SEBI Floats White Paper To Ease Of Compliance For Listed Companies With Non-Convertible Debentures

In a move to ease the compliance requirements for organisations with listed non-convertible debentures (NCDs), the Securities and Exchange Board of India (SEBI) proposed amendments on Friday.

This revision will ease the cost of compliance for financial sector entities.

This move is in line with the announcement by the government in the FY 2023–24 Budget: 'To simplify, ease, and reduce the cost of compliance, financial sector regulators will be requested to carry out a comprehensive review of existing regulations. For this, they will consider suggestions from public and regulated entities.'

Further, SEBI suggested placing in order the approval and authentication process for financial results of institutions with listed non-convertible securities to that of equity-listed organisations, the capital markets regulator said in the consultation paper.

Simplification of fiscal results process

This will simplify the processes and guarantee that the board of directors approves the financial results and that a designated official signs them, just like equity-listed entities must.

Additionally, the regulator suggested harmonising the disclosure requirements for fraud and default by senior management in companies that have listed non-convertible securities with those that apply to companies with equity listings.

Short notification period

In the consultation paper, SEBI stated that it would also shorten the period, possibly from seven to three working days, by which entities with listed non-convertible securities must notify stock exchanges of record dates. Market players will have plenty of time to react to this proposal.

Disclosures in XRBL format

The Corporate Bonds and Securitisation Advisory Committee of the regulatory body also suggested requiring all disclosures made by listed companies holding non-convertible securities to be submitted in the XBRL format.

The modification will lessen duplication and streamline the filing procedure. The entities must currently submit filings in both PDF and XBRL formats.

ISIN relaxation

Furthermore, it suggested easing limitations on International Securities Identification Numbers (ISINs) for securities that were outstanding but not listed as of December 31, 2023, provided that ISINs are later listed.

By taking this action, entities with multiple ISINs will have less regulatory burden and a smoother transition to listed status. By September 6, the SEBI is asking for public feedback and recommendations on the consultation paper.