Recent amendments relating to Corporate Bonds

– Vinita Nair, Aanchal Kaur Nagpal & Payal Agarwal | corplaw@vinodkothari.com

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Read our related resources here :

  1. Debenture trustees’ nominees on Corporate Boards: FAQs
  2. SEBI Consultation Paper on NCS regulations: Changes in Offer Doc. | Mandatory Listing | Disclosure of Issue expense
  3. SEBIs Consultation Paper on review of CG norms for a High Value Debt Listed Entities
  4. SEBI to provide debenture holders the right to object material related party transactions

SEBI proposes freezing of CEOs’ personal shareholding for continuing default of Regs & fine

– Sharon Pinto & Ajay Ramanathan | corplaw@vinodkothari.com

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Debenture trustees’ nominees on Corporate Boards: FAQs

– Team Corplaw | corplaw@vinodkothari.com

Table of Contents

Appointment of Nominee directorDisqualification under CA, 2013
Resignation, removalRoles, responsibilities and liability
Board compositionApplicability and immediate actionable under present amendment

Brief Introduction

A Nominee Director is a representative of a stakeholder/ stakeholder group (“nominator”), put by the nominator on the board of a company, to ensure that the interests of the nominator, and the general interests of the Company, are safeguarded. While, the enabling provisions for appointment of nominee director is primarily set out in Sec. 161(3) of CA, 2013 authorisation in the Articles of Association of the Company is a prerequisite. Under CA, 2013 the power to appoint director vests with shareholders. The Board has the power to appoint an additional director, alternate director and a nominee director only where specifically authorised under the AOA.

A nominee director is a director, and therefore, except for specific provisions of law, articles or the terms of the agreement under which the right of nomination comes, the position, appointment process, etc.,  of the nominee director are the same as those of any director. The similarities and the differences are tabulated as under:

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Recent amendments relating to Corporate Bonds

– Vinita Nair, Senior Parnter | corplaw@vinodkothari.com

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SEBI Consultation Paper on NCS regulations: Changes in Offer Doc. | Mandatory Listing | Disclosure of Issue expense

– Sharon Pinto & Ajay Ramanathan | corplaw@vinodkothari.com

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SEBI revises framework for green debt securities

– Alignment with international standards and avoidance of greenwashing

– Payal Agarwal and Shreya Salampuria | corplaw@vinodkothari.com

Sustainability labeled bonds, more popularly known as GSS+ bonds, are looked upon as one of the primary means of raising funds towards sustainable development. The same has been discussed in Sustainable finance and GSS+ bonds: State of the Market and Developments. India is also not oblivious to the concept of GSS+ bonds, and companies in India have also been issuing such bonds, in one or more forms.

The issuance of green debt securities (“GDS”) in India was initially formalized through a circular issued  by SEBI in 2017 in this regard, later absorbed under the SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021 (“ILNCS Regulations”) read with Chapter IX of the Operational Circular on the same. The regulatory framework for GDS in India has since been reviewed, and following a Consultation Paper on Green and Blue Bonds as a mode of Sustainable Finance (“Consultation Paper”) dated 4th August, 2022, SEBI, in its meeting dated 20th December, 2022 (“Board Meeting”) has approved amendments to the existing regulatory framework for GDS issuance. The press release of the Board Meeting reads as “in the backdrop of increasing interest in sustainable finance in India as well as around the globe, and with a view to align the extant framework for green debt securities with the updated  Green  Bond  Principles (GBP) recognised by IOSCO, SEBI undertook a review of the regulatory framework for green debt securities.”

Pursuant to the review of the regulatory framework for GDS, the following has been notified –

In this write-up, we intend to discuss the revised regulatory framework for GDS issuance in India.

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SEBI notifies amendments to all modes of Buy-back

– Sanya Agrawal, Executive | executive@vinodkothari.com

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Read our related write-up on Buyback here:

  1. SEBI’s revised framework brings relaxation under buy-back norms

SEBI to provide debenture holders the right to object material related party transactions

Complicates approval process for closely held High Value Debt Listed Entities

– Vinita Nair, Senior Partner | vinita@vinodkothari.com

SEBI continues to tighten the regulatory regime for debt listed entities as it aims to promote corporate bond market. After equating debt listed entities with outstanding value of listed non-convertible debt securities of Rs. 500 crore and above with equity listed entities for the purpose of corporate governance norms, SEBI proposes a stricter approval regime for Related Party Transactions (‘RPTs’) under Reg. 23 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘LODR’) vide Consultation paper on review of Corporate Governance norms for a High Value Debt Listed Entity (‘HVDLE’)[1]. This has been rolled out just before the corporate governance provisions become applicable on a mandatory basis effective from April 1, 2023. The composition of 138 HVDLEs, in terms of shareholding pattern, as on March 31, 2022 was as under:

Figure 1: Analysis of shareholding pattern of the HVDLE
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Online workshop on Recent amendments relating to Corporate Bonds

Click here to register for the workshop: https://forms.gle/V8SRUpDpsSMYraBx9

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Identification Of Related Parties Of Subsidiaries

Which law to follow? – Listing Regulations or laws applicable to subsidiaries?

– Aisha Begum Ansari, Manager | aisha@vinodkothari.com

The RPT provisions under the SEBI Listing Regulations were substantially amended by SEBI on November 9, 2021. Pursuant to the amendment, the definitions of related party, RPT, material RPT, requirements of obtaining audit committee, and shareholders’ approval were changed.

The definition of ‘RPT’ was amended to include cross RPTs. Earlier, only transactions between the listed entity and its related parties were covered, but now, the following transactions are also covered:

  1. Transaction between listed entity and its related parties;
  2. Transaction between the subsidiaries of listed entity and its related parties;
  3. Transaction between listed entity and related parties of subsidiaries;
  4. Transaction between subsidiaries and related parties of listed entity;
  5. Transaction between subsidiaries and related parties of other subsidiaries.
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