The secondary market advisory committee of the Securities and Exchange Board of India (Sebi) has recommended that a listed company issuing debt securities either on private placement basis or through the public issue should have the same exhaustive disclosure requirements as are normally required under the Companies Act, 1956 and Sebi regulations.
The committee headed by Clearing Corporation chairman, R H Patil, which met on January 13 has recommended that a listed company issuing debt securities on private placement basis should be allowed to make full disclosures on the websites of the company, stock exchange(s) and Sebi only, provided such securities are issued and traded in standard denomination of Rs 10 lakh.
The companies must appoint debenture trustees for all such issuances. An unlisted company making private placement of debt securities and intending to list them should make adequate disclosures but if the securities are not proposed to be listed, Sebi-registered intermediaries should be discouraged from associating with issuance or trading of such securities in any manner.
The continuing disclosures, as stipulated under the listing agreement, shall also be made by listed companies in respect of all outstanding debt issues.
A separate listing agreement may be devised for listing all debt securities. However, if the securities of the company are already otherwise listed, the company may be exempted from compliance with the requirements which are already being complied with under the earlier listing agreement...that is, though the company would sign debt listing agreement, it would comply with incremental requirements only.
It is desirable that the corporate debt securities are issued and traded in demat form.With the above disclosures, the corporate debt securities can be brought into trading platform of the exchanges.
One of the members of the Committee also felt that suitable amendments to the Companies Act, 1956 for protecting interests of investors adequately should precede implementation of the above framework.
