The SEBI Circular dated 5th October, 2021 can be read here
The SEBI Circular dated 5th July, 2019 can be read here
The SEBI Circular dated 10th August, 2016 can be read here
Our article on the same can be accessed here – https://vinodkothari.com/2021/09/debt-listed-entities-under-new-requirement-of-quarterly-financial-results/
Burhanuddin Dohadwala, Senior Manager | corplaw@vinodkothari.com
Updated as on: October 06, 2021
In case of equity listed entities, SEBI vide Circular dated May 31, 2021[1] mandated disclosures around loans/ guarantees/comfort letters/ security provided by the listed entity, directly or indirectly to promoter/ promoter group entities or any other entity controlled by them, on a half yearly basis, in order to ensure greater transparency. The format has been prescribed as Annex IV to his requirement becomes effective from first half year of the FY 21-22. Accordingly, this will be required to be furnished for the first time while submitting the corporate governance report under Reg. 27 (2) of Listing Regulations for quarter and half year ended September 30, 2021.
Further, SEBI notified fifth amendment to the Listing Regulations[2] w.e.f. September 7, 2021 pursuant to which debt listed entities with outstanding principal amount of Rs. 500 crore and more as on March 31, 2021 were categorized as ‘High Value Debt Listed Entity’ and subjected to corporate governance requirement (Reg. 15 to 27 of Listing Regulations) on a ‘comply or explain basis’ till March 31, 2023.
In the aforementioned amendment, SEBI also amended compliance requirements applicable to all entities with listed non-convertible securities (i.e. NCDs, NCRPS)[3].
The table below provides immediate compliance requirement to be carried out post September 30, 2021 by an equity listed and non-convertible security listed entity.
| Regulation No. | Heading | Particulars | Timeline | Due Date |
|
Entities with listed specified securities |
||||
| 27(2) | Corporate Governance | Annex IV of SEBI Circular dated May 31, 2021 w.r.t Format of compliance report on Corporate Governance by Listed Entities | Within 21 days on a half yearly basis
(commencing from September 30, 2021) |
October 21, 2021 |
|
High Value Debt Listed Entity (HVDLE) |
||||
| 27(2) | Corporate Governance | Annex I of SEBI Circular dated May 31, 2021 w.r.t Format of compliance report on Corporate Governance by Listed Entities
As per NSE & BSE Circular dated September 30 & October 01, 2021 respectively w.r.t Formats specifying disclosure of Corporate Governance by High value debt listed entities. |
Within 21 days on a quarterly basis. | October 21, 2021 |
|
All entities with listed Non-Convertible Security |
||||
| 52(1) | Financial Results | Listed entity shall prepare and submit un-audited/audited quarterly and year to year financial results to stock exchange.
Format: As per SEBI Circular dated October 05 w.r.t Revised Formats for filing Financial information for issuers of non-convertible securities. Note: Intimation to stock exchange within thirty minutes of the closure of the meeting where the financial results are placed. |
Within 45 days of end of Quarter (except for last quarter)
|
November 14, 2021 |
| 52(7) | A statement indicating the utilization of issue proceeds of non-convertible securities | The listed entity to submit to the stock exchange, a statement indicating the utilization of issue proceeds of non-convertible securities, which shall be continued to be given till such time the issue proceeds have been fully utilised or the purpose for which these proceeds were raised has been achieved. | Within forty-five days from the end of every quarter | November 14, 2021 |
| 52(7A) | Material Deviation | In case of any material deviation in the use of proceeds as compared to the objects of the issue, the same shall be indicated in the format as specified by the Board i.e. Jan 17, 2020. | ||
| 57(4) | Details for interest/dividend/principal obligations shall be payable during the quarter | The listed entity to provide details for all the non-convertible securities for which interest/dividend/principal obligations shall be payable during the quarter. | Within five working days prior to the beginning of the quarter. | September 24, 2021 to September 30, 2021 |
| 57(5) | Confirming the payment along with the details of unpaid interest/dividend/principal obligation | The listed entity to provide the following:
|
Within 7 working days from the end of the quarter. | October 11, 2021 |
| Proviso to Reg. 61A(2) | Dealing with unclaimed non-convertible securities and benefits accrued thereon | Transfer to escrow account of unclaimed interest/ dividend and redemption amount, w.r.t. non-convertible securities, as on September 7, 2021 that is outstanding for less than 7 years. | Within 30 days from September 07, 2021 | October 07, 2021 |
| 61A(2) | Transfer to escrow account of unclaimed interest/ dividend and redemption amount, w.r.t. non-convertible securities, remaining unclaimed for thirty days after due date (‘X’). | X+30 days+7 days | – | |
[1] Read our write up at https://vinodkothari.com/2021/06/financial-transactions-with-promoter-entities-become-part-of-cg-disclosure/ and ppt at https://vinodkothari.com/2021/06/presentation-on-lodr-amendments/
[2] Refer snapshot of amendment at https://vinodkothari.com/2021/09/presentation-on-lodr-fifth-amendment-regulations-2021/ and write up at https://vinodkothari.com/2021/09/corporate-governance-enforced-on-debt-listed-entities/
[3] Refer ppt at https://vinodkothari.com/2021/09/presentation-corporate-governance-debt-listed-entities/
Refer FAQs at https://vinodkothari.com/2021/08/faqs-recent-amendments-listing-regulations/ ; https://vinodkothari.com/2021/09/faqs-corporate-governance-debt-listed-entities/
Our Book on Law and Practice Relating to Corporate Bonds and Debentures, authored by Ms. Vinita Nair Dedhia, Senior Partner and Mr. Abhirup Ghosh, Partner can be ordered through the below link:
https://www.taxmann.com/bookstore/product/6330-law-and-practice-relating-to-debentures-and-corporate-bonds
Anita Baid | anita@vinodkothari.com
The Reserve Bank of India (RBI) has issued the new guidelines, viz. Master Directions- Reserve Bank of India (Transfer of Loan Exposures) Directions, 2021 and Master Directions- Reserve Bank of India (Securitisation of Standard Assets) Directions, 2021, on September 4, 2021, that replaces and supersedes the existing regulations on securitisation and direct assignment (DA) of loan exposures. The new directions have been made effective immediately which introduces several new concepts and compliance requirements.
The TLE Directionshave consolidated the guidelines with respect to the transfer of standard assets as well as stressed assets by regulated financial entities in one place. Further, the scope of TLE Directions covers any “transfer” of loan exposure by lenders either as transferer or as transferees/acquirers. In fact, the scope contains an outright bar on any sale or acquisition other than under the TLE Directions, and outside permitted transferors and transferees, apart from securitisation transactions. Read more →
[Sikha Bansal is Partner at Vinod Kothari & Company and can be reached at resolution@vinodkothari.com]
This article was first published on IndiaCorpLaw Blog and can be read here
IBBI recently came up with IBBI (Liquidation process) (Second Amendment) Regulations, 2021 (‘Amendment Regulations’) making certain important changes in the provisions pertaining to liquidation process under Insolvency and Bankruptcy Code, 2016 (‘IBC). One important amendment pertains to ‘Stakeholders Consultation Committee’ (‘SCC’) covered under regulation 31A of the IBBI (Liquidation Process) Regulations,2016 (‘Liquidation Regulations’).
The provisions relating to SCC were inserted vide IBBI (Liquidation Process) (Amendment) Regulations, 2019 (‘2019 Amendments’), read with Circular dated 26th August, 2019 (’IBBI Circular’). It required that the liquidator shall constitute an SCC (consisting of representatives of stakeholders entitled to distribution under section 53) within 60 days of the liquidation commencement, to advise the liquidator on the matters relating to sale under regulation 32.
While the obligation of the Liquidator to constitute the SCC within 60 days still remains the same, however, the role of SCC has been enlarged vide the Amendment Regulations, as discussed below –
Insolvency is a state of insufficiency – as such, the need to protect ‘whatever is there’ is quite
obvious. The rule of ‘anti-deprivation’ offers that protection.
Under normal circumstances, the autonomy of parties entering into contracts is well-established.
However, in insolvency, there is an inherent tension between contractual freedom and the objective
of corporate rescue and the need to ensure pari passu treatment to all claimants clamouring to share
what is insufficient, and therefore, contractual provisions are quite often subjected to either statutory
challenge or are read down or invalidated by courts. The anti-deprivation rule, also sometimes
called rule against ipso facto clauses in contracts, seeks to invalidate any contractual provision
which has the effect of depriving the insolvent’s estate of any right, property, or benefit, by the very
fact (hence, ipso facto) of the entity becoming insolvent. The rule of anti-deprivation thus seeks to
protect the insolvent’s estate (and consequentially, its creditors) from getting ‘deprived’ as such.
The full article is published in the Quinquennial of Insolvency and Bankruptcy Code, 2016 and can be read here.
Anushka Vohra | Deputy Manager (corplaw@vinodkothari.com)
On September 13, 2021, in the matter of Ebix Singapore Private Limited v. Committee of Creditors of Educomp Solutions Limited[1], the Apex Court ruled that a Resolution Plan, once submitted with the Adjudicating Authority (“AA”) for approval, cannot be subsequently withdrawn at the behest of the Resolution Applicant. While this question of withdrawal of resolution plans has been around for quite some time, especially due to the COVID disruption, the Hon’ble Supreme Court has now given the final word of law.