MANU/SMIS/0005/2020

Ministry : Securities and Exchange Board of India

Department/Board : Market Intermediaries Regulation and Supervision Department

Circular No. : SEBI/HO/MIRSD/CRADT/CIR/P/2020/203

Date : 13.10.2020

To,

All Issuers who have listed their debt securities or
propose to list their debt securities
All Debenture Trustees (DTs) registered with SEBI

Standardisation of procedure to be followed by Debenture Trustee(s) in case of 'Default' by Issuers of listed debt securities

1. Representations were made by Debenture Trustee(s) regarding the process to be followed in case of 'Default' by issuers of listed debt securities. After consultation with stakeholders including investors, Debenture Trustee(s), Issuers etc., procedures to be followed by the Debenture Trustee(s) in case of 'Default' by issuers of listed debt securities has been decided. This circular prescribes the process to be followed by the Debenture Trustee(s) in case of 'Default' by issuers of listed debt securities including seeking consent from the investors for enforcement of security and/or entering into an Inter-Creditor Agreement ("ICA").

A. Event of default

2. Regulation 51 read with the Explanation to Clause A (11) in Part B of Schedule III of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), 2015 ("LODR Regulations") defines 'default' as non-payment of interest or principal amount in full on the pre-agreed date which shall be recognized at the first instance of delay in the servicing of any interest or principal on debt.

3. In the manner of calling 'event of default', due to the presence of multiple ISIN's which may have been issued under the same Information Memorandum(s) ("IM(s)") or a single ISIN which may have been split across multiple IM(s), it is clarified that 'event of default' shall be reckoned at the ISIN level, as all terms and conditions of issuance of security are same under a single ISIN even though it might have been issued under multiple IMs.

B. Consent of investors for enforcement of security and for signing the ICA

4. The Reserve Bank of India ("RBI"), vide Circular dated June 07, 2019 issued the Reserve Bank of India (Prudential Framework for Resolution of Stressed Assets........