Joseph JimmyPartner
Tania ChourasiaCounsel
Yajat BansalAssociate
Key Developments
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Proposed amendments to the regulatory framework around export and import of goods and services
The Reserve Bank of India released draft regulations and directions to authorised dealer banks (AD Bank) for public comments till 1 September 2024, to rationalise regulations governing the export and import of goods and services. The draft regulations will supersede the existing Foreign Exchange Management (Export of Goods and Services) Regulations, 2015 and the draft directions will supersede the existing Master Direction – Export of Good and Services and Master Direction – Import of Goods and Services. This move aims to promote ease of doing business, especially for small exporters and importers.
The revised regime obligates AD Banks to put in place a comprehensive, well-documented policy, as approved by their board of directors, within six months of the draft guidelines being notified, for handling payment transactions related to export or import of goods and services and merchanting trade. The policy is to ensure that the procedures applied are conducive to international trade and not discriminatory. The procedures must be comprehensive enough to include all aspects relevant to foreign trade at that time. While laying down their internal policy and processes, AD banks must also ensure that the responsibility for approving transactions is clearly demarcated and the different internal levels at which different types of transactions can be approved are delineated.
From a market perspective, the provision of timelines and the introduction of caution listing of exports is likely to bring about much needed adherence to the framework, improving recoveries and reducing defaults in payments.
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Securities and Exchange Board of India introduces reduced denomination for the issuance of debt securities and non-convertible redeemable preference shares
On 3 July 2024, the Securities and Exchange Board of India (SEBI) modified Chapter V of the Master Circular for issue and listing of non-convertible securities. The modification allows prospective issuers to issue debt securities and non-convertible redeemable preference shares at a reduced face value of INR 10,000, subject to certain conditions.
The modification aims to increase participation by introducing a smaller ticket size, which would encourage more non-institutional investors in the corporate bond market, thereby increasing market liquidity while ensuring adequate safeguards and transparency for investors.
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Securities and Exchange Board of India simplifies and streamlines the issuance process of debt securities to increase transparency and standardisation
SEBI amended the SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021 to enhance transparency, standardise processes, and strengthen investor protection in the issuance and listing of non-convertible securities. The amendments also place additional responsibilities on issuers and debenture trustees, which may lead to improved governance and confidence in the debt securities market. The key highlights of the amendments are:
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Record date to be fixed
Issuers are required to fix a record date for payment of interest, dividend, redemption or repayment or for such other purposes as specified by SEBI. This record date must be 15 days before the due date for the payment.
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Due diligence certificate to be filed by the debenture trustee at the time of listing of public issue of debt
Debenture trustees are now required to submit a due diligence certificate in the specified format at the time of filing of the listing application by the issuer in case of a public issue of debt securities.
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Reduced time period for seeking public comments on draft offer documents for public issue of debt
The time period for seeking public comments on draft offer documents for public issues of debt securities has been reduced from seven to five days and to one day for issuers with specified securities listed on stock exchanges.
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Reduced issue period for public issue of debt
The minimum issue period for public issue of debt securities or non-convertible redeemable preference shares has been reduced from three to two working days, with the maximum issue period of ten days remaining the same. In case of any revision in the price band or yield, the timeline for extending the issue period has been reduced from three to one working day.
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Changes in disclosure requirements for listing of debt securities
Disclosure requirements under the regulations have been simplified. Issuers now have the option to include only a web-link and static QR code for audited financial statements, and a static QR code for the details of branches/units of the issuer. Disclosure requirements of personal information of the promoters of the issuer have also been reduced. Details such as the personal address and permanent accountant number of the promoters are no longer required to be disclosed. Moreover, disclosures in relation to use of proceeds of the issuance has also been streamlined with other SEBI regulations.
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Securities and Exchange Board of India aligns the timelines for submission of payment obligation status to stock exchanges for listed commercial papers with those for listed non-convertible securities
The timeline in Chapter XVII of the SEBI Master Circular for issue and listing of non-convertible securities for submission of status of payment obligations to the stock exchanges by entities that have listed commercial papers has been reduced from two to one working day of payment becoming due. This amendment aligns the timeline for commercial papers with the requirement under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 for entities with listed non-convertible securities.
The amendment creates consistency in reporting timelines across different types of listed debt instruments, potentially simplifying compliance for issuers who have multiple types of listed securities.
