Online workshop on Recent amendments relating to Corporate Bonds
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Open in new tab SEBI amends NCS Regulations – DT nominated director | Green Debt Securities | Public issue offer period
– Ajay Ramanathan, Executive | ajay@vinodkothari.com
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Debenture Issuance -Recent developments & applicable compliances
– Vinita Nair, Senior Partner | vinta@vinodkothari.com
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Sustainable finance and GSS+ bonds: State of the Market and Developments
– Vinod Kothari and Payal Agarwal | corplaw@vinodkothari.com
The topic of sustainable finance has become as critical as sustainable development, since finance is the prerequisite for sustainable development. “Finance can play a leading role in allocating investment to sustainable corporates and projects and thus accelerate the transition to a low carbon and more circular economy. Moreover, investors can exert influence on the corporates in which they invest. In this way, long-term investors can steer corporates towards sustainable business practices.”[1] Hence, there is momentum towards organising funds and resources to transition from low energy efficiency to high energy efficiency, or renewable energy devices.
The expression “sustainable finance” is broader, as it encompasses the use of ESG considerations in financing decisions.[2] However, sustainability bonds are capital market instruments issued with a stated end-use. The term GSS+ bonds, which has recently been much in vogue, has G, S, S and then augmented by the + sign. The components of “GSS+” are as follows:
G : Green
S: Social
S: Sustainability
+ : Other labeled bonds, particularly, transition bonds, and depending on the usage, may also include sustainability-linked bonds.
The other labeled bonds may also include blue bonds, gender bonds, climate bonds, yellow bonds etc., although the same may already be covered under one of the components of the GSS bonds. For instance, blue bonds are taken as a part of green bonds, and gender bonds are taken as a part of social bonds.
GSS+ bonds are also called “thematic” or “labeled” bonds, with the use of their proceeds linked with the respective theme represented by such bonds. These expressions may be somewhat overlapping[3].
Read more →2022 Wrapped Up: Regulatory review of corporate law developments
– Payal Agarwal, Assistant Manager (payal@vinodkothari.com)
2022 has been a relatively stable year when it comes to Companies Act, save changes in the forms and filing procedures with increasing online processes, there has been significant traction on the part of SEBI. While Structured Digital Database (SDD) remained the buzzword for the listed entities with the stock exchanges requiring them to submit quarterly compliance certificates, the stress for proper controls on insider trading remained the focal point. For social enterprises, a landmark development was the introduction of the concept of Social Stock Exchanges, which seems to be shortly getting into operational mode.
We have tried to briefly cover the major developments in corporate laws during the year 2022. You may also refer to our brief discussion of the same in this youtube video. For updates relevant to the financial sector including the overseas investment norms, refer 2022 in retrospect: Regulatory activity in the financial sector. You may also refer to our quick round-up of regulatory developments in IBC in the year 2022.
Read more →SEBI Circular | Operational guideline on Scheme of arrangement for entities having listed NCDs/ NCRPS
– Kaushal Shah, Executive | kaushal@vinodkothari.com
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Read our related resources on the recent 6th LODR amendments :
- SEBI rationalizes ID appointment and removal process for first term Re-appointment process to be rationalized post amendment in CA, 2013
- SEBI LODR amendments: Minority say in independent directors, added regulations for debt issuers
- SEBI notifies amendments in LODR for NCS entities Scheme of Arrangement | Submission of financial results & line items | Transfer to IPEF for unclaimed NCS amounts by body corporate
SEBI notifies amendments in LODR for NCS entities Scheme of Arrangement | Submission of financial results & line items | Transfer to IPEF for unclaimed NCS amounts by body corporate
Ajay Ramanathan, Executive |
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Read our related resources :
- SEBI LODR amendments: Minority say in independent directors, added regulations for debt issuersSEBI rationalizes ID appointment and removal process for first term Re-appointment process to be rationalized post amendment in CA, 2013
- SEBI rationalizes ID appointment and removal process for first term Re-appointment process to be rationalized post amendment in CA, 2013
SEBI LODR amendments: Minority say in independent directors, added regulations for debt issuers
Pammy Jaiswal | Partner | Vinod Kothari and Company (pammy@vinodkothari.com)
Background
Following the various recommendations provided by the Primary market Advisory Committee (PMAC), SEBI in its board meeting held on 30th September, 2022 discussed several proposals including the agenda to review the process for independent directors’ (IDs) appointment, re-appointment or removal, introducing the need to appoint a monitoring agency for overseeing the utilisation of the issues proceeds from the preferential issue and the qualified institutional placements (‘QIP’), requirement of obtaining NoC from SEBI for schemes of arrangement involving such companies which have listed their Non-Convertible Securities (‘NCS’) and several other changes dealing with disclosures and financial results for NCS listed entities. Our snippet covering the aforesaid board decisions may be viewed here.
These proposals have been notified, as the SEBI Listing Obligations and Disclosure Requirements) (Sixth Amendment) Regulations, 2022 (LODR 6th Amendment Regulations) have come into effect vide Notification dated 14th November, 2022 (‘Effective Date’). Our snippet covering the amendments may be viewed here.
Read more →SEBI further caps limit for ISINs to reduce fragmentation and boost liquidity
– Lovish Jain, Executive | lovish@vinodkothari.com
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Debentureholders’ rights in Intercreditor agreements
Supreme Court lays principles in case of debenture defaults
– Sikha Bansal, Partner, Vinod Kothari & Company | corplaw@vinodkothari.com
A well-developed corporate bond market not only provides cost-effective funds to the issuer, but also enables lenders like banks and other financial institutions to streamline their asset-liability mismatches. As such, there have been a lot of efforts to facilitate the development of the corporate bond market in India. While the market is growing steadily, the size of the market remains small as compared to other emerging markets in Asia[1]. Therefore, India may still have a long way to go.
An important element in ensuring smooth functioning of the bond market is to ensure that there is sufficient clarity on the options, remedies, and rights which the debentureholders have or may have in a given scenario. One such aspect has been dealt with by the Supreme Court (SC) in the recent ruling Securities and Exchange Board of India v. Rajkumar Nagpal and Others[2] (‘SC ruling’). The SC was dealing with the interplay between the RBI’s ‘Prudential Framework for Resolution of Stressed Assets’ issued in June, 2019 (‘RBI Resolution Framework’) and SEBI’s Circular on ‘Standardisation of procedure to be followed by Debenture Trustees in case of ‘Default’ by Issuers of listed debt securities’ (‘SEBI Circular’) and consequent impact of the same on the rights of the debentureholders.
As we see below, the SC ruling is crucial – that it clears the air around the force which SEBI Circular carries and protects dissenting investors from non-statutory compromises. However, most importantly, this SC ruling can be seen as highlighting the problems and gaps which may arise because of segregated rule-making where two regulators were bound by their respective regulatory ambit, thereby leading to a not-so-comprehensive resolution framework.
The author, in this article, has not gone into the facts of the particular case (which, inter alia, necessitated the SC to invoke Article 142 of the Constitution). Instead, the author has deliberated on the key takeaways from the SC ruling.
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