

Name of the Issuer Secured / Unsecured Type

(P/R/PPL)

Issue Size ( in `
crores )
Type of Default* Details of action taken

* Type of Default:

1. Non-payment of interest;

2. Non-payment of redemption;

3. Delay in payment of interest/redemption;

4. Any other (like non-creation of security)

Name of Compliance Officer
Email ID

Section IVCOMPLIANCE

COMPLIANCE CERTIFICATE FOR THE HALF YEAR ENDED SEPTEMBER / MARCH 20..

A. No conflict of interests with other activities

The activities other than debenture trusteeship performed by DT are not in conflict with DT activities and appropriate systems and policies have been put in place to protect the interests of debenture holders.

B. Change in status or constitution

Reporting of ‘changes in status or constitution’ of DT (In terms of SEBI Circular No. CIR/MIRSD/10/2011 dated June 20, 2011)

C. Other Information

i. Details of arrest / conviction of key officials of DT

ii. Details of prosecution cases or criminal complaints filed by investors against the DT

iii. Details of any fraudulent activity by the employees associated with DT activities and action taken by the DT

iv. Details of conviction of any offence involving moral turpitude or any economic offence by employees of DT

v. Action taken by the DT on the above issues

D. Compliance with registration requirements

i. Certified that the requirements specified for SEBI registration as DT are fulfilled, the details are as under;

ii. Net worth (audited) as defined in the Regulations as on FY ended ………… (as per the latest audited financials)

iii. Any change in infrastructure since the last report / registration/ renewal

iv. Changes in Key personnel during the half year ended……….. )

Name(s) of the key
personnel
Appointment / Cessation Date of appointment / cessation Qualification Experience Functional areas of work

Notes:-

1 SEBI Circular SEBI/HO/MIRSD/MIRSD1/CIR/P/2017/38 dated May 02, 2017.

2 SEBI Circular SEBI/HO/GSD/T&A/CIR/P/2017/42 dated May 16, 2017

3 SEBI Circular CIR/MIRSD/14/2011 dated August 02, 2011.

4 SEBI Circular No. SEBI/MIRSD/DR-2/SRP/Cir – 2/ 2005 dated January 4, 2005.

5 SEBI Circular No. MIRSD/ DPSIII/ Cir-21/08 dated July 7, 2008.

6Circular No. CIR/MIRSD/25/2011 dated December 19, 2011.

7 Circular CIR/MIRSD/3/2013 dated March 15, 2013

8 SEBI Circular No. SEBI/HO/MIRSD/MIRSD3/CIR/P/2017/ 72 dated June 30, 2017.

9 SEBI Circular No. SEBI/HO/MIRSD/MIRSD3/CIR/P/2017/ 72 dated June 30, 2017.

10 Circular No. CIR/IMD/DF/17/2013 dated October 22, 2013.

11Circular No. CIR/ MIRSD/ 25/ 2011 dated Dec 19, 2011

12Circular No. SEBI/HO/MIRSD/MIRSD3/CIR/P/2017/ 72 dated June 30, 2017

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