Amendment
in timeline for filing Debenture Trustee’s Certificate in case of certain
companies
The Securities and Exchange
Board of India (SEBI) has vide notification dated 7th May 2019,
amended certain provisions of the SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015 (“SEBI LODR Regulations”). This amendment was
approved by SEBI at its Board meeting held on 1st March 2019.
The background and implications
of this amendment are explained as follows:-
Background –
Under Regulation 33 of SEBI (LODR) Regulations, equity listed entities
are required to submit quarterly
financial results within 45 days from the end of every quarter (mandatorily
within 60 days from end of last quarter/ financial year)
Similarly, under Regulation 52 of SEBI (LODR)
Regulations, debt listed entities are required to submit half-yearly and annual financial results within 45 days from
the end of half-year (optional within 60 days from end of last half year /
financial year)
Under Regulation 52(4) of SEBI (LODR) Regulations, while submitting half yearly / annual financial results, the debt
listed entity needs to disclose the following items along with the financial
results:
(a) credit rating and change
in credit rating (if any);
(b) asset cover available, in
case of non-convertible debt securities;
(c) debt-equity ratio;
(d) previous due date for the
payment of interest/ dividend for non-convertible redeemable preference shares/
repayment of principal of non-convertible preference shares /non-convertible
debt securities and whether the same has been paid or not; and,
(e) next due date for the
payment of interest/ dividend of non-convertible preference shares /principal
along with the amount of interest/ dividend of non-convertible preference
shares payable and the redemption amount;
(f) debt service coverage
ratio;
(g) interest service coverage
ratio;
(h) outstanding redeemable
preference shares (quantity and value);
(i) capital redemption
reserve/debenture redemption reserve;
(j) net worth;
(k) net profit after tax;
(l) earnings per share:
Under Regulation 52(5)
of SEBI (LODR) Regulations, while
submitting the above mentioned information under Reg 52(4), the debt listed
entity also needs to submit to stock exchange(s), a certificate signed by debenture trustee that it has taken note of the
contents.
Practical
Difficulty faced by Companies having listed equity shares on Main Board of
stock exchanges as well as listed Debt Securities -
Now, equity listed entities are also governed by Reg 30 of
SEBI (LODR) Regulations. Under Regulation 30(6) read with Para A of Part A of
Schedule III of the said Regulations, financial
results are to be submitted within thirty minutes of the conclusion of the
board meeting.
In case of
entities having only listed debt securities, the timeline prescribed for
submission of financial statements is 45 days from the end of half year /
optionally 60 days from end of financial year under Reg 52(1), and there is no specific timeline prescribed
after conclusion of board meeting, for submission of financial results to stock
exchange.
Hence practically speaking, in case of issuers having both listed equity and debt securities, they
had a very short time frame after adoption of financial results by the
Board of Directors, for seeking the
above mentioned certificate from Debenture Trustees as required under Regulation
52(5).
Amendment in
this regard –
Hence, now SEBI has modified Regulation 52 of SEBI (LODR)
Regulations as follows:-
1.
A proviso
has been inserted in Regulation 52(1) which says that “in case of entities
which have listed their equity shares and debt securities, a copy of the financial results submitted to stock exchanges shall be
provided to Debenture Trustees on the same day the information is submitted to
stock exchanges.”
2.
Regulation
52(5) which prescribed that, the listed entity shall, while submitting the
financial results and the above mentioned information about debt securities to
stock exchange(s), shall also submit a certificate signed by debenture trustee
that it has taken note of the contents, has been amended with respect to the
timeline of submission of this certificate.
As per Amended Regulation
52(5), within seven working days
from the date of submission of financial results and the above mentioned information
about debt securities to stock exchange, the
listed entity shall, submit to stock exchange(s), a certificate signed by
debenture trustee that it has taken note of the contents.
Accordingly, as per this Amendment,
(a)
the
Companies having listed equity shares and listed debt securities are under a
compulsion to submit a copy of financial
results to the Debenture Trustees on the same day when it is submitted to
stock exchange.
(b)
All debt listed companies have
now got a period of 7 working days for submission of certificate from Debenture
Trustee to stock exchanges, after submission of financial results and other debt
securities related information to the stock exchanges.
The copy of the SEBI Notification dated 7th May 2019 for
amendment to SEBI (LODR) Regulations, 2015 in this regard is available on
following link:
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