SEBI Clarifies on Appointment of Debenture Trustee Nominee for Non-company Issuers
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- Last Updated on 6 July, 2023
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Circular No. SEBI/HO/DDHS/POD1/P/CIR/2023/112, Dated 04.07.2023
The SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021 obligates an issuer which is a company to ensure that its Articles of Association requires its Board to appoint as director, the nominee of debenture trustee (DTs).
Recently, the SEBI has received various representations from Debenture Trustees, a gist of the representations, are as follows:
1. Issuers that are incorporated under different statutes have expressed inability to execute such amendments as the composition of their boards is governed by certain statutes which do not provide for appointment of nominee directors by Trustees.
2. Appointment of any director on the boards of certain issuers which are governed by certain statutes requires prior approval of the President of India.
3. Certain issuers are unable to appoint Nominee Directors on their boards as their principal document/charter does not provide for the same.
Now, the SEBI has clarified on the appointment of nominee for issuers that are not companies.
Accordingly, owing to the issues above, the issuers that fall in any of the categories mentioned above shall submit an undertaking to their Debenture Trustees that a non-executive/independent director/trustee/member of its governing body shall be designated as nominee director for the purposes of NCS Regulations, in consultation with the DTs, or, in case of multiple DTs, in consultation with all the DTs.
Click Here To Read The Full Circular
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