Informist, Wednesday, Aug 21, 2024

MUMBAI – The Securities and Exchange Board of India has proposed to clarify that remuneration payable to debenture trustees by the issuer will be excluded from the definition of pecuniary relationship, the regulator said in a consultation paper today. SEBI has invited public comments on the consultation paper by Sep 11.

There were concerns about the debenture trustee guidelines on whether the remuneration paid to the trustee by the issuer was included in the purview of the pecuniary relationship.

Currently, there exists a restriction in the appointment of an entity as a debenture trustee, who has any pecuniary relationship with the issuer amounting to 2% or more of its gross turnover or total income or 5 mln rupees, whichever is lower, during the two immediately preceding financial years or in the current financial year.

"It is proposed to clarify, by way of circular, that the pecuniary relationship excludes remuneration payable to DTs (debenture trustees)," the consultation paper said.

The paper also proposed that the revenue received by the debenture trustees from the issuer for services needs to be mentioned in the offer document.

SEBI defines debenture trustees as those entities which are appointed to protect the interests of bond and debenture holders. To act as a debenture trustee, the entity should either be a scheduled bank carrying on commercial activity, a public financial institution, an insurance company, or a body corporate. End

Reported by Kshipra Petkar

Edited by Saji George Titus

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