The Securities and Exchange Board of India has notified the Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) (Third Amendment) Regulation, 2020 on 08 October 2020.
The 3rd Amendment to SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015 [‘SEBI LODR’] was notified after decisions were taken in the SEBI Board Meeting held on 29 September 2020. A summary of the changes introduced by this 3rd Amendment is as under:
Asset Cover:
Regulation 54(1) of SEBI LODR has been substituted and now listed companies have been permitted to maintain asset cover in respect of its listed non-convertible debt securities, at 100% asset cover or asset cover as per the terms of the offer document/ Information Memorandum and/ or Debenture Trust Deed, sufficient to discharge the principal amount at all times for the non-convertible debt securities issued.
Further, SEBI has removed Regulation 54(3) through which exemption from maintaining asset cover was granted to regulated financial sector entities issuing unsecured debt securities for meeting capital requirements as specified by their respective regulators.
Intimation to Debenture Trustee
Regulation 56(1) SEBI has included a new intimation to be made by the listed entity to their Debenture trustee, namely: “All covenants of the issue (including side letters, accelerated payment clause, etc.).”
Half Yearly Certificate submitted to Debenture Trustee
Under Regulation 56(1)(d), listed entities shall mandatorily submit a half-yearly certificate regarding maintenance of 100% asset cover to the Debenture Trustee. Now in line with the permission granted by SEBI to maintain asset cover as per the terms of the offer document/ Information Memorandum and/or Debenture Trust Deed, the half-yearly certificate shall accordingly reflect compliance with the asset cover.
Moreover, the listed entities could earlier obtain this certificate from a practicing chartered accountant or a practicing company secretary, now this has to be mandatorily obtained from the Statutory Auditor of the Company.
Forensic audit Disclosure: Event-based Disclosure under Regulation 30
In order to address the gaps in the availability of information on the forensic audit of listed entities, SEBI has decided that in case of initiation of such audits, listed entities shall make the following disclosures to stock exchanges under Regulation 30 [Schedule III – Part A] without any application of materiality:
a) The fact of initiation of forensic audit along-with name of the entity initiating the audit and reasons for the same, if available;
b) Final forensic audit report (other than for forensic audit initiated by regulatory / enforcement agencies) on receipt by the listed entity along with comments of the management, if any.
