SEBI clarifies on perpetual debt instrument/non-cumulative preference share issuance and listing
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- Last Updated on 10 February, 2023
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Circular No. SEBI/HO/DDHS/DDHS-RACPOD1/P/CIR/2023/027, Dated 08.02.2023
Chapter V of the SEBI (Issue and Listing of Non-convertible Securities) Regulations, 2021, prescribes conditions for the issuance and listing of perpetual debt instruments/non-cumulative preference shares and similar instruments. Now, upon receiving references from market participants, including issuers and merchant bankers, seeking clarity on the applicability of the provisions of Chapter V of the NCS Regulations, the SEBI has provided clarity on the applicability of Chapter V as requested by the market participants.
SEBI prescribed the list of the characteristics of the securities on which the said provisions will be applicable. Some of the characteristics are as follows:
- The issuer is permitted by RBI to issue such instruments,
- The instruments form part of non-equity regulatory capital,
- The instruments are perpetual debt instruments, perpetual non-cumulative preference shares or instruments of similar nature and
- The instruments contain a discretion with the issuer/RBI for events.The SEBI further clarified that the instruments contain a discretion with the issuer/RBI for events including but not restricted to all or any of the below events:
- Conversion into equity
- Write off of interest/principal
- Skipping/delaying payment of interest/principal
- Making an early recall and
- Changing any terms of issue of the instrument. This circular shall come into force from 08.02.2023.
Click Here To Read The Full Circular
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