Sebi issued a new norms for listing of (NCDs) and (NCRPS)
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Markets regulator Sebi issued a new framework for listing of non-convertible debentures (NCDs) and non-convertible redeemable preference shares (NCRPS) following mergers and acquisitions (M&As).
Provisions of new framework:
A listed company may seek listing of NCRPS/NCDs issued pursuant to a scheme of arrangement only in case where the listed firm is a part of such scheme and such securities are issued to the holders of specified securities of such listed entity
Only the NCRPS/NCDs issued to the holders of listed specified securities, vide the scheme of arrangement, would be eligible for seeking listing
However, if the same series of securities are also allotted to other investors (other than the allotment done to the holders of listed specified securities as per the scheme of arrangement) then such securities would not be eligible for listing.
A scheme of arrangement is a court-approved agreement between a company and its shareholders or creditors.
The Securities and Exchange Board of India (Sebi) said that the minimum tenure of such securities would be one year.
The regulator has listed out several documents including face value and price; terms of payment of dividends/coupon including frequency; credit rating; maturity; details about terms of redemption, amount, date, early redemption scenarios that need to be disclosed in Draft Scheme of Arrangement.
Sebi, in March, streamlined regulatory framework for scheme of arrangement such as merger and acquisitions by listed firms to check any possible bypassing of norms and prevent companies from seeking direct approval of National Company Law Tribunal (NCLT) for such deals.
Listed entities, desirous of undertaking scheme of arrangement, will have to file the draft scheme with stock exchange for obtaining observation letter or no-objection letter, before filing such scheme with any court or tribunal
Further, stock exchanges have to forward their objection /no-objection letter on such scheme to Sebi, which can also review the scheme and issue necessary observations, within three working days.
Immediately upon filing of the draft scheme of arrangement with bourses, the listed entity will have to disclose such scheme along with all the documents on its website. They will also have to disclose the observation letter of exchanges on its website within 24 hours of receiving it.
About Nonconvertible debentures :
Are unsecured bonds that cannot be converted to company equity or stock. Nonconvertible debentures usually have higher interest rates than convertible debentures. A fixed deposit is an arrangement with a bank where a depositor places money in the bank and is paid a regular fixed profit.
About Non-Convertible Redeemable Preference Shares :
As per Securities and Exchange Board Of India (Issue And Listing Of Non-Convertible Redeemable Preference Shares) Regulations, 2013 Non-Convertible Redeemable Preference Share means a preference share which is redeemable in accordance with the provisions of the Companies Act, 1956 and does not include a preference share which is convertible into or exchangeable with equity shares of the issuer at a later date, with or without the option of the holder.
The Securities and Exchange Board of India is the regulator for the securities market in India. It was established in the year 1988 and given statutory powers on 30 January 1992 through the SEBI Act, 1992
Founded: 12 April 1992
Sector: Securities market
Agency executive: Ajay Tyagi (Chairman)