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Informist, Wednesday, Dec. 18, 2024

MUMBAI – The Securities and Exchange Board of India, in a board meeting on Wednesday, increased the threshold to identify high value debt listed entities to INR 10 billion from INR 5 billion, the regulator said in a release. It had issued a consultation paper on this in October.

The proposal to increase the threshold was taken as it was found that 812 entities had listed debt instruments with an outstanding amount of INR 37.25 trillion, as per data received from National Securities Depository Ltd. Around 112 pure debt listed entities had an outstanding of more than INR 10 billion, and 75 entities had an outstanding of more than INR 20 billion.

The regulator has also approved the introduction of a separate chapter, and a sunset clause for corporate governance norms, which will be applicable to entities that have only debt listed securities, to facilitate ease of reference, the release said.

The regulator has also increased the flexibility on the constitution of the nomination and remuneration committee, risk management committee, and stakeholder relationship committee by high-value debt listed entities. It has also relaxed entities set up under the public private partnership mode from provisions relating to the composition of directors under the regulations similar to public sector undertakings or statutory entities.

SEBI has also allowed these entities to be included in computation of listed entities while counting the ceiling on the number of directorships, memberships or chairpersonships to ensure that a director is able to give adequate attention to each listed entity.

"The restriction on maximum number of directorships shall not apply for directorships that arise due to an ex-officio position by virtue of statute or applicable contractual framework in the case of PSUs and entities set up under the public private partnership mode, respectively," the release said.

The release also mentioned that debt listed entities where shareholding was wholly or substantially held by one or a few related party shareholders, material related party transactions would require a no-objection certificate from the debenture trustee. "The said NOC shall be obtained before seeking shareholder's approval on the same through resolution. If the NOC has been withheld, the matter shall not be taken forward for shareholders' consideration/ action; This shall be applicable for RPTs (related party transactions) undertaken by HVDLEs (high value debt listed entities) from April 01, 2025 onwards," the release said.

On a voluntary basis, these entities will now have to bring out a business responsibility and sustainability report to introduce the practice of good governance at par with equity listed entities, SEBI said.  End

Reported by Kshipra Petkar

Edited by Avishek Dutta

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