Debt listed entities under new requirement of quarterly financial results

-Implications and actionables

Anushka Vohra | Deputy Manager

The SEBI (Listing Obligations and Disclosure Requirements) (Fifth Amendment) Regulations, 2021[1] have increased the compliance burden on the debt listed entities. Ranging from introducing the corporate governance requirements on High Value Debt Listed Entities (HVDLEs)[2] to increasing the disclosure and compliance requirements on all debt listed entities, the amendment per se aims to make the current regulatory requirements stringent on the debt listed entities.

One significant amendment under Chapter V, which is applicable on all debt listed entities, is the requirement of submission of financial results on a quarterly basis instead of a half yearly basis, as was previously the requirement. With this write-up, we will try to understand the implications on the debt listed entities due to change in the periodicity of submission of financial results and the required actionables.

Entities with listed non-convertible securities

Consideration of financial results

Non-convertible securities include debentures which are not convertible into equity at any given time and constitute a debt obligation on the part of the issuer. Chapter V of the SEBI(Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations) is applicable to entities that have listed their non-convertible securities on the stock exchange(s). Regulation 52 of the Listing Regulations deals with the preparation and submission of financial results

The extant Regulation provided that such listed entity shall submit financial results on a half yearly basis, within 45 days from the end of half year i.e; within 45 days from the end of September & March [for entities following FY April-March]. For the first half year the requirement was mandatory but SEBI provided a relaxation for second half year, whereby it was stated that such listed entity may not be required to submit unaudited financial results for the second half year, if it intimates in advance to the stock exchange(s), that it shall submit its annual audited financial results within 60 days from the end of financial year. Akin to such relaxation, SEBI provided that if such a listed entity submits the unaudited financial results within 45 days from the end of the second half year, the annual financial results may be submitted as and when approved by the board of directors.

Extant framework

Unaudited accompanied with limited review report Audited financial results + statements + Auditor’s Report (AR)
For the first half year (have to be mandatorily given) For the second half year (whether submitted / not)
Yes No Within 60 days from end of financial year
Yes Yes As soon as approved by the board


Now, since the periodicity has changed from half yearly to quarterly, such listed entities will be required to submit financial results within 45 days from the end of each quarter, other than the last quarter and the annual financial results within 60 days from the end of the financial year.

New framework

Unaudited accompanied with limited review report Audited financial results + statements + AR
For the first quarter* For the second quarter* For the third quarter* For the fourth quarter**
Yes Yes Yes No Within 60 days from end of financial year

*mandatorily required

**not required


Landscape of intimations & disclosures – understanding the actionables

It is an irrefutable fact that debt in India is mostly privately placed which primarily involves the Qualified Institutional Buyers (QIBs) and no prejudice is caused to the public at large. Keeping that in mind, the debt listed entities were treated differently from the equity listed entities and were not subject to the such stricter compliances when compared to debt listed entities.

In view of  SEBI’s approach during recent times, , it has put an end to the easy going voyage of a debt listed entity and they have been placed at par with the equity listed entities.

Regulation 50 dealing with intimation to stock exchange(s) has been amended and now require the debt listed entities to intimate to the stock exchange(s) at least 2 working days in advance, excluding the date of board meeting and date of intimation, of the board meeting where the financial results shall be considered (quarterly / annually). This Regulation 50 corresponds to Regulation 29 which is applicable to equity listed entities.

Further, in case of equity listed entities, Regulation 30 (read with Schedule III Part A) is a cumbersome Regulation as the same requires certain events to be disclosed as and when they occur. For debt listed entities, the corresponding Regulation is Regulation 51 (read with Schedule III Part B). Unlike Regulation 30, the list under Regulation 51 (i.e; under schedule III) was narrow in its scope, however, with the said amendment, the list under the Part B of Schedule III, applicable on debt listed entities has also been amended to streamline the same with what is applicable on equity listed entities.

Furthermore, while submitting the financial results (quarterly / annually) under Regulation 52, the debt listed entities have to provide certain information. Such information is captured under Regulation 52(4) and includes the following:

Exemption : Non Banking Financial Companies (NBFCs) which are registered with the RBI were exempted from making disclosure of interest service coverage ratio, debt service coverage ratio and asset cover. However, exemption from disclosure of asset cover has been withdrawn i.e; now the NBFCs that have listed their debt securities have to make disclosure of asset cover. Also, the exemption from disclosing interest service coverage ratio and debt service coverage ratio is now also extended to Housing Finance Companies (HFCs) registered with the RBI.

This new framework is now in sync with what is applicable to equity listed entities. The Regulator’s intent to subsume the compliances applicable on equity and debt listed entities seems to have been inspired by the need for more transparency and promptness of information. However, this sudden drift calls for certain actionables on the part of debt listed entities.

A summary of actionables can be represented as under:


Other aspects :

Entities with listed equity shares / convertible securities

The entities that have listed their equity shares / convertible securities i.e; specified securities are covered under Chapter IV of the Listing Regulations, subject to exemptions under Regulation15. These entities have to comply with Regulation 33 for preparation and submission of financial results and the timeline for the same is quarterly. There has been no change for such listed entities as far as the financial results are concerned.

However, since the amendment has made Chapter IV applicable on HVDLEs which are debt listed entities covered under Chapter V, these HVDLEs have to comply with both Regulation 33 and Regulation 52. But since the requirements in both these regulations have been streamlined, no impact will be caused on such HVDLEs.

Entities with listed equity shares & non-convertible securities OR listed convertible securities & non-convertible securities

Such entities are governed by both Chapter IV and Chapter V, thus w.r.t. financial results they have to comply with both Regulation 33 and Regulation 52. Prior to such amendment, such listed entities followed the quarterly preparation and submission of financial results, since the same is stricter. For all other provisions which are common among both chapters but vary in timelines, the one with the stricter provision needs to be followed. For instance, in case of prior intimation of board meetings where financial results shall be considered, Chapter IV provides advance intimation of 5 days, whereas Chapter V provides advance intimation of 2 working days. Clearly, the timeline of 5 days in advance is stricter, therefore such entities shall comply with the same.

Concluding remarks

The sense of ease on the debt listed entities has been undone and the Regulator is preparing to bring the equity and debt listed entities under the same blanket. The extension of Chapter IV on HVDLEs seems to be a wake up call for debt listed entities which are not HVDLEs as of now. The enhanced disclosure on all debt listed entities would nevertheless burden them, however the impact of the same is yet to be analysed.

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[2] A listed entity which has listed its non-convertible debt securities and has an outstanding value of listed non-convertible debt securities of Rs. 500 crore & above as on March 31, 2021.

‘High value’ debt listed entities under full scale corporate governance requirements

SEBI move nullifies MCA exemption; bond issuers face disproportional compliances

Vinod Kothari & Vinita Nair  | Vinod Kothari & Company

Giving bond markets in the country a push is an admitted policy objective; so much so that “large borrowers” are mandated to move a part of their incremental funding compulsorily to the bond markets. Just when privately placed bond issuance was looking very promising, augured by low interest rates and  increasing investors’ confidence, SEBI’s recent move of notifying SEBI (Listing Obligations and Disclosure Requirements) (Fifth Amendment) Regulations, 2021 (‘2021 Amendment’)to extend corporate governance requirements, largely equivalent to that applicable to equity listed entities, comes as an enigma. These new norms, incorporated in the post-listing corporate governance requirements imbibed in SEBI ( Listing Obligations and Disclosure Requirements) Regulations, 2015  (‘Listing Regulations’) become effective immediately on a “comply or explain” basis, and become binding from 1st April, 2023.

What is surprising is that the capital market regulator has thought of equating a debt listed entity with an equity listed one; potentially disregarding the essential difference between equity listing and bond listing. Equity listing is achieved by a public offer, which underlies widely dispersed retail investors’ interest. Bond listing, to the extent of 98%, is by way of private placement, which definitely means that bonds are placed with knowledgeable qualified institutional buyers. Also, it is a known fact that a large number of listed bond issuers are private limited companies, which are close corporations, with strictly private holding of capital. In light of these facts, extension of substantially the same regime for debt listed entities as that applicable to equity listing creates several irreconcilable compliance requirements, some of which are detailed out in this article. At a time when the need to push the country’s bond markets to new heights, ahead of a potential inclusion of India in global bond indices, is unquestionable, this regulatory move is both surprising as prejudicial. Surprising, because many of SEBI’s regulatory exercises, there was no public comments for these amendments.

The key to the potential prejudice that the regulatory move may cause to bond markets is the definition of “high value debt listed entities”, picking up a threshold of Rs. 500 crores. If the total value of listed bonds outstanding, purely from the corporate sector, is over Rs. 36 lakh crores[1], the amount of Rs. 500 crores is infinitesimal, less than 0.014% of the bond market, and therefore, the basis for taking this value as “high value” is seriously flawed.

Let us start with some facts. India’s bond market is largely a private placement, comprised of bespoke bond issues with limited number investors, majority of them being Qualified Institutional Buyers (QIBs). While technically, these bonds may be sourced through an electronic platform, the avowed fact is that bond issues by even the most frequent bond issuers are negotiated over the counter. Public issue of bonds is activity rarity. This is evident from Table 1: Listed debt issuance, by way of private placement vis-à-vis public issuance during last 3 years.

Regulatory regime before:

Regulation is always proportional to the regulatory concern: the regulatory concern in this case, obviously, is investor protection. Securities regulator is neither the prudential regulator for the bond issuers, nor does it lay the operational safeguards in working of companies. The key objective of the securities regulator is to ensure that the corporate governance does not entail risks to investors’ interest.

Further, the regulatory regime that existed hitherto is as follows: Once the debt securities are listed, companies were required to comply with Listing Regulations mainly Chapter II (dealing with principles relating to disclosures), Chapter III (dealing with common obligations for all listed entities and Chapter V (dealing with disclosure requirements on website, to debenture trustees, stock exchanges, submission of financial results and structure and terms of debt securities). Provisions relating to corporate governance were not applicable to debt listed entities.

It is also notable that debt listed entities were earlier only required to prepare half yearly financial statements, as opposed to quarterly financial statements applicable to equity listed entities.

The rest of the labyrinth of corporate governance provisions, dealing with composition of board of directors, non-executive chairperson, independent directors, constitution of the several board committees, shareholders’ approval for  related party transactions, etc. were not applicable to debt listed entities.

Present amendment

SEBI, in its Board meeting held on August 06, 2021 approved amendments to the Listing Regulations and notified 2021 Amendment with effect from September 8, 2021[2]. The amendments may be classed into (i) those applicable to a “high value” debt listed entity and (ii) those applicable to every entity having its non-convertible securities listed[3].

The 2021 Amendment has made corporate governance related provisions applicable to a listed entity which has listed its non-convertible debt securities and has an outstanding value of listed non-convertible debt securities of Rs. 500 crore and above as on March 31, 2021 (‘HVD entity’). Further, once the provisions become applicable, it will continue to apply even if subsequently the outstanding value falls below the threshold.

Given the details of bonds issuance and present outstanding indicated above, there would be several entities that would be regarded as an HVD entity. In view of SEBI’s requirements under Large Corporate Borrower framework, entities with any of its securities listed, having an  outstanding  long  term  borrowing  of  Rs.  100  crores  or  above and with credit rating of ‘AA and above’[4], will have to mandatorily raise 25% of its incremental borrowing by ways of issuance of debt securities or pay monetary penalty/fine of 0.2% of the shortfall in the borrowed amount at the end of second year of applicability[5].

If one were to argue it is the mere size of debt funding that brings in corporate governance requirements, then even a company that borrows from banks and financial institutions to the extent of Rs. 500 crores should, a priori, have been subjected to similar requirements. If moving from loans to bonds attracts severe corporate governance requirements, not applicable otherwise, there is a clear disincentive to moving bond markets, which is conflicting directly with SEBI’s own requirement of a “large borrower framework”.

We discuss some of the new requirements imposed on HVD entities, and demonstrate how some of these are completely non-reconciling with the type of entities to which they would apply.

Complete overhaul of Board composition

The Board of an HVD entity should comprise of prescribed number of independent directors (‘IDs’) depending on the nature of office of the Chairperson. Appointment of IDs in case of private companies and wholly owned public limited companies will require inducting requisite number of external persons on its Board. In case of a promoter Chairperson, half of its Board should comprise of IDs. A private company is a private matter, in terms of its shareholding. It cannot have an “independent” shareholder. Hence, boards of private companies, as per law, may only have 2 directors. SEBI, on the contrary, mandates 6 directors. Regrettably, the very “privacy” of a private company is compromised with the mandated presence of independent directors. Indeed, there are external investors who contributed to the debt of the entity, but they did with the explicit understanding that the corporate governance of a private company is remarkably different from that of a widely held company. If a private company has to behave and be governed almost like a widely held public company, then there may be a very strong disincentive for such companies to access bond markets.

The requirement of IDs is not merely getting some guests into the boardroom: IDs are required to be independent of management, should meet the eligibility criteria and are responsible to protect the interest of the minority shareholders. In case of several HVD entities there would be no minority shareholders whatsoever: therefore, the IDs would be left wondering as to how the IDs discharge the very same obligations as applicable to an entity with a few lakh shareholders.

The procedure to be followed by a listed entity for appointment of an ID under Listing Regulations is also very elaborate. The Nomination and Remuneration Committee (‘NRC’) is required to prepare a description of the needed capabilities and skill sets after doing a gap analysis, identify candidates basis the prepare description, justify to the Board and shareholders how the proposed incumbent meets the criteria and then recommend their appointment.

The listed entities are not only required to obtain declaration of independence from the IDs but also assess the veracity of the same. Further, the provisions stipulate conducting familiarization programme periodically, obtain Directors and Officer’s insurance for the IDs (otherwise applicable only to top 500 equity listed entities w.e.f. Jan 1, 2022), and ensure that a separate meeting of IDs are carried out.

Need to constitute 4 Committees

The HVD entity, irrespective whether a private company or a closely held company, is required to have an Audit Committee, NRC, Risk Management Committee (otherwise applicable only to top 1000 listed entities based on market capitalization,  but strangely applicable to the entire population of HVD entites) and even a Stakeholder’s Relationship Committee (‘SRC’).

Section 178 of CA, 2013 also mandates constituting SRC only where there are 1000 shareholders, debenture holders, deposit-holders and any other security holders at any time during a financial year. And there are quite a few debt listed entities that have not triggered this requirement even after 8 years of enforcement of CA, 2013.

Under Listing Regulations as well, the role of SRC is mainly to resolve investor grievances, oversee steps taken by the listed entity to reduce quantum of unclaimed dividend, effective exercise of voting rights, monitoring adherence to service standards by RTA, which may not be even relevant to HVD entities that are private companies or closely held public companies. Strangely, the requirement of having SRC will be applicable to debt listed entities having a handful of debt investors, and purely in-house shareholders.

Remuneration related approvals

Requirement to seek shareholder’s approval by way of special resolution is applicable in case of continuing with directorship of a non-executive director (‘NED’) of 75 years and above, or remunerating one NED to the extent of more than 50% of annual remuneration of all NEDs in a financial year, or paying of remuneration to the promoter directors serving in executive capacity in case (i) the annual remuneration payable to such executive director exceeds Rs. 5 crore or 2.5 per cent of the net profits of the listed entity, whichever is higher; or (ii) where there is more than one such director, the aggregate annual remuneration to such directors exceeds 5 per cent of the net profits of the listed entity.

And it will not be a case of wide shareholder participation with institutional shareholders exercising voting rights basis the guidance from proxy advisors etc. as several of HVD entities could be private companies or closely held public limited companies.

Further, prior approval of public shareholders is required in case any employee including key managerial personnel or director or promoter of a listed entity enters into any agreement for himself /herself or on behalf of any other person, with any shareholder or any other third party with regard to compensation or profit sharing in connection with dealings in the securities of such listed entity.

Formulation of codes and policies

Code of conduct for Board and senior management personnel, policy for determination of material subsidiary, policy for determination of materiality of and dealing with related party transactions, archival policy for website are some of the additional codes and policies that HVD entities will have to frame.

Paradoxical regulation: Related Party Transactions (‘RPTs’) to require minority shareholder approvals

While framing a policy for determination of materiality of and dealing with RPTs and half yearly disclosure of RPTs to stock exchange might seem feasible, the 2021 Amendment also stipulates only IDs in the Audit Committee to approve RPTs. Further, in case of material RPTs, at the time of seeking shareholder’s approval all related parties are prohibited from voting to approve the RPT i.e. either they may vote against or abstain from voting altogether.

This is completely paradoxical. A debt listed entity may be a subsidiary of a holding company. The holding company, being a “related party”, will be excluded from voting. If the related parties are to be excluded from voting at the general meeting of a private company, it is quite likely that there will be no shareholders whose votes may be counted!


Subsidiary related governance

An HVD Entity will be required to ascertain material subsidiary, induct an ID on the board of super material subsidiary (that contribute 20% of consolidated income or net worth), place details of significant transactions undertaken by unlisted subsidiary before its Board, place the financials of unlisted subsidiaries before its Audit Committee and seek prior approval of shareholders in case of disposal of shares resulting in losing of control over the entity by the HVD entity or selling/leasing/ disposing 20% of the assets of such material subsidiary in a financial year.

Group governance may be more relevant for entities where the listed entity is answerable for creation of shareholder value. In case of a debt listed entity, the expectation of the investors is not creation of shareholder value but ability to timely service the debt and redeem the principal.


Will this be a deterrent for new issuers or small players from opting for the listed debenture route? Whether these enhanced corporate governance norms provide greater comfort and assurance to the investors in securing timely repayment of their monies? Will it increase trading in debt securities in the secondary market? It is assumed that SEBI must have considered these before enforcing the 2021 Amendment and only time could reveal the effectiveness of these provisions.






[1] The total corporate bond outstanding as on June, 2021[1] is about 36,27,667.18 crores represented by 26,350 outstanding instruments of 3903 issuers. The actual number of issuers, instruments and outstanding amount will be higher, if one were to include unlisted debt issuance as well.


[3] As per SEBI (Issue and Listing of Non-convertible Securities) Regulations, 2021 means debt securities, non-convertible redeemable preference shares, perpetual non-cumulative preference shares, perpetual debt instruments and any other securities as specified by the Board;

[4] As per para 2.2 of

[5] a listed entity identified as a LC, as on last day of FY “T-1”, shall  have to  fulfil  the  requirement  of  incremental borrowing for FY “T”, over FY”T” and “T+1”.

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Other write-up relating to corporate laws:

Our  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 though the below link:


Presentation on LODR Fifth Amendment Regulations, 2021

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Corporate governance enforced on debt listed entities

  • LODR (Fifth Amendment) Regulations, 2021 notified

Payal Agarwal, Executive (

Brief background

SEBI has, continuing with its trends of the recent months, notified SEBI (Listing Obligations and Disclosure Requirements) (Fifth Amendment) Regulations, 2021 [hereinafter referred to as the “Amendment Regulations”] on 7th September, 2021 to amend the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 [hereinafter referred to as the “Listing Regulations”]. The amendments have huge implications on debt listed companies and provide for various mandatory requirements to be fulfilled by an entity which has listed its debt securities on stock exchanges. While some changes deal with alignment of the requirements with those under the Companies Act, 2013 [“Act”], some are significantly different calling for actionable on the part of debt listed companies.


Particulars Applicable entities Applicable dates
Chapter IV – Regulations 16 to 27

(“Corporate Governance Provisions”)

Entities which has listed its non-convertible securities (“NCS“) on a recognised stock exchange and has outstanding listed debt securities of Rs. 500 crores or more [hereinafter referred to as “high value debt listed entities” or “HVDs”]


Presently, limit has to be checked as on 31st March, 2021

Applicable w.e.f. 07th September, 2021 on “comply or explain” basis


Mandatory w.e.f. 31st March, 2023


·         Comply or explain shall mean –

a.       Comply with the requirements within 31st March, 2023

b.      In case of non-compliance/partial compliance, explain reasons for same along with steps initiated to ensure compliance

·         to be reported in the quarterly compliance report filed under Reg 27

Applicability attracted during the course of a year to be complied within six months of such applicability
Amendments relating to Chapter V of the Listing Regulations applicable on all entities which have listed its non-convertible securities on recognised stock exchange with effect from 7th September, 2021

Further, it is mentionable that vide amendment in Reg 3(3) of the Listing Regulations, the Corporate Governance Provisions once applicable on a HVD entity, has to be complied with and does not cease to apply subsequently unless the company has no listed debt outstanding.

Corporate governance requirements applicable on HVDs

The debt-listed companies are mostly private companies or public companies that are unlisted for the purposes of the Act, and therefore, the alignment of their board composition with that of other listed entities may call for various actionable and some practical difficulties during the course of implementation. Here, we have tried to present the composition of board and committees as will be required to be ensured by the debt-listed entities and the possible constraints that may follow.

Relevant head Under the Act Under the Listing Regulations
Private company Unlisted public company
Ratio of executive (ED) and non-executive directors (NED) NA NA optimum combination with at least 50% NEDs
No. of independent directors (IDs) NA 2 IDs 1/3rd if Chairperson (CP) is NED

½ if CM is ED

Maximum age of NED NA NA 75 years (if beyond that, a special resolution is required along with justification for such appointment)
Minimum no. of board meetings (BM) with maximum gap between two meetings 4 (with a max gap of 120 days between two subsequent meetings) Same Same
Remuneration/ commission to directors NA As per the limits of net profits u/s 197 of the Act read with Sc. V –

Special resolution of members required if exceeds limits

·         Aggregate remuneration to all – 11%

·         Single ED – 5%

·         All EDs in aggregate – 10%

·         All NEDs in aggregate – 1%/ 3% (if no NEDs)


Approval of members by way of shareholders’ resolution required if –

·         Commission to single NED > 50% of total commission payable to NEDs

·         Annual remuneration to each ED > Rs. 5 crores or 2.5% of net profits – HIGHER

·         Aggregate remuneration to all EDs > 5% of net profits

Performance evaluation of IDs NA criteria of evaluation to be formulated by NRC to be done by entire board
Maximum no. of directorships in 20 companies (out of which max 10 can be public cos.) in 20 companies (out of which max 10 can be public cos.) Not more than 8 directorships in listed entities (excludes debt listed entities)

Not more than 7 directorships in listed entities as ID (excludes debt listed entities)

Composition of Audit Committee (AC) NA  

●      Min 3- directors

●      Majority of IDs

●      Majority of members (inl. chairperson) shall be a person with ability to read and understand financial statements.

●      Min- 3 directors

●      At least 2/3rd of (ID)

●      All members to be financially literate and at least 1 member shall have accounting or related financial management expertise.)

●      Chairman – shall be ID

●      CS – Secretary of Committee.

Meetings and quorum of AC Not Specified. ●      At Least 4 times in a year and  (with a max gap of 120 days between two subsequent meetings)

●      Quorum – 2 or 1/3rd of the members, whichever is greater, with at least 2 IDs.


Composition of Nomination and Remuneration Committee (NRC) NA ●      Min- 3 NEDs

●      At least not less than half directors shall be ID.

●      Chairperson of the entity, Executive or not, may be member of committee but not the CM of Committee

similar requirements except that CM must be an ID
Meetings and quorum of NRC Not Specified. ●      Quorum – 2 members or 1/3rd of the members, whichever is greater, with at least 1 ID.

●       At least one meeting in a year.


Composition of Stakeholders Relationship Committee (SRC) Applicability- Company which consists of >1000 shareholders, debenture-holders, deposit-holders and any other security holders at any time during a FY.

●      CP- shall be a NED.

●      Members as decided by board.

●      CP- shall be a NED.

●      Min- 3 directors, with at least 1 being ID.


Meetings of SRC Not Specified. ●      Committee shall at least meet once a year.
Composition of Risk Management Committee (RMC) NA NA  

●      Min- 3 directors, with majority of them being members of BOD, including at least 1 ID

●      Chairperson- Member of BOD and Sr. executives may be members.


Meetings and quorum of RMC ●      Quorum – 2 members or 1/3rd of the members, whichever is higher, incl.  at least one member of BOD in attendance.

●      Committee shall meet at least twice in a year(w.e.f 5.5.2021)

Related Party Transactions (RPT) In case of private company –  second proviso to Sub-section (1) of Section 188  shall not apply. ●      Approval required only for specified transactions under Sec 188

●      All members of AC can vote

●      All RPTs shall require prior approval of the AC.

●      Only those members who are IDs shall approve RPT

Secretarial Audit Applicability- O/S loans or borrowings from banks or public financial institutions of 100 crore or more. Applicability-

PUSC- 50 cr or more, or

Turnover- 250 cr or more

O/S loans or borrowings from banks or public financial institutions of 100 crore or more.


Note- Material Unlisted company of a listed entity is also covered.

Every listed entity and its material unlisted subsidiaries incorporated in India shall undertake secretarial  audit.


Every listed entity shall submit a secretarial compliance report within 60 days of the end of FY.

Analysis of the amendments

As demonstrated in the table above, the compliances that will be made applicable to an HVD entity are much more diverse than that applicable to a private company/ unlisted public company. However, these debt listed entities are mostly non-banking financial companies (NBFCs), on which the corporate governance directions of RBI are applicable. Considering the same, the amendments may not result in wide impact and changes in the existing board and committee structure. Only minor modifications may be required to align the composition in such a way that it meets the criteria of both RBI (under Corporate Governance Directions) and SEBI (under Listing Regulations).

Maximum number of committees’ memberships – an anomaly in the language of law?

Reg 26 of the Listing Regulations specifies the maximum no. of committees in which a director can hold membership/chairmanship. It provides that a director cannot be a member in more than 10 committees and Chairman in more than 5 committees at any one time. In regard with the same, certain classes of companies are specifically included/ excluded as below –

Here, while the public companies are specifically included in one hand, HVDs have been excluded which can be public as well as private companies. Therefore, there arises an anomaly as to whether public companies, being HVDs, are exempted while calculating the number of committees, or whether the same has to be included?

A possible interpretation that may follow is that a company, only on account of being a HVD, will not get included for the purpose of counting committee memberships under this Regulations. However, a public company, being specifically included irrespective of being listed or not, committee memberships of such public companies should also be taken into account which are listed as HVD entities.

Board-level compliances


Increased compliance burden on debt listed entities

Besides the corporate governance provisions that have newly become applicable on the HVD entities, the regular compliances of the debt listed entities have also undergone vivid changes mostly in line with the requirements applicable to a listed entity having its equity shares listed in stock exchange. The compliance requirements are two fold – (i) increasing the disclosures required to be made to the stock exchanges and (ii) increasing the frequency of such reporting/ disclosures (shifting half yearly compliances into quarterly etc). The Amendment Regulations also provide clarity with regard to the time within which disclosures are required to be made. General terms have been replaced with more specific matters and timelines.

Quarterly compliances

Requirement with respect to financial results*

In the erstwhile Reg 52, the debt listed entities had an option to submit unaudited financial results followed by annual audited financial results once approved by the Board. However, vide the Amendment Regulations, it has been mandatory for the debt listed entities to submit audited financial results within 60 days from the end of the financial year. Some additional accounting ratios have also been specified to be disclosed by the companies. Further, the asset cover is also required to be disclosed along with the results.

A clarificatory change is with regard to the exemption of providing information related to debt service coverage ratio and interest service coverage ratio by Housing Finance Company (HFC) along with NBFC.

Half-yearly compliances

Website disclosures

Any change in the information has to be updated within two days. The stock exchange intimations are required to be kept in the website for a period of 5 years and archived thereafter.

Stock exchange intimations

Matters concerning the debenture holders are also required to be intimated to the debenture trustee simultaneously with intimation to the stock exchanges.

Material modifications in structure of NCS

Reg 59 deals with the approvals required for any material modifications to be made in the structure of NCS. The three step process requires –

  1. Approval of board and debenture- trustee
  2. Approval of debenture-holders
  3. Approval of stock exchanges

In the erstwhile Regulations, the consent of a requisite majority of securities holders was required to be taken before applying to the stock exchange for its approval. However, in the Amendment Regulations, the written consent of atleast 3/4th (by value)of the securities holders is required to be taken, before proceeding with any material modification in the structure of NCS. The company is further required to provide e-voting facilities in respect of the same.

Our comments –  Requirement of consent of 3/4th by value is in line with the requirements for variation of rights under Section 48 of the Act, which applies to variation in rights of shareholders. However, the same may not be practically possible in case of debenture holders, who may not care to vote at all. Moreover, considering that the debenture trustee is already approving the modification, adequate protection to debenture holders are already ensured.  Further, what is material modification is not a defined term and left to the discretion and judgement.

Concluding Remarks

The status of debt listed companies had undergone a change with effect from 1st April, 2021 after an amendment in the definition of listed companies under the Companies Act, 2013, vide which the debt listed companies were no more considered as a ‘listed’ company for the purposes of the Companies Act, 2013. This might have led to loose ends in the corporate governance of such debt listed companies. SEBI’s move of enforcing corporate governance provisions on HVD entities can be seen as a measure to refill the gaps. However, the corporate governance provisions under the Listing Regulations are quite stringent and will make it tougher for the private companies to get their debt securities listed. While there is a minimum outstanding listed debt threshold to determine applicability of such corporate governance provisions, however, the limits are very minimal from the viewpoint of companies and will take a huge chunk of debt listed companies under its ambit.


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