Sebi revises requirements for issuance, listing of transition bonds

To facilitate transparency and informed decision-making among the investors, markets regulator Sebi on Friday mandated additional requirements for the issuance and listing of transition bonds.

The move is also aimed at ensuring that the funds raised through transition bonds are not being misallocated, the Securities and Exchange Board of India (Sebi) said in a circular.

Transition bond is one of the sub-categories of 'green debt security'. These bonds are generally used for raising funds for transitioning to a more sustainable form of operations in line with India's intended nationally determined contributions.

In its circular, Sebi said that an issuer wishing to issue transition bonds will have to make additional disclosures in the offer document for public issues or private placements of such transition bonds.

To differentiate transition bonds from other categories of green debt security, the issuer of transition bonds will have to use a denotation 'GB-T'. Such denotation would be disclosed in the offer documents on the cover page and in the type of instrument field in the term sheet.

The transition plan should contain the details of interim targets, along with an indicative timeline for achieving the targets. The interim targets should also reflect the indicative figure regarding how much emissions the issuer is envisaging to reduce.

Among others, the transition plan should have information about the brief of the project implementation strategy and details regarding the usage of technology for the project implementation and mechanism to oversee the utilisation of the funds raised through transition bonds and the implementation of the transition plan.

Issuers can also form a committee to oversee the implementation and ensure the timely completion of the defined targets.

With regards to disclosure in the centralised database for corporate bonds, Sebi said that an issuer will have to disclose the denotation in the centralised database for corporate bonds by filling in the denotation --GB-T. The depositories will update this denotation as a prefix in the "instrument details" field in the centralised database for corporate bonds.

In case of disclosure to stock exchanges, in case of a revision in the transition plan, Sebi said that an issuer of transition bonds, during the year, will have to disclose the revised transition plan along with an explanation for any such revision to the already disclosed plan; if applicable.

Also, issuers will have to disclose the transition plan along with a brief on the progress of the implementation of the transition plan in the annual report.