Procedure for Public Issue of Debentures

Procedure-for-Public-Issue-of-Debentures

Procedure for Public Issue of Debentures

Procedure for Public Issues of Non Convertible debt instruments under SEBI (Issue and Listing of Debt Securities) Regulations, 2008


    1. Call a Board Meeting after giving notice to all the directors of the company to decide following about the issue of debentures.

  ·    whether the debenture is non-convertible or      fully or partly convertible
   ·  credit rating
   ·  appointment of trustee
   ·  appointment of Lead Manager(s) and other      intermediaries

  2. Make an application to one or more recognized stock exchanges for listing of such securities therein. If the application is made to more than one recognized stock exchanges, the issuer shall choose one of them as the designated stock exchange. If the application is made to any of the stock exchanges having nationwide trading terminals, the issuer shall choose one of them as the designated stock exchange.

3.     Obtain- in-principle approval for listing of its debt securities on the recognized stock exchanges where the application for listing has been made.

4.    Obtain credit rating from at least one credit rating agency registered with the Board and disclose it in the offer document.

5.   Enter into an arrangement with a depository registered with the Board for dematerialization of the debt securities that are proposed to be issued to the public, in accordance with the Depositories Act, 1996 and regulations made there-under.

6.    Appoint one or more merchant bankers registered with the Board at least one of whom shall be a lead merchant banker.

7.    Appoint one or more debenture trustees in accordance with the provisions of Section 71 of the Companies Act, 2013 and Securities and Exchange Board of India (Debenture Trustees) Regulations, 1993.

8.    No debt securities will be issued for providing loan to or acquisition of shares of any person who is part of the same group or who is under the same management.

9.  Prepare an offer document containing following material disclosures which are necessary for the subscribers of the debt securities to take an informed investment decision.

·  the disclosures specified in Section 26 of the Companies Act, 2013

·  disclosure specified in Schedule I of SEBI Issue and Listing of Debt Securities)  Regulations, 2008

·  additional disclosures as may be specified by the Board.

10. File the draft offer document with the designated stock exchange through the lead merchant banker and post the same on the website of the designated stock exchange for seeking public comments for a period of seven working days from the date of filing the draft offer document with such exchange. Also display the draft offer document on the website of the issuer, merchant bankers and the stock exchanges where the debt securities are proposed to be listed.
11. Following shall be ensured by the lead merchant banker –

·  The draft offer document clearly specifies the names and contact particulars of the compliance officer of the lead merchant banker and the issuer including the postal and email address, telephone and fax numbers.
·  All comments received on the draft offer document are suitably addressed prior to the filing of the offer document with the Registrar of Companies.

11. Forward a copy of draft and final offer document to the Board for its records.

12. Obtain a due diligence certificate as per Schedule II of these regulations from the lead merchant banker shall, prior to filing of the offer document with the Registrar of Companies.

13. Obtain a due diligence certificate as per Schedule III of these regulations from the debenture trustee prior to the opening of the public issue.

14. Both the draft and final offer document shall be displayed on the websites of stock exchanges and shall be available for download in PDF / HTML formats.

15. File the offer document with the designated stock exchange, simultaneously with filing thereof with the Registrar of Companies, for dissemination on its website prior to the opening of the issue. Also make physical copy of the offer document to the person demanding it.

16. Make an advertisement in a national daily with wide circulation, on or before the issue opening date and such advertisement shall, amongst other things, contain the disclosures as per Schedule IV.

17. Ensure that every application form issued by the issuer is accompanied by a copy of the abridged prospectus.

18. The company may propose to issue debt securities to the public through the on-line system of the designated stock exchange.

19. The issuer may determine the price of debt securities in consultation with the lead merchant banker and the issue may be at fixed price or the price may be determined through book building process in accordance with the procedure as may be specified by the Board.

20. The minimum subscription for public issue of debt securities shall be 75% of the base issue size.

21. A public issue of debt securities may be underwritten by an underwriter registered with the Board and in such a case adequate disclosures regarding underwriting arrangements shall be disclosed in the offer document.

22. The offer document shall not omit disclosure of any material fact which may make the statements made therein, in light of the circumstances under which they are made, misleading. The offer document or abridged prospectus or any advertisement issued by an issuer in connection with a public issue of debt securities shall not contain any false or misleading statement.

23. A trust deed for securing the issue of debt securities shall be executed by the issuer in favour of the debenture trustee within three months of the closure of the issue containing such clauses as may be prescribed under section 71 of the Companies Act, 2013 and those mentioned in Schedule IV of the Securities and Exchange Board of India (Debenture Trustees) Regulations, 1993.

24.Create debenture redemption reserve in accordance with the provisions of the Companies Act, 2013.

25. Disclose the proposal to create a charge or security, if any, in respect of secured debt securities in the offer document along with its implications.

26. Keep all the issue proceeds in an escrow account until the documents for creation of security as stated in the offer document are executed.
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