SEBI Introduces Additional Disclosures for Issuers Making Private Placements of Non-Convertible Securities

Notification No. SEBI/LAD-NRO/GN/2023/135; Dated: 03.05.2023

The SEBI has notified the SEBI (Issue and Listing of Non-Convertible Securities) (Second Amendment) Regulations, 2023. Various amendments have been made to the SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021.

The key highlights of the amendment are as follows:

Definitions of “Key Managerial Personnel” and “Senior Management” newly inserted

The SEBI has inserted definitions of “Key managerial personnel” and “Senior Management” under Regulation 2. The term “key managerial personnel” means key managerial personnel as defined u/s 2(51) of the Companies Act, 2013. The term “Senior Management” shall mean the officers

Introduction of additional disclosures for issuers making issuance & listing of Non-Convertible Securities on a Private Placement basis

SEBI has introduced a new Chapter VA for the issuance and listing of non-convertible securities issued on a private placement basis. Under this new chapter, an issuer making a private placement of non-convertible securities and seeking listing on stock exchanges must file a general information document with the stock exchanges containing disclosures specified in Schedule I.

Further, the provisions of this regulation shall be applicable on a ‘comply or explain’ basis until March 31, 2024 and on a mandatory basis.

Mandatory information for Key Information Document

The key information document shall include the following information:

details of the offer of non-convertible securities in respect of which the key information document is being issued;

financial information, if such information provided in the general information document is more than six months old;

material changes, if any, in the information provided in the general information document;

any material developments not disclosed in the general information document, since the issue of the general information document relevant to the offer of non-convertible securities in respect of which the key information document is being issued;

SEBI notifies the requirements for ‘Large Corporates’

SEBI has introduced chapter VB specifying the requirements for ‘Large Corporates’. A listed entity, fulfilling the criteria as may be specified by the Board, shall be considered as a ‘Large Corporate’.

Currently, listed entities which specify the following criteria are considered large corporates [Circular no. SEBI/HO/DDHS/P/CIR/2021/613’ dated 10.08.2021] –

Listed entities that have their specified securities or debt securities or non-convertible redeemable preference shares, listed on a recognised stock exchange in terms of SEBI LODR Regulations, 2015

Listed entities that have outstanding long-term borrowings of Rs 100 crore or above, where outstanding long-term borrowings shall mean any outstanding borrowing with an original maturity of more than one year and shall exclude external commercial borrowings and inter-corporate borrowings between a parent and subsidiary.

Have a credit rating of “AA and above”, where credit rating shall be of the unsupported bank borrowing or plain vanilla bonds of an entity, which have no structuring/support built-in and in case, where an issuer has multiple ratings from multiple rating agencies, the highest of such ratings shall be considered.

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