Markets regulator Sebi today allowed an entity to issue additional debt securities for the remaining period of maturity where call or put option is exercised.
This is subject to not breaching the overall aggregate count of outstanding ISINs (International Securities Identification Numbers).
ISINs code, which has 12 characters, is used for uniquely identifying securities like stocks, bonds warrants and commercial papers.
"It is clarified that in case of debt securities, where call and/or put option is exercised, the issuer, if so desires, may issue additional debt securities for the balance period viz. remaining period of maturity of earlier debt securities," Sebi said in a circular.
Explaining it with an example, the regulator said that if an issuer has issued debt securities in August 2017 having maturity period of three years and callable after one year, then in such a scenario if the call option is exercised in August 2018, then for the balance two years period (September 2018-August 2020) the issuer may issue additional debt securities maturing in August 2020, under the same ISIN.
However, the "additional issue shall be subject to the condition that the aggregate count of outstanding ISINs maturing in the financial year in which the original issue of debt securities (bearing call and/or put option) is due for expiring, shall not exceed the prescribed limit of ISINs".
As per Sebi norms, an issuer is allowed a maximum of 17 ISINs maturing per financial year.
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The regulator said that all the debt securities issued in 2017-18 on or after July 1, 2017, all the ISINs corresponding to these issues, maturing in any financial year, will adhere to the limit of 12/5 ISINs.
A maximum of 12 ISINs maturing per financial year is permitted only for plain vanilla debt securities. Within the limit of 12, an entity can issue both secured and unsecured non-convertible debentures while no separate category of ISINs has been provided to them.
Furthermore, an entity can issue up to five ISINs every fiscal for structured debt instruments of a particular category.
In case of conversion of partly paid debt securities to fully paid debt securities, such conversion will not be counted as an additional ISIN.
According to Sebi, the issuer while making an issue of debt securities, needs to disclose upfront in the disclosure document that further issuances may be made under the same ISIN.
However, if such a disclosure is not made by the issuer then compliance will have to be made under Sebi (Listing Obligations and Disclosure Requirements) Regulations.
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