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Wednesday, September 27, 2023

Sebi notifies stricter delisting rules for non-convertible debt securities

NEW DELHI: With an intention to guard traders’ curiosity, Sebi has notified a brand new framework prohibiting listed entities, with greater than 200 non-QIB (certified institutional purchaser) holders of non-convertible debt securities, from delisting voluntarily.
Under the brand new rule, the listed entity should get hold of permission from all holders of non-convertible debt securities inside 15 working days of receiving the notification of delisting.
The current rule permits entities to delist by giving a previous intimation to the inventory alternate concerning the assembly of the board of administrators, the place the proposal for a voluntary delisting is taken into account.
Unlike fairness, whereby approval by a threshold majority is ample for approval of delisting, within the new framework, approval of 100 per cent of the debt safety holders has been mandated for delisting of debt securities.
This is as a result of, not like fairness which is a perpetual instrument, listed debt securities have a finite time period to maturity.
In its notification issued on August 23, Sebi mentioned the brand new framework for delisting of non-convertible debt securities would permit all listed non-convertible debt securities to be delisted voluntarily.
However, entities wouldn’t be authorised to delist sure securities whereas selectively itemizing others.
Also, it will not apply to the delisting of non-convertible debt securities in sure conditions comparable to delisting as a consequence of any penalty or motion initiated in opposition to the listed entity by inventory exchanges; delisting pursuant to the redemption of the non-convertible debt securities.
Further, the mechanism wouldn’t apply to the delisting of a listed entity’s non-convertible debt securities which were delisted below a decision plan authorised below the Insolvency Code.
In case of delisting pursuant to a decision plan as per the provisions of the Insolvency Code, the main points of delisting of non-convertible debt securities shall be disclosed to the inventory exchanges inside one working day of the approval of the decision plan below the Insolvency Code.
The new rule prohibits a listed entity that has “more than 200 securities holders excluding qualified institutional buyers (QIBs) in any International Securities Identification Number relating to listed non-convertible debt securities or non-convertible redeemable preference shares”.
Sebi mentioned that each one the occasions pertaining to the proposal of delisting in respect of non-convertible debt securities, ranging from the inserting of the agenda for delisting to the board of administrators and until the delisting is accomplished, should be disclosed as materials info to the alternate.
The listed entity should ship the discover of delisting to the holders of non-convertible debt securities inside three working days from the date of receipt of in-principle approval from the exchanges.
Within 5 working days from the date of acquiring approval from all of the holders of non-convertible debt securities, the listed entity should make the ultimate software for delisting to the alternate.
Sebi mentioned that the delisting proposal shall be thought-about failed in case of non-receipt of in-principle approval from the inventory alternate, comparable to non-receipt of no-objection certificates from the debenture trustee and non-receipt of approval from all of the holders of non-convertible debt securities.
In case of failure of the delisting proposal, the listed entity should intimate the identical to the alternate inside one working day from the date of such occasion of failure.
To give this impact, Sebi amended LODR (Listing Obligations and Disclosure Requirements) Regulations.

Nilesh Desai
Nilesh Desaihttps://www.TheNileshDesai.com
The Hindu Patrika is founded in 2016 by Mr. Nilesh Desai. This website is providing news and information mainly related to Hinduism. We appreciate if you send News, information or suggestion.

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