CIRCULAR
SEBI/HO/CFD/DIL/CIR/P/2021/614 Aug 13, 2021
To
All Recognized Stock Exchanges
All Recognized Depositories
Issuer Companies
Merchant Bankers and Brokers registered with SEBI
Dear Sir / Madam,
Sub: Guidelines on issuance of non-convertible debt instruments along with
warrants (‘NCDs with Warrants’) in terms of Chapter VI – Qualified Institutions
Placement of SEBI (Issue of Capital and Disclosure Requirements) Regulations,
2018.
1. Chapter VI of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018,
(‘ICDR Regulations, 2018’) governs issuance of ‘NCDs with Warrants’ (hereinafter ‘the
issue’), through Qualified Institutions Placement (QIP). Regulation 179 of ICDR
Regulations, 2018, inter alia provides that :
“(3) In a qualified institutions placement of non-convertible debt instrument along with
warrants, an investor can subscribe to the combined offering of non-convertible debt
instruments with warrants or to the individual securities, that is, either non- convertible
debt instruments or warrants.”
2. The above framework under ICDR Regulations, 2018, permits the issue where NCDs
and warrants offering can be attached to each other (stapled offer) or offered separately
for subscription (segregated offer).
3. SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021, governs
issue and listing of non-convertible securities, on a recognized stock exchange and
provides for Electronic Book Provider platform (EBP platform), offering efficient and
transparent price discovery mechanism.
4. In this regard stakeholders were consulted through a SEBI consultation paper regarding
‘NCDs with Warrants’ as a product and on applicability of EBP platform mechanism on
‘NCDs portion’ of the issue.
5. Accordingly, in order to streamline procedure of issuance and applicability of EBP
platform mechanism on the ‘NCDs portion’, the following has been decided and made
applicable for issues wherein the size of NCDs portion is above threshold prescribed
under SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021, and
Circulars issued there under:
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5.1. EBP platform mechanism shall be mandatory for ‘NCDs portion’ of the issue (for
both stapled and segregated offer) and issuer shall be required to comply with the
SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021, and
Circulars issued there under.
5.2. ‘Warrants portion’ of the issue shall be in terms of Chapter VI on Qualified
Institutions Placement under ICDR Regulations, 2018.
5.3. Of the ‘total issue size’ of the issue, at least 40% size shall consist of ‘Warrants
portion’. It may be noted that ‘total issue size’ shall mean combined size of NCDs
issue and the aggregate size of the warrants portion, including the conversion price
of warrants.
5.4. The segregated offer of NCDs and stapled offer, both shall be exempted from the
requirements as prescribed under the Regulations 175(3), 179(2) (a), 180(1), and
180(2) of the ICDR Regulations, 2018.
6. This circular shall be applicable for all issues of ‘NCDs with Warrants’ made under ICDR
Regulations, 2018, on or after the date of this Circular.
7. Entities involved in the ‘NCDs with Warrants’ issue process are advised to ensure
compliance with this circular.
8. This circular is issued in exercise of powers conferred by Section 11(1) read with
Section 11A of the Securities and Exchange Board of India Act, 1992 read with
Regulations 299 and 300 of the Securities and Exchange Board of India (Issue of
Capital and Disclosure Requirements) Regulations, 2018, to protect the interests of
investors in securities and to promote the development of, and to regulate the securities
market.
9. A copy of this circular is available on SEBI website at www.sebi.gov.in under the
categories “Legal Framework/Circulars”.
Yours faithfully,
Yogita Jadhav
General Manager
Corporation Finance Department
yogitag@sebi.gov.in
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