6 days ago
Sebi Proposes Merchant Banker Exemption For Small-Value Debt Issues
Sebi is considering a new rule for certain small debt offerings.
Companies can raise money through debt by borrowing from investors.
Today, some private debt offerings require the company to appoint a merchant banker.
Sebi says this requirement can make small fund-raising efforts more expensive.
The proposed change would cover debt securities and certain preference shares with a face value of Rs 10,000.
Only eligible listed companies regulated by a financial-sector regulator could use the exemption.
They would also need to have been listed for at least one year.
Companies must have no pending fines and no specified payment or repayment defaults.
Sebi will accept public comments until September 17.
Sebi proposed exempting eligible small-value private debt issues by listed entities from mandatory merchant banker appointments.
The proposal covers debt securities and non-convertible redeemable preference shares issued at a face value of Rs 10,000.
Eligible issuers must be regulated by a financial-sector regulator and listed on a recognised stock exchange for at least one year.
Issuers must have no pending regulatory or exchange fines and no specified repayment, interest, redemption, dividend, or term-loan defaults.
Sebi is seeking public comments on the proposal until September 17.
- Who
- The Securities and Exchange Board of India (Sebi), listed issuers, merchant bankers, financial-sector regulators, and stock exchanges are involved.
- What
- Sebi proposed exempting eligible small-value private debt issues from the mandatory appointment of a merchant banker.
- Where
- The proposal concerns private placements by listed entities through recognised stock exchanges and was reported from New Delhi.
- When
- The proposal was reported on August 27, and public comments are invited until September 17.
- Why
- Sebi said the exemption could reduce compliance costs, lower issuers’ cost of capital, and encourage more small-value debt issuances.
Key facts
- Regulator
- Securities and Exchange Board of India (Sebi)
- Proposed exemption
- Eligible small-value debt issues would not require a mandatory merchant banker appointment
- Covered instruments
- Debt securities and non-convertible redeemable preference shares
- Face value
- Rs 10,000
- Issuance method
- Private placement by listed entities
- Eligibility
- The issuer must be regulated by a financial-sector regulator and listed on a recognised stock exchange for at least one year
- Financial and compliance record
- The issuer must have no pending regulator or exchange fines and no specified defaults during the last three financial years and the current financial year
- Comment deadline
- September 17
Quotes
Securities and Exchange Board of India (Sebi)
India’s securities-market regulator, which issued the consultation proposal
“In order to facilitate fund raising by issuers of debt security/ non-convertible redeemable preference share on a private placement basis at a face value of Rs 10,000 (i.e., small-value debt), it has been decided to exempt such issues from the requirement of merchant banker appointment, subject to certain conditions.”
thehansindia.com
freepressjournal.in
Sources
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