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SEBI OPERATIONAL FRAMEWORK FOR TRANSACTIONS IN DEFAULTED DEBT SECURITIES POST MATURITY

Securities Exchange Board of India (SEBI) vide Circular no. SEBI/HO/DDHS/CIR/P/103/2020 dated 23rd June, 2020 has came out with Operational framework for transactions in defaulted debt securities post maturity date/ redemption date under provisions of SEBI (Issue and Listing of Debt Securities) Regulations, 2008.

The Circular was issued to:

  • All Issuers who have listed their debt securities
  • All Recognized Stock Exchanges
  • All Depositories
  • All Debenture Trustee(s)

SEBI has received various Representations from market participants and investors to allow transactions in debt securities where redemption amount has not been paid on maturity/redemption date (referred as defaulted debt securities) and has decided  to introduce an operational framework for transactions in defaulted debt securities Accordingly.

Applicability: The provisions of this circular shall come into force from July 01, 2020.

Outline of the operational framework presented in a tabular form along-with timelines:

Event Activity to be undertaken Timeline (Working Days) By To
1. Execution of Debenture trust deed Pre-authorization to seek debt redemption payment-related information from issuer’s bank At the time of execution of the deed Issuer Debenture Trustee(s)
2. Any change in bank details of issuer for making debt redemption payment Information regarding updated bank details Within 1 working day of event Issuer Debenture Trustee(s)
3. Creation of ISIN / Listing of Debt Securities Intimation of Redemption date Issuer Depositories

Stock Exchange(s)

4.  

 

 

 

 

Redemption/ Maturity date (T day)

Non acceptance of

trades for reporting/settlement

T-2 Stock Exchange
5. Temporary restriction

on transaction in ISIN

T Depository
6. Intimate Status of payment of debt securities T+1 Issuer Stock Exchange(s)

Depositories

Debenture Trustee(s)

7. Non receipt of status of payment from Issuer Independent Assessment of

Payment Status

T+2 to T+9 Debenture Trustee(s)
8. Intimate Status of

payment of debt securities

By T+9 Stock Exchange(s)

Depositories

9. Receipt of information regarding full

payment

Obligations as per para 9 of Annexure A T+3/T+11/

event basis, as applicable

Depositories

Stock Exchanges

10. Receipt of information regarding non payment Obligations as per para 4-8 of Annexure A Depositories

Stock Exchanges

Continuous assessment of payment
11. Any development that impacts the status of default of the concerned debt securities (including restructuring of debt securities, IBC proceedings,

its repayment, etc.)

Intimate updated Status of payment of debt securities Within 1 working day of event Issuer or Debenture Trustee(s) 1. Stock Exchange(s)

 

2. Depositories

12. Continuous assessment of Payment Intimate Status of payment of debt securities 2nd working day of April every

financial

Issuer 1. Stock Exchange(s)

 

2. Depositories

year 3. Debenture
Trustee(s)
13. Non receipt of

status of payment from Issuer

Independent

Assessment  of Payment Status

3rd

working

day of April

– 7th

working

day of April

of every

financial

year

Debenture Trustee(s)
14. Intimate Status of payment of debt

securities

Within 7 working days of April of

Every financial year

1. Stock

Exchange(s)

2. Depositories

Link of the Circular: https://www.sebi.gov.in/legal/circulars/jun-2020/operational-framework-for-transactions-in-defaulted-debt-securities-post-maturity-date-redemption-date-under-provisions-of-sebi-issue-and-listing-of-debt-securities-regulations-2008_46912.html


Disclaimer:

IN NO EVENT THE AUTHOR SHALL BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL OR INCIDENTAL DAMAGE RESULTING FROM OR ARISING OUT OF OR IN CONNECTION WITH THE USE OF THIS INFORMATION.

 

 

CS Lalit Rajputhttp://enlightengovernance.blogspot.com/
Company Secretary having 5 years of post-qualification experience in the Compliance Management Services industry by serving Corporates including Listed Companies, Corporate Secretarial Firms, and LLP.

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