Debentures are of two types, namely convertible debentures and non-convertible debentures (NCD). Non-convertible debentures (NCD) are fixed-income instruments, usually issued by high-rated companies in the form of a public issue to accumulate long-term capital appreciation. Article compiles Obligations of Listed Entity which has Listed its Non-convertible debentures.
Obligations of Listed Entity which has Listed its Non-convertible debentures
| S. No. | Regulation | Description | Time line |
| 1 | 50(1) | The listed entity shall intimate the date on and from which the interest on debenture and redemption amount of debentures shall be payable. | at least 11 working days before the interest or redemption amount is payable |
| 2 | 50 (2) | Intimation to the stock exchange(s) of the Board Meeting wherein the proposal to raise funds through issue of new NCDs and it proposes to list either through a public issue or on private placement basis, shall be considered | Prior to the BM. |
| 3 | 50 (3) | The listed entity shall inform the stock exchange(s)- regarding the meeting of its BoDs, at which the recommendation or declaration of issue of NCDs or any other matter affecting the rights or interests of holders of NCDs is proposed to be considered. | at least two working days in advance (excluding the date of the intimation and date of the meeting) |
| 4 | 51(1) | The listed entity shall inform the stock exchange(s) about all the information having bearing on the performance/ operation of the listed entity, price sensitive information or any action that shall affect payment of interest or redemption of NCDs | Promptly inform
[Explanation: promptly inform means that the stock exchange(s) must be informed as soon as practically possible and without any delay and that the information shall be given first to the stock exchange(s) before providing the same to any third party] – Explanation for clause xi- default means Non-payment of interest or principal amount in full on the pre-agreed date and shall be recognized at the first instance of delay in servicing of any interest or principal on debt |
| 5 | 51(2) read with Schedule III Part B | List of Items specified in Schedule III part B- without prejudice to the generality of Reg. 51(1), which shall have effect on performance/ operation of the listed entity:
i. expected default in payment of interest/ redemption amount/ creation of security for debentures; ii. any attachment or prohibitory orders restraining the entity from transferring NCDs; iii. any action which shall result in redemption, conversion or cancellation of NCDs; iv. any action that shall adversely affect the payment of interest on NCDs, including default by the issuer upon payment of interest/ failure to create charge on the assets; v. any change in the form or nature of the NCDs listed in the stock exchange(s) or rights and privileges of the holders thereof; vi. any change in the general character/ nature of business or activities / disruption of operations due to natural calamity and commencement of commercial production/ operations; vii. any event viz. strikes & lock outs which have bearing on payment of interest/ redemption amount; viii. details of letter received from the debenture trustee regarding payment / non- payment of interest, principal payment or any other matter concerning the security or the assets along with the comments thereon, if any; ix. delay/ default in payment of interest/ redemption amount for a period more than 3 months from the due date; x. failure to create charge on the assets within the time period; xi. instances of delay/ default of interest/ principal obligation and nay proposal of rescheduling or postponement of the repayment programs with the lenders; xii. any major change in composition of the Board of Directors which may amount to change in control under SEBI (SAST) Regulations, 2011; xiii. any revision in rating; xiv. following approvals of the Board : a. Decision to pass any interest payment; b. Short particulars of any increase of capital- through issue of bonus/ right securities offered to debenture holders; xv. any information/ notice/ circular/ call letters, etc. concerning holders of the NCDs; xvi. any other change that shall effect the rights of the holders of NCDs. |
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| 6 | 52(1) | Submission of the un-audited/ audited financial results on half yearly to the stock exchanges.
The listed entity which has listed their equity as well as NCDs shall provide a copy of the financial submitted to the Debenture Trustee |
Within 45 days from the end of the half year.
On the same day when the financials are submitted to the stock exchange(s). |
| 7 | 52(2) | Requirement w.r.t preparation, approval and publication of the half yearly results:
a. Un-audited financial results to be accompanied with the limited review of the auditor; Annual audited financial results; b. Half yearly results to be taken on record by the Board and signed by the MD / executive Director c. Modified opinion in the auditor’s report that have bearing in the payment of interest of the NCDs must be addressed by the BoDs while publishing the accounts |
Within 45 days from the end of half year
Within 60 from the end of financial year |
| 8 | 52(4) | The listed entity at the time of submitting the financial results (half yearly/ annually) shall disclose the following along with the financial results:
a. Credit rating or any change in credit rating (if any); b. Asset cover available for NCDs; c. Debt equity ratio; d. Previous due date for payment of interest / repayment of NCDs and whether the same has been paid or not; e. Debt service coverage ratio; f. Interest service coverage ratio; g. Debenture redemption reserve; h. Net worth; i. Net profit after tax; and j. Earnings per share |
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| 9 | 52(5) | The listed entity shall submit to the stock exchange(s)a certificate from the Debenture trustee that it has taken the information as mentioned in Reg. 52(4) on record | Within 7 days from the date of submission of results |
| 10 | 52(7) | The listed entity shall submit to the stock exchange(s) on a half yearly basis along with the half yearly financial results, a statement indicating material deviations, if any, in the use of proceeds of issue of NCDs | |
| 11 | 52(8) | Newspaper publication of the financial results in atleast one English national daily newspaper circulating in whole or substantially whole of India | Within 2 calendar days of the conclusion of the meeting |
| 12 | 54 | The listed entity shall:
1. maintain 100 % asset coverage ratio sufficient to discharge at all times the principal amount of the NCDs- for secured debts only 2. Disclose to the stock exchange(s) the quarterly/ half yearly, year to date and annual financial results, the extent and nature of security created |
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| 13 | 55 | Each rating obtained by the listed entity shall be reviewed by the credit rating agency | At least once a year |
| 14 | 56 | Documents and intimation required to be given to the debenture trustee promptly:
a. Copy of the annual report along with the copy of certificate from the auditors in respect of utilization of funds; b. A copy of all notices/ resolutions and circulars relating to: i. New of issue of NCDs at the same time as they are sent to the holders of the NCDs; ii. The meeting of holders of NCDs c. Intimation regarding- revision in ratings/ default in timely payment of interest or redemption or both /failure to create charge over the assets; d. Half yearly certificate from PCS or PCA regarding maintenance of 100% asset cover of listed NCDs along with half yearly results; |
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| 15 | 57(1) | The Listed entity shall submit a certificate to the stock exchange(s) regarding timely payment of interest or principal obligations or both w.r.t NCDs | Within 2 days of interest or principal or both becoming due |
| 16 | 57(2) | The Listed entity shall submit an undertaking to the stock exchange(s) that all documents and intimations required to be submitted to Debenture Trustees in terms of Trust Deed and SEBI (Issue and Listing of Debt Securities) Regulations, 2008 have been complied with. | On annual basis |
| 17 | 58 | The listed entity shall send the following documents to the holders of NCDs:
i. Hard copies of annual report to the holders of NCDs who had requested for the same; ii. Half yearly communication to the holders of NCDs as mentioned in sub- regulation 4 & 5 of Reg. 52 |
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| 18 | 59 | Prior approval of the stock exchange(s) (the approval is required after approval of the BoDs, debenture trustee and after obtaining consent of requisite majority of class of security holders) are required were NCDs of the listed entity are listed-before making any changes in the structure of debentures in terms of coupon, conversion, redemption or otherwise | |
| 19 | 60 | The listed entity shall fix a record date for the purpose of payment of interest / payment of redemption amount. | give notice in advance of at least seven working days (excluding the date of intimation and the record date) |
| 20 | 62 | Website Disclosure requirement:
a. Details of business; b. Copy of annual report; c. Contact information of the designated officials of the listed entity responsible for investor grievances; d. Email address for grievance redressal; e. Name of debenture trustee with full contact details; f. Information, report, notice and circular, etc. concerning the interest of NCDs; g. All information and reports filed by the listed entity; and h. Information w.r.t. default by the issuer to pay interest or redemption amount, failure to create charges on assets, revision on rating assigned to the NCDs |
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