MANU/SMIS/0023/2024

Ministry : Securities and Exchange Board of India

Department/Board : Department of Debt and Hybrid Securities

Circular No. : SEBI/HO/DDHS/DDHS-PoD-1/P/CIR/2024/94

Date : 03.07.2024

Notification/ Circulars Referred : Master Circular no. SEBI/HO/DDHS/PoD1/P/CIR/2024/54 dated May 22, 2024 MANU/SMIS/0016/2024

Subject: Capital Market

Citing Reference:
Master Circular no. SEBI/HO/DDHS/PoD1/P/CIR/2024/54 dated May 22, 2024 MANU/SMIS/0016/2024  Referred

To,

Issuers who have listed and/ or propose to list Non-convertible Securities;
Recognised Stock Exchanges;
Registered Depositories;
Registered Credit Rating Agencies, Debenture Trustees, Merchant Bankers, Registrars to an Issue and Share Transfer Agents and Bankers to an Issue

Madam/ Sir,

Reduction in denomination of debt securities and non-convertible redeemable preference shares

(Modification to Chapter V of the Master Circular for issue and listing of Non- convertible Securities, Securitised Debt Instruments, Security Receipts, Municipal Debt Securities and Commercial Paper dated May 22, 2024)

1. Chapter V (Denomination of issuance and trading of Non-convertible Securities) of the Master Circular no. SEBI/HO/DDHS/PoD1/P/CIR/2024/54 dated May 22, 2024, (hereinafter referred as 'Master Circular') issued by SEBI, prescribes provisions pertaining to denomination of issuance and trading of non-convertible securities.

2. Market participants have expressed that lower ticket size of debt securities may encourage more non-institutional investors to participate in the corporate bond market which in turn may also enhance liquidity.

3. In view of the above, the following amendments are being made in Chapter V (Denomination of issuance and trading of Non-convertible Securities) of the Master Circular:

3.1. In Clause 1.1, after the words "shall be Rs. One lakh", the words "except as provided in Clause 1.3 below" shall be inserted.

3.2. Clause 1.3 shall be inserted with the following:

"1.3 The Issuer may issue debt security or non-convertible redeemable preference share on private placement basis at a face value of Rs. Ten Thousand,

(i) Subject to the following conditions:

a) The issuer shall appoint at least one Merchant Banker.

Provided that the role, responsibilities and obligations of the Merchant Banker(s) shall be same as they would be in case of public issue of debt security or non-convertible redeemable preference share.

b) Such debt security or non-convertible redeemable preference share shall be interest/ dividend bearing security paying coupon/ dividend at regular intervals with a fixed maturity without any structured obligations.

(ii) The following credit enhancements shall be permitted in the aforesaid securities:

a) Guaranteed bonds;

b) Partially guaranteed bonds;

c) Standby Letter of credit (SBLC) backed securities;