The Securities and Exchange Board of India on 13th August 2021 has directed the depositories to develop a platform for ‘Security and Covenant Monitoring System for capturing process of security creation, monitoring of covenants and keeping a track of asset cover.
The system shall inter alia capture the process of creation of security (viz. due diligence, charge creation etc.), continuous monitoring of covenants by Debenture Trustees (as applicable), credit rating of the non-convertible securities by the Credit Rating Agencies (CRAs) etc.
The system shall come into effect from April 01,2022. However, testing of the system shall start from January 01, 2022 and therefore, Issuers, Debenture Trustees and Credit Rating Agencies etc. are thereby advised to carry out necessary changes, if any, in order to be ready to execute such functions as required for the proposed platform.
The depositories shall provide secure login credentials to Issuers, CRAs, debenture trustees (DTs) etc. for recording and verifying requisite information on the system and shall put in place adequate safeguards to ensure the integrity and security of the data on the system.
The Issuer shall record relevant details regarding proposed ‘Security creation/Security Cover’ (if applicable) including asset details, other related documents in the system based on the type of asset offered for security creation.
Further Issuer shall provide the half-yearly certificate by the statutory auditor specifying the security cover and asset cover and upload the same on the system within 45 days/ 60 days as specified under the provision of SEBI (LODR) Regulations, 2015 and shall upload on a periodic basis the necessary and applicable documents, information within stipulated time.
