https://vinodkothari.com/wp-content/uploads/2023/06/vinod-kothari-logo.png00Vinod Kothari Consultantshttps://vinodkothari.com/wp-content/uploads/2023/06/vinod-kothari-logo.pngVinod Kothari Consultants2020-04-15 12:47:282020-04-18 13:13:34Virtual Conference on Impact of RBI's Moratorium on PTC Transactions
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Staff Publication says:
Subsequent to our meeting, on 223rd April, SEBI has issued a circular, [https://www.sebi.gov.in/legal/circulars/apr-2020/review-of-provisions-of-the-circular-dated-september-24-2019-issued-under-sebi-mutual-funds-regulations-1996-due-to-the-covid-19-pandemic-and-moratorium-permitted-by-rbi_46549.html] saying the following: “Accordingly, based on assessment, if the valuation agencies appointed by AMFI areof the view that the delay in payment of interest/principalor extension of maturity of a security by the issuerhas arisen solely due to COVID-19 pandemic lockdown and/or in light of the moratorium permitted by Reserve Bank of India (RBI) (vide notification no. RBI/2019-20/186, dated March 27, 2020) creating temporary operational challenges in servicing debt, then valuation agencies may not consider the same as a default for the purpose of valuation of money market or debt securities held by Mutual Funds.”
Hence, the entire issue now stands resolved.
Typically the terms of issuance will provide for a voting mechanism – say, 75% votes in value. If that voting threshold is not obtained, then, unfortunately, the restructuring cannot be done.
Subsequent to our meeting, on 223rd April, SEBI has issued a circular, [https://www.sebi.gov.in/legal/circulars/apr-2020/review-of-provisions-of-the-circular-dated-september-24-2019-issued-under-sebi-mutual-funds-regulations-1996-due-to-the-covid-19-pandemic-and-moratorium-permitted-by-rbi_46549.html] saying the following: “Accordingly, based on assessment, if the valuation agencies appointed by AMFI areof the view that the delay in payment of interest/principalor extension of maturity of a security by the issuerhas arisen solely due to COVID-19 pandemic lockdown and/or in light of the moratorium permitted by Reserve Bank of India (RBI) (vide notification no. RBI/2019-20/186, dated March 27, 2020) creating temporary operational challenges in servicing debt, then valuation agencies may not consider the same as a default for the purpose of valuation of money market or debt securities held by Mutual Funds.”
Hence, the entire issue now stands resolved.
I am curious to know how it is practically possible to get approval of all PTC holders particularly when there are many HNI investors.
Typically the terms of issuance will provide for a voting mechanism – say, 75% votes in value. If that voting threshold is not obtained, then, unfortunately, the restructuring cannot be done.
Sure