SEBI notifies rules on shelf prospectus for debt securities

According to the new norms, the shelf prospectus for issuance of non-convertible debt securities can be filed by NBFCs

February 03, 2014 5:23 IST | India Infoline News Service
Market regulator Securities and Exchange Board of India (SEBI) on Friday notified new norms which allow listed companies, including non-banking financial institutions and issuers authorised by central board of direct taxes (CBDT), to file shelf prospectus for public issuance of debt securities.
A shelf-prospectus enables companies to issue corporate bonds using the same documents more than once. This will help to cut costs and save time.
According to the new norms, the shelf prospectus for issuance of non-convertible debt securities can be filed by non-banking finance companies (NBFCs), including infrastructure debt funds (IDFs) as well as public sector financial institutions. Besides, the regulator has extended the facility to issuers authorised by CBDT to make public issue of tax free secured bonds.
“The entities have no regulatory action is pending against the company or its promoters or directors before the Board, Reserve Bank of India or National Housing Bank, SEBI said in a notification.
To avoid fragmentation of the issues, which will affect the floating stock and thereby liquidity, Sebi has said that “not more than four issuances shall be made through a single shelf prospectus”.
“The issuer filing a shelf prospectus shall file a copy of an information memorandum with the recognised stock exchanges and the board, immediately on filing the same with the registrar,” it added.
Moreover, SEBI has said NBFCs and other listed issuers would be eligible for filing shelf prospectus only if meet certain criteria.
These include having a net worth of at least Rs500 crore, the securities issued under the shelf prospectus have been assigned a rating of not less than “AA-” category or equivalent by a credit rating agency registered with Sebi.
The issuer has not defaulted in the repayment of deposits or interest payable thereon, redemption of debentures or preference shares or payment of dividend to any shareholder, or repayment of any term
loan or interest payable thereon to any public financial institution or banking company, in the last three financial years.

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