OPERATIONAL CIRCULAR FOR DEBENTURE TRUSTEES
SEBI/HO/DDHS/P/CIR/2023/50 March 31, 2023
To
All Registered Debenture Trustees,
Trustees Association of India (TAI)
All Registered Credit Rating Agencies,
Issuers who have listed and/or propose to list Debt Securities and Municipal Debt
Securities
Recognized Stock Exchanges,
Recognized Depositories
Madam/ Sir,
Sub: Operational Circular for Debenture Trustees
1. Debenture Trustees are regulated under the provisions of Securities and Exchange
Board of India (Debenture Trustees) Regulations, 1993 (‘DT Regulations’). While the
broad framework for Debenture Trustees has been laid down in the DT Regulations,
over the years, procedural/ disclosure requirements and obligations have been
specified by SEBI through circulars. A single operational circular has been prepared
by consolidating all applicable circulars to remove inconsistencies and repetitions
through consequent changes.
2. The stipulations contained in such circulars have been detailed chapter-wise in this
operational circular. Accordingly, the circulars listed in Part-A of Annex-1 stand
superseded by this operational circular. Further, the applicability of provisions of the
circulars listed in Part-B of Annex-1, to the extent they pertain to Debenture Trustees,
has been rescinded.
3. For ease of reference, each chapter of this operational circular contains footnotes
corresponding to the respective erstwhile circulars. The terms ‘Issuer’ and ‘listed
entity’ have been used interchangeably in this operational circular.
4. Debenture Trustees are directed to comply with the conditions laid down in this
operational circular and it is reiterated that Debenture Trustees shall have necessary
systems and infrastructure in place for implementation of this circular. The Board of
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Directors of the Debenture Trustee shall be responsible for ensuring compliance with
these provisions
5. This Circular is issued in exercise of powers conferred under:
5.1 Section 11(1) of Securities and Exchange Board of India Act, 1992;
5.2 Regulation 2A of the Securities and Exchange Board of India (Debenture
Trustees) Regulations, 1993
5.3 Regulation 55 of the Securities and Exchange Board of India (Issue and
Listing of Non-Convertible Securities) Regulations, 2021; (‘SEBI NCS
Regulations’)
5.4 Regulation 29 of Securities and Exchange Board of India (Issue and Listing of
Municipal Debt Securities) Regulations 2015;
5.5 Regulation 101 (1) of Securities and Exchange Board of India (Listing
Obligations and Disclosure Requirements) Regulations 2015 (‘SEBI LODR
Regulations’)
to protect the interest of investors in securities and to promote the development
of, and to regulate, the securities market.
6. Applicability: The provisions of the Operational Circular shall come into force with
effect from April 01, 2023.
7. This Circular is available on SEBI website at www.sebi.gov.in under “Legal
Framework”.
Yours faithfully,
Pradeep Ramakrishnan
General Manager
Department of Debt and Hybrid Securities
+91 – 022 2644 9246
pradeepr@sebi.gov.in
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Table of Contents
Chapter I: Terms of Registration ..................................................................................... 4
Chapter II: Due Diligence by Debenture Trustees ......................................................... 10
Chapter III: Security and Covenant Monitoring System ................................................. 20
Chapter IV: Recovery Expenses Fund .......................................................................... 34
Chapter V: Security Cover Certificate ........................................................................... 36
Chapter VI: Periodical/ Continuous Monitoring by Debenture Trustee .......................... 44
Chapter VII: Disclosures on the website of a Debenture Trustee .................................. 49
Chapter VIII: Provisions relating Debenture Trust Deed, Sharing and Dissemination of
Information by Debenture Trustee................................................................................. 55
Chapter IX: Redress of Investors’ Grievances .............................................................. 59
Chapter X: Breach of Covenants, Default and Remedies ............................................. 69
Chapter XI: Operational framework for transactions in defaulted debt securities post
maturity date/ redemption date ..................................................................................... 73
Chapter XII: Centralised Database - Responsibilities of Debenture Trustee ................. 74
Chapter XIII: Reporting of regulatory compliance ......................................................... 75
Chapter XIV: Guidelines on Outsourcing of Activities by Debenture Trustee ................ 78
Chapter XV: Unauthenticated news circulated by SEBI registered market intermediaries
through various modes of communication ..................................................................... 85
Chapter XVI: General Guidelines for dealing with Conflicts of Interest by Debenture
Trustee and its Associated Persons in Securities Market ............................................. 86
Glossary ........................................................................................................................ 88
Annex-1 (List of circulars rescinded) ............................................................................. 90
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Chapter I: Terms of Registration
1. Online Registration Mechanism for Debenture Trustees1
1.1. The SEBI Intermediary Portal is available at https://siportal.sebi.gov.in for SEBI
registered intermediaries including Debenture Trustees to submit registration
applications online. SEBI Intermediary Portal shall inter-alia include online
application for registration, processing of application, grant of final registration,
application for surrender/ cancellation, submission of periodical reports, requests
for change of name/ address/ other details, etc. The Link for SEBI Intermediary
Portal is also available on SEBI website – www.sebi.gov.in.
1.2. All applications for registration/ surrender/ other requests will be made through
SEBI Intermediary Portal only. The applicants will be separately required to
submit relevant documents viz. declarations/ undertakings required as a part of
application forms prescribed in relevant regulations, in physical form, only for
records without impacting the online processing of applications for registration.
1.3. In case of any queries and clarifications with regard to the SEBI Intermediary
Portal, Debenture Trustees may contact on 022-26449364 or may write at
portalhelp@sebi.gov.in.
2. Digital Mode of Payment2
2.1. SEBI has enabled digital mode of payment (RTGS/ NEFT/ IMPS etc.) for fees/
penalties/ remittance/ other payments etc.
2.2. In order to identify and account for such direct credit in the SEBI account,
Debenture Trustee shall provide the information to SEBI once the payment is
made as per the format specified below:
Date
Department of SEBI
Name of Intermediary/ Other Entities
Type of Intermediary
SEBI Registration Number (if any)
PAN
Amount (INR)
1 SEBI/HO/MIRSD/MIRSD1/CIR/P/2017/38 dated May 02, 2017;
2 SEBI/HO/GSD/T&A/CIR/P/2017/42 dated May 16, 2017;
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Purpose of Payment (including the period for
which payment was made e.g. quarterly,
annually)
Bank name and Account number from which
payment is remitted
UTR No
2.3. The above information should be emailed to the respective department(s) as well
as to the Treasury & Accounts division at tad@sebi.gov.in.
3. Grant of prior approval to Debenture Trustee for change in control3
3.1. Debenture Trustee is required to obtain prior approval of SEBI in case of change
in control. With a view to expedite the process of granting prior approval, SEBI
has adopted a ‘single window clearance at SEBI’, for the Debenture Trustees in
case of their having multiple registrations with SEBI.
3.2. Therefore, in case a Debenture Trustee holds multiple registrations with SEBI, it
shall make only one application addressed to "Chief General Manager,
Department of Debt and Hybrid Securities, SEBI" accompanied by the following
information:
a) Whether any application was made in the past to SEBI seeking registration
in any capacity but it was not granted? If yes, details thereof.
b) Whether any action has been initiated/ taken under SCRA/ SEBI Act or rules
and regulations made thereunder? If yes, status thereof along with corrective
action taken to avoid such violations in the future.
c) The acquirer shall also confirm that it shall honour all past liabilities/
obligations of the applicant, if any.
d) Whether any investor complaint is pending? If yes, steps taken and
confirmation that the acquirer shall resolve the same.
e) Details of litigation, if any.
f) That all the fees due to SEBI have been paid.
g) That there will not be any change in the Board of Directors of incumbent or
in its management team, till the time prior approval is granted.
h) That the incumbent shall inform all its existing investors/ clients in order to
enable them to take informed decisions regarding their continuance or
otherwise with the entity with new management.
3.3. Further, in case the incumbent is a registered stock broker and/ or depository
participant, in addition to the above, it shall obtain approval/ NOC from all the
3 CIR/MIRSD/14/2011 dated August 02, 2011;
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Stock Exchanges/ Depositories, where the incumbent is a member/ Depository
Participant and forward a self-attested copy of the same to SEBI.
3.4. The prior approval granted by SEBI shall be valid for a period of 180 days from
the date of communication.
4. Effect on change in control in case of transfer of shareholdings among
immediate relatives and transmission of shareholdings in case of a Debenture
Trustee being an unlisted body corporate4
In the following scenarios, change in shareholdings of a Debenture Trustee will not
be construed as change in control:
4.1. Transfer of shareholding among immediate relatives shall not be treated as
resulting in change in control;
4.2. Transfer of shareholding by way of transmission to immediate relative or not,
shall not be treated as resulting in change in control
Immediate relative shall be construed as defined under Regulation 2(l) of SEBI
(Substantial Acquisition of Shares and Takeovers) Regulations, 2011 which inter-
alia includes any spouse of that person, or any parent, brother, sister or child of
the person or of the spouse
4.3. Incoming shareholders in the Debenture Trustee, pursuant to transfer of shares
from immediate relative/ transmission of shares (immediate relative or not), need
to satisfy the fit and proper person criteria stipulated in Schedule II of SEBI
(Intermediaries) Regulations, 2008.
5. Transfer of business by SEBI registered intermediaries to other legal entity5
SEBI has been receiving registration applications pursuant to transfer of business
(SEBI regulated business activity) from one legal entity which is a SEBI registered
Intermediary (transferor) to other legal entity (transferee). In this regard, following is
clarified:
5.1. The transferee shall obtain fresh registration from SEBI in the same capacity
before the transfer of business if it is not registered with SEBI in the same
capacity. SEBI shall issue new registration number to transferee different from
transferor’s registration number in the following scenario:
4 SEBI/HO/MIRSD/DOR/CIR/P/2021/42 dated March 25, 2021;
5 SEBI/HO/MIRSD/DOR/CIR/P/2021/46 dated March 26, 2021;
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a) “Business is transferred through regulatory process (pursuant to merger/
amalgamation/ corporate restructuring by way of order of primary regulator/
govt./ NCLT, etc.) or non-regulatory process (as per private agreement/ MOU
pursuant to commercial dealing/ private arrangement) irrespective of
transferor continues to exist or ceases to exist after the said transfer.
b) In case of change in control pursuant to both regulatory process and non-
regulatory process, prior approval and fresh registration shall be obtained.
While granting fresh registration to same legal entity pursuant to change in
control, same registration number shall be retained.
c) If the transferor ceases to exist, its certificate of registration shall be
surrendered.
d) In case of complete transfer of business by transferor, it shall surrender its
certificate of registration.
e) In case of partial transfer of business by transferor, it can continue to hold
certificate of registration.
6. Surrender of Certificate of Registration6
6.1. If a Debenture Trustee wishes to surrender the certificate of registration
voluntarily, it shall transfer, wherever relevant, its existing business/ client
accounts to another SEBI registered Debenture Trustee, before making such
request to SEBI in the format specified in Annex-IA.
6.2. The Debenture Trustee may, if it so desires, make a representation for dispensing
with the procedure, along with the application, for surrender in terms of the first
proviso to Regulation 33B of SEBI (Intermediaries) Regulations, 2008.
6.3. In all cases of transfer of business or client accounts to another registered
Debenture Trustee, the clients shall not be subjected to any additional cost.
7. Designated e-mail ID for regulatory communication with SEBI7
7.1. In order to facilitate the issuance of digitally signed circulars, Debenture Trustees
are required to create a designated email-id for regulatory communications. This
email-id shall be exclusively for the above purpose and should not be person
centric.
7.2. The designated email-id shall be communicated to SEBI by emailing a file to
dt@sebi.gov.in, as prescribed below:
a) The file should be an excel file;
6 SEBI/MIRSD/DR-2/SRP/Cir - 2/ 2005 dated January 4, 2005;
7 MIRSD/ DPSIII/ Cir-21/ 08 dated July 7, 2008;
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b) The name of the file and the subject of the email shall specify the type of
Debenture Trustee and the name of the Debenture Trustee. For example –
“Debenture Trustee – ABC co. Ltd – communication of designated email-id.”
c) The file shall contain the following details:
Name Address Category Registration Designated Name of
No. email id compliance
officer
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Annex-IA
Application form for surrender of certificate of registration by Debenture Trustee
To
Securities and Exchange Board of India
Sir/Ma’am,
Sub: Surrender of Certificate of Registration as Debenture Trustee, Registration
No. __.
1. We hereby surrender our certificate of registration as Debenture Trustee.
2. We enclose the original certificate of registration (or indemnity in case the certificate
is lost or stolen) for cancellation.
3. We hereby confirm that:
a. no complaint/ disciplinary proceeding is pending against us;
b. no investigation/ inquiry by SEBI is pending against us with respect to our activities
as a Debenture Trustee;
c. as on date of application, we have paid all fees;
d. we shall continue to be liable for all liabilities/ obligations (including monetary
penalties, if any) for violations, if any, of the provisions of the SEBI Act, Rules and
the SEBI (Debenture Trustee) Regulations, 1993 that have taken place before our
surrender of certificate of registration;
e. all our current assignments as a Debenture Trustee have been either duly
terminated or transferred to another registered Debenture Trustee _____ with
registration no.___;
f. we have issued a public notice in a widely circulated national and a regional daily
dated________ informing surrender of our registration as Debenture Trustee
(Please enclose a clipping of the said public notice);
g. we have notified the Depositories and all the Stock Exchanges where our client
companies are listed about the surrender of our registration.
4. *We hereby request SEBI to dispense with the procedure laid down in Regulation 33B
of Securities and Exchange Board of India (Intermediaries) Regulations, 2008 while
processing our request for surrender of certificate of registration.
Thanking you,
Yours faithfully,
Name:
(Whole time/ Managing Director/ Principal Officer)
*Please strike off, if not applicable.
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Chapter II: Due Diligence by Debenture Trustees
1. Appointment of Debenture Trustee
A Debenture Trustee shall ensure compliance with the provisions of the regulations
13 and 13A of DT Regulations with regard to being appointed as a Debenture Trustee
in relation to an issue.
2. Due Diligence in respect of Secured Debt Securities8
The Debenture Trustee shall ensure the following with regard to due diligence at the
time of creation of security:
2.1. Documents/ Consents required at the time of entering into debenture
trustee agreement
In order to enable the Debenture Trustee to exercise due diligence with respect to
creation of security, the Issuer at the time of entering into debenture trustee
agreement shall provide the following information/ documents to the Debenture
Trustee:
a) Details of assets, movable property and immovable property on which charge
is proposed to be created including title deeds (original/ certified true copy by
issuers/ certified true copy by existing charge holders, as available) or title
reports issued by a legal counsel/ advocates, copies of the relevant
agreements/ Memorandum of Understanding, copy of evidence of registration
with Sub-registrar, Registrar of Companies, Central Registry of Securitization
Asset Reconstruction and Security Interest (CERSAI) etc.
b) For unencumbered assets, an undertaking that the assets on which charge is
proposed to be created are free from any encumbrances.
c) For encumbered assets, on which charge is proposed to be created, the
following consents along-with their validity as on date of their submission:
i. Details of existing charge over the assets along with details of charge
holders, value/ amount, copy of evidence of registration with Sub-registrar,
Registrar of Companies, CERSAI, Information Utility (IU) registered with
Insolvency and Bankruptcy Board of India (IBBI) etc. as applicable; and
ii. Consent/ No-objection certificate (NOC) from existing charge holders for
further creation of charge on the assets or relevant transaction documents
wherein existing charge holders have given conditional consent/
8 SEBI/HO/MIRSD/CRADT/CIR/P/2020/218 dated November 03, 2020, SEBI/HO/DDHS/DDHS_Div1/P/CIR/2022/106
dated August 04, 2022 and SEBI/HO/DDHS/DDHS-RACPOD1/P/CIR/2022/176 dated December 19, 2022
Page 10 of 91
permission to the Issuer to create further charge on the assets, along-with
terms of such conditional consent/ permission, if any; and
iii. Consent/ NOC from existing unsecured lenders, in case, negative lien is
created by Issuer in favour of unsecured lenders.
d) In case of personal guarantee or any other document/ letter with similar intent
is offered as security or a part of security:
i. Details of guarantor viz. relationship with the Issuer; and
ii. Net worth statement (not older than 6 months from the date of debenture
trustee agreement) certified by a chartered accountant of the guarantor;
and
iii. List of assets of the guarantor including undertakings/ consent/ NOC as
per para 2.1(b) and 2.1(c) above; and
iv. Conditions of invocation of guarantee including details of put options or
any other terms and conditions which may impact the security created;
and
v. List of previously entered agreements for providing guarantee to any other
person along with an undertaking that there are no agreements other than
those provided in the list, if any.
e) In case of corporate guarantee or any other document/ letter with similar intent
is offered as security or a part of security:
i. Details of guarantor viz. holding/ subsidiary/ associate company etc.;
ii. Audited financial statements (not older than 6 months from the date of
debenture trustee agreement) of guarantor including details of all
contingent liabilities;
iii. List of assets of the guarantor along-with undertakings/ consent/ NOC as
per para 2.1(b) and 2.1(c) above;
iv. Conditions of invocation of guarantee including details of put options or
any other terms and conditions which may impact the security created;
v. Impact on the security in case of restructuring activity of the guarantor;
vi. Undertaking by the guarantor that the guarantee shall be disclosed as
“contingent liability” in the “notes to accounts” forming part of the financial
statements of the guarantor;
vii. Copy of Board resolution of the guarantor for the guarantee provided in
respect of the debt securities of the Issuer;
viii. List of previously entered agreements for providing guarantee to any other
person along with an undertaking that there are no agreements other than
those provided in the list, if any.
f) In case of any other contractual comforts/ credit enhancements provided for or
on behalf of the issuer, it shall be required to be legal, valid and enforceable at
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all times, as affirmed by the issuer. In all other respects, it shall be dealt with
as specified above with respect to guarantees.
g) In case securities (equity shares, etc.) are being offered as security then a
holding statement from the depository participant along with due pledge of such
securities in favour of Debenture Trustee in the depository system shall be
ensured.
h) Details of any other form of security being offered viz. Debt Service Reserve
Account, etc.
i) Any other information, documents or records required by the Debenture
Trustee with regard to creation of security and perfection of security.
2.2. Due diligence by a Debenture Trustee for creation of security
2.2.1. Regulation 15(6) of DT Regulations inter-alia requires a Debenture Trustee,
to exercise independent due diligence to ensure that security is free from
encumbrances, adequate consent has been taken from existing charge
holders, if any, etc. Regulation 15(1)(i) of DT Regulations places obligations
on the Debenture Trustee to ensure that the assets of the Issuer are
sufficient to discharge the interest and principal amount with respect to debt
securities of the Issuer at all times.
2.2.2. A Debenture Trustee, by itself or through professionals appointed and
compensated/ remunerated by the Debenture Trustee viz., practicing
chartered accountant, practicing company secretary, registered valuer, or
legal counsel shall independently carry out due diligence. The terms and
conditions with respect to exercising due diligence shall also be included in
the debenture trustee agreement. The due diligence to be exercised by
Debenture Trustee with respect to creation of security shall inter-alia include
the following:
(a) Debenture Trustee shall verify that the assets provided by Issuer for
creation of security are free from any encumbrances or necessary
permissions or consents has been obtained from existing charge
holders by carrying out the following checks:
(i) Verify from Registrar of Companies, Sub-registrar, CERSAI, IU or
other sources where charge is registered/ disclosed as per terms.
(ii) In case of conditional consent/ permission received as per para
2.1(c)(ii) above:
(A) Verify whether such conditional consent/ permission given to
Issuer by existing charge holders is valid as per terms of
transaction documents; and
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(B) Intimate existing charge holders through necessary and
appropriate means (including via e-mail) about the proposal to
create further charge on assets by Issuer seeking their
comments/ objections, if any, to be communicated to the
Debenture Trustee within next five working days.
(b) In case of personal guarantee, corporate guarantee and any other
guarantees/ form of security, the Debenture Trustee shall verify the
relevant filings made on websites of Ministry of Corporate Affairs, Stock
Exchange(s), CIBIL, IU etc. and obtain appraisal report, necessary
financial certificates from professionals as referred earlier in this
Chapter.
2.2.3. A Debenture Trustee, by itself or by engaging professionals, shall prepare
one or more reports viz. valuation report, ROC search report, title search
report/ appraisal report, security cover certificate, any other report/
certificate as applicable etc. and shall independently assess that the assets
for creation of security are adequate for the proposed issue of debt
securities.
2.2.4. A Debenture trustee shall issue ‘due-diligence certificate’ to the Issuer, as
per format specified in Annex-IIA, subject to the following:
(a) Information on consents/ permissions required for creation of further
charge on assets is adequately disclosed in Offer Document (‘OD’)/
Placement Memorandum (‘PM’).
(b) All disclosures made in the OD/PM with respect to creation of security
are in conformity with the clauses of debenture trustee agreement.
(c) All covenants proposed to be included in debenture trust deed
(including any side letter, accelerated payment clause etc.) are
disclosed in OD/PM.
2.2.5. A Debenture Trustee shall maintain records and documents pertaining to
due diligence exercised for a period of five years from redemption of the
debt securities unless required by law, or on account of any enquiries or
proceedings to retain such records.
2.3. Due Diligence Certificate in case of Shelf Prospectus/ Placement
Memorandum:
2.3.1. In case security details have not been finalized at the time of filing of a draft
shelf prospectus/ placement memorandum by an issuer, then the
Debenture Trustee shall undertake due diligence as under:
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(a) The Debenture Trustee may furnish a due diligence certificate,
confirming that it has carried out due diligence for the clauses other than
that related to security creation [clauses are specified in the formats
prescribed under regulations 40(a) and 44(3) of the SEBI NCS
Regulations and Annex-IIA of this operational circular].
(b) At the time of the issuance of the tranche prospectus/ placement
memorandum when the issue structure including terms related to
security has been determined and finalized, the Debenture Trustee
shall issue a due diligence certificate covering all clauses of formats
prescribed under regulations 40(a) and 44(3) of the SEBI NCS
Regulations and Annex-IIA of this operational circular.
2.4. Encumbrance on securities for issuance of listed debt securities:
2.4.1. Creation of encumbrance on the securities for securing the listed debt
securities shall be through the depository system only in accordance with
the Depositories Act, 1996, the SEBI (Depositories and Participants)
Regulations, 2018, Depository bye laws and other applicable regulations
and circulars.
2.4.2. Encumbrance for the above shall mean the following:
(a) Pledge, hypothecation, mortgage, lien, negative lien, non-disposal
undertaking or non-disposal agreement;
(b) Any restriction on the free and marketable title to the asset, by whatever
name called, whether executed directly or indirectly;
(c) Any covenant, transaction, condition or arrangement in the nature of
encumbrance, by whatever name called, whether executed directly or
indirectly.
2.5. Disclosures in the OD/PM and filing of OD/PM by the Issuer
2.5.1. The Issuer, in addition to disclosures made under Schedule I of SEBI NCS
Regulations and circulars issued thereunder, shall also disclose the
following in the OD/PM:
(a) “Debt securities shall be considered as secured only if the charged
asset is registered with Sub-registrar and Registrar of Companies or
CERSAI or Depository etc., as applicable, or is independently verifiable
by the Debenture Trustee.”; and
(b) Terms and conditions of debenture trustee agreement including fees
charged by Debenture Trustee, details of security to be created and
process of due diligence carried out by the Debenture Trustee; and
(c) Due diligence certificate as per the format specified in Annex-IIA.
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2.5.2. An Issuer proposing to make an issue of debt securities by way of a public
issue or offer debt securities by way of a private placement, shall submit to
the Stock Exchange, a due diligence certificate from the Debenture Trustee
as per the format specified in Annex-IIA and update the same into the
Security and Covenant Monitoring System operated by a recognised
Depository, which the Debenture Trustee shall validate/ confirm on such
system as detailed in Chapter III of this circular.
2.6. Creation and registration of charge of security by the Issuer
2.6.1. Before making the application for listing of debt securities, the Issuer shall
create charge as specified in the OD/ PM, in favour of the Debenture
Trustee and also execute a debenture trust deed9 with the Debenture
Trustee.
2.6.2. The Stock Exchange shall list the debt securities only upon receipt of a due
diligence certificate as per format specified in Annex-IIB from the
Debenture Trustee confirming creation of charge and execution of the
debenture trust deed.
2.6.3. The charge created by Issuer shall be registered with Sub-registrar,
Registrar of Companies, CERSAI, Depository etc., as applicable, within 30
days of creation of such charge. In case the charge is not registered
anywhere or is not independently verifiable, then the same shall be
considered a breach of covenants/ terms of the issue by the Issuer.
2.7. Manner of change in security/ creation of additional security/ conversion of
unsecured to secured in case of already listed debt securities:
2.7.1. Regulation 59 of SEBI LODR Regulations provides for a change in terms of
listed debt securities. A change in the structure of debt listed debt securities,
inter-alia, may include:
a) A change in security,
b) Creation of additional security in case of already secured listed debt
securities or
c) Creation of security in case of unsecured listed debt securities.
2.7.2. In order to harmonize the process of creation of security pursuant to listing,
the following directions are issued:
9 Form SH 12 of Companies (Share Capital and Debentures) Rules, 2014
Page 15 of 91
a) Before initiating due diligence, the Debenture Trustee and the Issuer
shall ensure compliance with the paras 2.1 and 2.2 of this Chapter.
b) Pursuant to carrying out of due diligence as per paras 2.1 and 2.2 of
this Chapter, the Debenture Trustee shall issue a no-objection
certificate (NOC) to the issuer for going ahead with proposed change in
the structure/ creation of security.
c) Thereafter, the issuer shall create the proposed security and the charge
in favour of Debenture Trustee and the same shall be registered with
the sub-registrar, Registrar of Companies, CERSAI, Depository etc., as
applicable, within 30 days of creation of such charge. In case the charge
is not registered anywhere or is not independently verifiable, then the
same shall be considered as a breach of the covenants/ terms of the
issue by the Issuer.
d) Pursuant to the creation and registration of charge, the issuer and
Debenture Trustee shall enter into a supplemental/ amended debenture
trust deed including all the terms and conditions arising out of the due
diligence carried out by the Debenture Trustee as well as of the security
created by Issuer.
e) The issuer, pursuant to execution of supplemental/ amended debenture
trust deed, shall submit the following to the Depositories and Stock
Exchanges:
i. NOC by Debenture Trustee for change in security or creation of
security.
ii. Executed supplemental/ amended debenture trust deed;
iii. An undertaking from the Debenture Trustee that the security has
been created and registered.
iv. Other documents/ consents required to be submitted to Stock
Exchanges and Depositories in terms of Regulation 59 of SEBI
LODR Regulations, circulars issued thereunder and bye-laws of
Stock Exchanges and Depository, as applicable.
f) The Depository shall assign a new ISIN to the listed debt securities
pursuant to submission of documents mentioned above only and shall
share the information with respect to change in ISIN of listed debt
securities, with the recognized Stock Exchanges.
g) It may be noted that none of the cases mentioned in para 2.7.1 would
constitute a change in the structure of the listed debt securities,
provided there are no other changes to the terms/ nature of issue of the
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listed debt securities such as maturity date, coupon rate, face value,
redemption schedule, nature of the debt securities (secured/
unsecured), etc. Accordingly, the Depository shall not assign a new ISIN
in such cases. However, where there is a change in the underlying
security, the Debenture Trustee shall ensure compliance with the
provisions of Regulation 15(1)(i) of DT Regulations.
2.8. Engagement of Independent professionals by Debenture Trustee:
2.8.1. For the purpose of availing the services of an independent professional for
carrying out due diligence and continuous monitoring under the provisions
of this operational circular, the Debenture Trustee shall:
a) Put in place a criterion/ policy for engagement of an independent
professional/ availing the services of an independent professional as
approved by its board of Directors and shall disclose the same on its
website
b) Formulate a policy on mitigating conflict of interest and shall disclose
the same on its website; the policy shall, inter-alia, include a
requirement that the independent professional should not have had
pecuniary relationship with the issuer three years prior to the date of
opening of the issue.
c) The Debenture Trustee shall directly compensate/ remunerate the
professional who is engaged.
2.8.2. While a Debenture Trustee may avail the services of independent
professionals, the responsibility shall rest with the Debenture Trustee.
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Annex-IIA
FORMAT OF DUE DILIGENCE CERTIFICATE TO BE GIVEN BY THE DEBENTURE
TRUSTEE AT THE TIME OF FILING THE DRAFT OFFER DOCUMENT/ PLACEMENT
MEMORANDUM
To,
Stock Exchange
Dear Sir / Madam,
SUB.: ISSUE OF ____________________ BY _______________LTD.
We, the debenture trustee(s) to the above mentioned forthcoming issue state as follows:
1) We have examined documents pertaining to the said issue and other such relevant
documents, reports and certifications.
2) On the basis of such examination and of the discussions with the Issuer, its directors
and other officers, other agencies and on independent verification of the various relevant
documents, reports and certifications, WE CONFIRM that:
a) The Issuer has made adequate provisions for and/or has taken steps to provide for
adequate security for the debt securities to be issued and listed.
b) The Issuer has obtained the permissions / consents necessary for creating security on
the said property(ies).
c) The Issuer has made all the relevant disclosures about the security and also its
continued obligations towards the holders of debt securities.
d) Issuer has adequately disclosed all consents/ permissions required for creation of
further charge on assets in offer document/ placement memorandum and all disclosures
made in the offer document/ placement memorandum with respect to creation of security
are in confirmation with the clauses of debenture trustee agreement.
e) Issuer has disclosed all covenants proposed to be included in debenture trust deed
(including any side letter, accelerated payment clause etc.), offer document/ placement
memorandum.
f) Issuer has given an undertaking that charge shall be created in favour of debenture
trustee as per terms of issue before filing of listing application.
We have satisfied ourselves about the ability of the Issuer to service the debt securities.
PLACE:
DATE:
DEBENTURE TRUSTEE TO THE ISSUE WITH HIS STAMP
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Annex-IIB
FORMAT OF DUE DILIGENCE CERTIFICATE TO BE GIVEN BY THE DEBENTURE
TRUSTEE AT THE TIME OF FILING OF LISTING APPLICATION BY ISSUER
To,
Stock Exchange
Dear Sir / Madam,
SUB.: ISSUE OF ____________________ BY _______________LTD.
We, the debenture trustee(s) to the above mentioned forthcoming issue state as follows:
1) We have examined documents pertaining to the creation of charge over assets of
Issuer.
2) On the basis of such examination and of the discussions with the Issuer, its directors
and other officers, other agencies and of independent verification of the various relevant
documents, WE CONFIRM that:
(a) The Issuer has created charge over its assets in favour of debenture trustee as
per terms of offer document/ placement memorandum and debenture trustee
agreement.
(b) Issuer has executed the debenture trust deed as per terms of offer document/
placement memorandum and debenture trustee agreement.
(c) The Issuer has given an undertaking that charge shall be registered with Sub-
registrar, Registrar of Companies, Central Registry of Securitization Asset
Reconstruction and Security Interest (CERSAI), Depository etc., as applicable,
within 30 days of creation of charge.
We have satisfied ourselves about the ability of the Issuer to service the debt securities.
PLACE:
DATE:
DEBENTURE TRUSTEE TO THE ISSUE WITH HIS STAMP
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Chapter III: Security and Covenant Monitoring System10
1. In order to strengthen the process of security creation, monitoring of security
created, monitoring of security cover and covenants of the debt securities, a
platform for ‘Security and Covenant Monitoring System’ (‘system’) hosted by
Depositories has been introduced.
2. The system shall be used for recording and monitoring of the security created and
monitoring of covenants of debt securities. The system shall, inter alia, capture:
2.1. the process of creation of security (viz. due diligence, charge creation etc.);
2.2. continuous monitoring of covenants by Debenture Trustees (as applicable);
2.3. credit rating of the debt securities by the Credit Rating Agencies (CRAs).
3. Depositories shall create, host, maintain and disseminate the system for security
and covenant monitoring using distributed ledger technology (or similar such
technologies). Further, the depositories shall:
3.1. Provide secure login credentials to Issuers, CRAs, Debenture Trustees etc.
for recording and/or verifying and/or viewing requisite information on the
system.
3.2. Put in place adequate safeguards to ensure the integrity and security of the
data on the system.
3.3. Share information with the other Depository for integrating and maintaining a
compatible system.
3.4. Develop an alert mechanism to be sent to the stakeholders on submission,
acceptance and rejection of information, and alerts for periodic and event
based compliances.
3.5. Wherever necessary, provide the feature of document upload by the various
stakeholders on the system.
3.6. Provide functionality of maintaining a trail/ log of all the communication/
interaction amongst various stakeholders viz. CRAs, Debenture Trustees,
Issuers, Depositories etc. and also in the system on account of recording
and/or verification and/or viewing of information by the stakeholders.
10 SEBI/ HO/ MIRSD/ CRADT/ CIR/ P/ 2022/ 38 dated March, 29 2022 and
SEBI/HO/MIRSD/MIRSD/CRADT/CIR/P/2021/618 dated August 13, 2021
Page 20 of 91
3.7. Provide functionality in the system to make changes in already recorded
information by stakeholders (in case a change is required to be made for
rectifying any discrepancy or recording additional information) and verification
of same by responsible stakeholder (as applicable) and due logs/trail and prior
versions of such changes.
3.8. Be responsible for the effective and smooth functioning of the system and shall
develop a mechanism to establish accountability/ responsibility for the
rectification of various issues and glitches that may hamper the effective
functioning of the system.
3.9. Have in place operational guidelines for the system after consultation with
various stakeholders.
4. In line with current market practices, related to issuance of debt securities, the
system, as per the nature of the debt securities, shall enable various stakeholders
to record information for the following aspects:
4.1. Security creation, security cover and covenants;
4.2. Periodical monitoring of security cover and covenants;
4.3. Interest and redemption payment (part and full) of debt securities;
4.4. Credit Rating information
5. Accordingly, the role and responsibilities of various stakeholders in the system
have been defined below.
A. Recording of information related to security creation, security cover and
covenants
5.1. Information regarding assets offered as security (Security creation/ Security
Cover):
a) Issuer shall record relevant details regarding proposed ‘Security creation/
Security Cover’ (if applicable) including asset details, other related
documents in the system based on the type of asset offered for security
creation as per Annex-IIIA. Issuers shall fill all the requisite fields in the
system at the time of creation of temporary ISIN/ ISIN.
b) The assets offered as security by an Issuer shall be recorded in the
system pursuant to validation/ verification by the Debenture Trustee in
terms of provisions of Chapter II.
c) In case the value and details of assets recorded are not in line with the
terms of proposed issue of debt securities, the Debenture Trustee shall
not validate the same and shall reject the same on the system and make
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due remarks explaining the same. The system shall send an intimation to
the Issuer to rectify any discrepancy or record additional details regarding
assets offered as security before initiating issuance of temporary ISIN/
ISIN which shall also require being validated and verified by the Debenture
Trustee.
d) The Debenture Trustee shall also upload the reports/ documents viz.
valuation report, ROC search report, title search report/ appraisal report,
security cover certificate, due diligence certificate as per Annex-IIA of this
operational circular and other related reports/ certificates as applicable
etc. on the system.
5.2. Recording of charge creation and charge registration details on the system:
a) Pursuant to creation of charge in favour of Debenture Trustee (as per
provisions of Chapter II), the Issuer shall upload the details of the charge
created on the system as per Annex-IIIB. The Issuer shall also upload all
the relevant documents supporting the charge such as Pledge Master
Report etc.
b) The Debenture Trustee shall then validate the details of the charge
entered in the system from Sub Registrar, ROC, CERSAI, Information
Utility of IBBI or any other independently verifiable source and shall
confirm the same on the system and update any subsequent changes, in
case of any discrepancy.
c) Pursuant to the issuance of due diligence certificate by the Debenture
Trustee to the Stock exchange as per Annex-IIB of this circular, the same
shall be uploaded on the system by the Issuer.
5.3. Modification in the information recorded on the system:
Any change in already recorded information on the system related to charge
creation, registration details etc. due to any discrepancy or any modification in
the value or details of the security provided on account of provision of
additional security by the Issuer or reduction or substitution of existing security
provided by the Issuer, shall be made after verification and validation by
Debenture Trustee and information regarding requisite documents and
permission/ consent obtained shall also be recorded on the system.
5.4. Recording of covenants in the system:
a) The Issuer shall enter the covenants of the issuance in the system and
Page 22 of 91
upload the debenture trust deed within five working days of signing of
debenture trust deed, including but not limited to the following:
i. Covenants as to title of Security
ii. Covenants as to Security Cover as per terms of Issue
iii. Covenant as to further borrowing/ issues
iv. Covenant as to creation of further encumbrances on the security
v. Financial covenants including any restrictions on payment of
dividends, maintaining Debt/ equity ratio, Gross Debt to EBITDA,
Debt to Value Ratio etc.
vi. Covenants as to any change in nature and conduct of business or
disposal of assets
vii. Covenants with respect to changes in the composition of its Board
of Directors
viii. Covenants with respect to related party transactions by the issuer
ix. Monitoring of Debenture Redemption Reserve, Debenture
Redemption Fund, Recovery Expense Fund
x. Other non-financial covenants such as credit rating, negative lien
undertaking, etc.
b) Debenture Trustee shall validate the covenants so entered by the Issuer
within seven working days of signing the Debenture Trust Deed.
B. Periodic monitoring of Security Cover and Covenants
5.5. The Issuer shall provide the half yearly certificate by the statutory auditor
certifying the security cover and upload the same on the system in the format
as per Annex-IIIA. The periodicity of filing this certificate on the system shall
be co-terminus with that of the financial results as per regulation 52 of the
SEBI LODR Regulations.
5.6. The Issuer shall, on a periodic basis, upload the necessary and applicable
documents, information within stipulated time so as to enable the Debenture
Trustee to exercise its functions in relation to monitoring of Security cover and
covenants.
5.7. In order to carry out periodical monitoring on security created/ covenants, the
Debenture Trustee shall:
a) Validate and upload the security cover certificate
b) Update the value of the assets in the system based on the periodic
valuation carried out by the Debenture Trustee, by itself or through
professionals in terms of provisions of Chapter II of this operational
circular
c) Upload the title search reports, valuation reports etc., in terms of
Page 23 of 91
provisions of Chapter II of this operational circular
d) The Debenture Trustee shall release charges in case any debt is repaid
and update/ validate the same in the platform.
C. Interest and redemption payment
5.8. Interest and principal payment:
a) The Issuer shall record information pertaining to payment of interest and
repayment of principal on the system at the time of creation of ISIN/
temporary ISIN. The issuer shall also record the status of such payment/
repayment within one working day of payment/ redemption due date after
taking requisite details from Registrar and Transfer Agent. The format for the
same is as specified in Annex-IIIC.
b) Once such information is recorded on the system, the Debenture Trustee
shall validate the status of such payment/ repayment in the system after
receiving the requisite details from the Registrar and Transfer Agent
including file prepared for payment of interest and repayment of principal,
Bank confirmation etc. Such status shall be validated within two working days
on the basis of the documentary evidence submitted by the Issuer and the
Registrar and Transfer Agent.
5.9. Non-receipt of information on the system:
a) In case of non-receipt of information in the system viz. the Issuer fails to
intimate the status of payment of interest or repayment of principal, the
Debenture Trustee shall seek status of such payment/ repayment from the
Issuer and/ or conduct independent assessment (from banks, investors, etc.)
to determine the same.
b) Based on such assessment, the Debenture Trustee shall update in the
system the status of such payment/ repayment, within seven working days
of the interest payment becoming due or nine working days of the maturity/
redemption date.
c) The Debenture Trustee shall update the details in the system and initiate
necessary action as per provisions of Chapter IX to this operational circular.
5.10. Redemption of debt securities:
a) Issuer shall initiate the release of charges and update the system with the
relevant documents including but not limited to Statutory Certificate, No dues
Page 24 of 91
from the holders of debt securities (applicable only in case of private
placement), ISINs Extinguishment letter, ROC Charge Satisfaction forms/
certificate.
b) The Debenture Trustee shall release charges in case any debt is repaid and
update/ validate the same in the platform.
D. Credit Rating information
5.11. The Issuer shall upload all the credit rating information for debt securities
including rating action, date of press release and hyperlink for press release
of credit rating. CRAs shall access the system to validate the rating
information uploaded by the Issuer. In case of discrepancy, Issuer and/ or
CRAs shall notify the same on system and update the correct information in
the system within two working days of such notification.
5.12. Any subsequent rating actions carried out by CRAs shall be recorded in the
system by the Issuer within one working day of the press release, which shall
inter-alia comprise rating action including rating outlook, date of press
release and hyperlink for press release of credit rating. In case of
discrepancy, Issuer and/ or CRAs shall notify the same on system and CRAs
shall update the correct information in the system within two working days of
such notification.
6. Unique asset identifier:
6.1. As the backbone of the system is the uniqueness of the record of assets, a
system generated unique identifier (Asset ID) shall be allotted for each asset
offered by the Issuer as security for the debt securities. For data exchange
and verification across Depositories, format for unique Asset ID shall be a 12-
digit alphanumeric string, which will be generated as provided in Annex-IIID.
6.2. To ensure that there is only one unique asset ID assigned to an asset of the
issuer for effective asset creation as well as tracking, the system will provide
an alert to the Issuer and the Debenture Trustee by having appropriate
validation/ duplicate checks in the system for identifying possible duplicate
entries for assets of an issuer and this validation/ duplication check shall be
based on the parameters as per Annex-IIIE. Issuers shall ensure that the entry
of the asset is made only once in the system for generation of the unique Asset
ID, which shall be verified by the Debenture Trustee.
7. The following assets shall be tracked at portfolio level and no specific parameters
for the underlying assets would be captured:
Page 25 of 91
7.1. movable assets viz furniture, equipment, inventory etc.
7.2. current assets viz portfolio of advances/ receivables, etc.
7.3. any other asset of similar nature.
8. On detection of a duplicate asset, an alert shall be generated and sent to the Issuer
and Debenture Trustee to cross check and verify the details entered into the
system for recording the details of asset. The Issuer and the Debenture Trustee
should verify and address the alert before overriding the same.
9. Monitoring/ Trigger events:
9.1. While the Depository shall ensure that there is only one unique asset ID
assigned to an asset of the issuer, Debenture Trustee, on a yearly basis, shall
reconcile the list of assets recorded in the system for an Issuer and in case
any duplicate entry is found for an asset, shall take necessary steps to
eliminate such duplicate entries in the system and verify security cover thereof
and take remedial action, if required.
9.2. Any event which reduces the security cover below the mandated/ stipulated
limit, as per regulation 54 of SEBI LODR Regulations, shall be updated by the
issuer in the system immediately. Such event shall be termed as ‘trigger event’
and Depository shall send such trigger events’ alerts to all the concerned
stakeholders.
10. All issuers of debt securities shall ensure that the details are recorded in the
system before activation of ISIN11. Depositories shall allot or defreeze an existing
ISIN (in case of re-issuance), as applicable, only after confirming recording of
information in the system.
11. For existing outstanding debt securities, issuers were required to enter the details
in the system on or before January 31, 2023 and Debenture Trustees were
required to verify the same by February 28, 2023.
12. Issuers, Debenture Trustees, CRAs, etc. shall have such mechanism to execute
such functions as required for the system.
11 Applicable for all issues made on or after April 01, 2022
Page 26 of 91
Annex-IIIA
Registration of assets for initial due diligence
1. Type and nature of security offered
a. Immovable Property
b. Movable Fixed Assets
c. Current Assets viz., receivables, book debts
d. Intangible viz., IPRs, etc.,
e. Securities/ Other Financial Asset
f. Assignment of rights
g. Guarantee viz personal corporate, corporate guarantee, government
guarantee etc.
2. Details related to security offered – The required data to be to be filled along with
supporting documents, wherever applicable:
a. Asset description
i. Asset name
ii. Asset Details (in case of shares, it shall also include ISIN, Quantity,
Pledgee Demat ID, Pledgee Instrument ID)
iii. Asset Location (including address of the asset)
iv. Asset ownership details
b. Value of security offered: Issuer shall submit documents as required under
Chapter II of this operational circular and other documents given by Issuer
for ascertaining the existence, veracity and value of assets.
c. Documents related to existing encumbrance on assets/ security offered:
Issuer shall record following details in the system and/or submit documents:
i. For unencumbered assets, an undertaking that the assets on which
charge is proposed to be created are free from any encumbrances.
ii. For encumbered assets, on which charge is proposed to be created, the
Issuer shall submit documents in system as per para 2.1. (c) of Chapter
II of this operational circular and any other document required to be given
by the Issuer to the Debenture Trustee.
Page 27 of 91
Annex-IIIB
Manner of updation of charge creation details on System:
1. Issuer shall enter the following details related to charge created on system as and
when applicable:
1.1. Asset details
1.2. Type of Charge Creation
1.3. Charge holder
1.4. Amount
1.5. Date on which charge is created
1.6. Modification date
1.7. Charge Closure date i.e. redemption date.
2. System shall ensure every charge details recorded in the system shall have a
unique number. Therefore, an asset with a unique asset ID shall be mapped against
multiple charge IDs.
3. After registering the charge creation details on ROC, CERSAI and IU or any other
independent agency, Issuer, shall update the same on depository platform wherein
Issuer will enter the following details:
3.1. Date of application/ filing with statutory/ government authority
3.2. Details of any receipt or challan obtained by Issuer after filing.
3.3. List of documents submitted to Agency
3.4. Certificate/ document obtained from statutory/ government authority after
successful registration of charge.
4. An individual charge created maybe required to be registered with more than one
agency, hence depository may enable Issuer to upload the above mentioned
information for more than one agency.
Page 28 of 91
Annex-IIIC
Interest and principal payment details
1. Issuers shall fill all the requisite fields in at the time of creation of ISIN/ temporary
ISIN as specified by filling in the following details:
Item Details
 Name of Instrument
 Date of Information Memorandum
 Issue Size
 No. of Instrument
 Face Value (Rs.)
Interest Payment
 Rate of Interest
 Interest Amount to be paid on due date
 Record Date
 Frequency
 Due date for Interest Payment
 Name of Instrument
 Date of Information Memorandum
 Record Date
 Frequency
 Type of Redemption
 If Partial Redemption, then
- By Face Value Redemption
- By Quantity Redemption
 If Redemption is based on Quantity, specify
Redemption payment
whether on:
 Lot Basis
 Pro-rata basis
 Reason for redemption
 Redemption due to PUT option (if any)
 Redemption due to CALL option (if any)
 Quantity and Amount Redeemed
 Due date for Redemption/ Maturity
 Date of early Redemption (if any)
2. Issuers shall fill all the following requisite fields to update the status of payment
within one working day of payment/ redemption date or a change in the due date
of interest payment/ redemption payment as under:
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 Actual Date for Interest Payment
 Amount of interest paid
 Date of last Interest Payment
Updation by Issue on
 Reason for non-payment/ delay in payment
continuous basis –
 Change in Frequency of payment (if any)
Payment of Interest
 Date of Change
 Details of such change
 Change in Record Date
 Actual Date for Redemption
 Amount Redeemed
Updation by Issue on  Outstanding Amount (Rs.)
continuous basis –  Reason for non-payment/ delay in payment
Redemption payment  Date of previous redemption (part
redemption), if applicable
 Change in Record Date
Page 30 of 91
Annex-IIID
Asset ID = System Code + Asset Type + Asset Sub Type + Unique Number +
Check Digit
System Code 2 characters (‘IN’ – for all asset types and sub-types)
Asset type 2 character Alphanumeric
Asset sub-type 2 character Alphanumeric
Unique Number 5 character alphanumeric sequential (start with 00001 to
99999.
Post full utilization of numbering then prefix will start from
A-Z.)
Check Digit 1 digit
Page 31 of 91
Annex-IIIE
1. Common parameters across asset types: The following is an indicative list of
parameters which shall be captured for all categories of asset types and sub-
types to assign Asset ID:
a. Asset name
b. Short description of Asset
c. Asset type & sub-type
d. Address details of the assets including PIN Code for assets located in India,
wherever available.
e. Ownership details of the asset
f. Valuation details of the asset
g. Unique Identification Number, if any, provided by regulator/agencies and the
agency identifier.
h. Code along with Code Description in ERP (Enterprise Resource Planning)
system of the issuer, wherever available.
i. Code along with Code Description in FAR (Fixed Asset Register) of the issuer,
wherever available.
j. Validity/ Expiry date, if any.
k. Encumbrance/ lien details, if any.
2. Specific additional parameters for certain asset types: In addition to the above,
following parameters shall also be captured for these specific asset types and
subtypes.
Sr. Asset Asset Sub Parameters to compare for Duplicate
No. Type Type check
1. Immovable All a. Area of the property
Property (Residential, b. Geographical Co-ordinates (Latitude/
Commercial, Longitude).
Industrial,
Agriculture,
etc.)
2. Current Specific a. Details related to account maintained
Assets accounts such as Bank Name, account number,
maintained IFSC code etc.
(DSRA, b. Mode of maintenance of account
DRR, MRR (Current account/ Fixed Deposit/
etc.) Bank Guarantee etc.) and details
thereof.
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3. Securities/ Securities in a. Demat Account Number
other Demat form b. ISIN Number
financial c. Quantity
assets d. Pledgee and pledger details
4. Guarantees Government a. Issuing Authority
b. Government order number
c. Government order date
d. Guarantee Amount
Corporate a. Guarantor details such as Name of
company, address, net worth etc.
b. PAN/CIN No. for guarantors in India
c. For guarantors outside India
i. Unique Identification Number
provided by Regulator/ Authority
of the host country
ii. Issuing Regulator/ Authority
d. Guarantee Amount
Personal a. Guarantor details such as Name of
company, address, net worth etc.
b. PAN No for guarantors in India
c. For guarantors outside India
i. Passport Number
ii. Passport Issuing Country
Any other Unique Number
provided by regulator of the
host country along with name
of the regulator.
d. Guarantee Amount
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Chapter IV: Recovery Expenses Fund12
In order to enable the Debenture Trustee to take prompt action for enforcement/legal
proceedings in case of ‘default’ in listed debt securities, a ‘Recovery Expense Fund’
(REF) shall be created which shall be used in the manner as decided in the meeting of
the holders of debt securities.
1. Manner of creation and operation of REF
1.1. The issuer proposing to list debt securities shall deposit an amount equal to 0.01%
of the issue size subject to maximum of Rs. 25 lakhs per issuer towards REF with
the ‘Designated Stock Exchange’, as identified and disclosed in its Offer
Document.
1.2. The REF shall be created and maintained in the following form:
a. The issuer shall deposit cash or cash equivalent(s) including Bank Guarantees
towards contribution to this fund at the time of making the application for listing
of debt securities.
b. The Designated Stock Exchange shall invest such cash in the REF in
Government Securities or Treasury Bills or Fixed Deposits with a Scheduled
commercial bank or gilt or overnight mutual fund schemes and the
income/interest earned thereof shall be added to the REF of the issuer.
c. The issuer shall ensure that the Bank Guarantee remains valid for a period of
six months post the maturity date of the listed debt security. The issuer shall
keep the bank guarantee in force and renew the Bank Guarantee at least
seven working days before its expiry, failing which the Designated Stock
Exchange shall invoke such Bank Guarantee.
1.3. In case of any change in status of issuer of the listed debt securities on account
of corporate restructuring by way of Scheme of Arrangement etc., the Designated
Stock Exchange shall ensure that the amount maintained in the REF is available
as per paragraph 1.1 before issuing the ‘No-objection letter’ in that regard.
12 SEBI/HO/MIRSD/CRADT/CIR/P/2020/207 dated October 22, 2020 and
SEBI/HO/MIRSD/MIRSD_CRADT/CIR/P/2022/67 dated May 19, 2022
Page 34 of 91
2. Manner of utilization of Recovery Expense Fund:
2.1. In the event of default, the Debenture Trustee/ Lead Debenture Trustee shall
obtain the consent of holders of debt securities for enforcement/ legal proceedings
and shall inform the same to the Designated Stock Exchange. The Designated
Stock Exchange shall release the amount lying in the REF to the Debenture
Trustee/ Lead Debenture Trustee within five working days of receipt of such
intimation.
2.2. For the purpose of the provisions of this Chapter, Lead Debenture Trustee shall
mean:
1. A Debenture Trustee who is chosen as the Lead Debenture Trustee by other
Debenture Trustees; or
2. A Debenture Trustee who represents holders of more than 50% of the
outstanding value of debt securities.
2.3. The Debenture Trustee shall keep a proper account of all expenses incurred out
of the funds received from REF towards Legal expenses, cost for hosting
meetings etc. towards enforcement/ legal proceedings in relation to the Debt
securities.
3. Refund of REF to the Issuer
3.1. The balance in the REF shall be refunded to the issuer on repayment to holders
of debt securities on their maturity or at the time of the exercise of call or put
option, upon a ‘No Objection Certificate (NOC)’ being issued by the Debenture
Trustee to the Designated Stock Exchange.
3.2. The Debenture Trustee shall satisfy that there is no ‘default’ on any other listed
debt securities of the issuer before issuing the NOC.
4. Verification of creation of REF
4.1. In order to ensure independent verification by a Debenture Trustee regarding
creation of REF by issuer, Debenture Trustee shall take confirmation from
Designated Stock Exchange or any other independent source in writing regarding
the creation of REF by the issuer and shall not rely solely upon the communication
by the issuer.
4.2. The Stock Exchange shall disclose on their websites, the amount of REFs created
by the issuers on a half yearly basis. Such disclosure shall also include the details
of the Debenture Trustee for the debt securities.
Page 35 of 91
Chapter V: Security Cover Certificate13
In terms of regulation 54 read with regulation 56(1)(d) of SEBI LODR Regulations,
Issuers are required to disclose security cover to Stock Exchange and Debenture
Trustee. The obligations of the Issuer and the Debenture Trustee with respect to
preparation and submission of security cover certificate are given as under:
1. Manner of preparation of security cover certificate by the Issuer:
1.1 The Issuer shall be required to prepare the security cover certificate on
quarterly basis and the statutory auditor of the Issuer shall certify the book
values of the assets provided in such certificate.
1.2 The Issuer shall provide the values in the format under the market values
column including the reference date based on which the market value has been
arrived at and the certificate shall be submitted to the Debenture Trustee. In
case of loans/ receivables or any other asset offered as security and the market
value is not ascertainable in the specific quarter, then the Issuer may provide
the carrying value/ book value as per the format for security cover is enclosed
at Annex-VA. However, the Issuer shall provide the justification for not
providing the market value along with the certificate in that quarter.
1.3 The frequency of valuation for asset classes offered as security by the Issuer
shall be as under:
a) In case of asset classes wherein frequency of valuation has been
prescribed by SEBI, the market value shall be provided, accordingly, in the
security cover certificate.
b) For the asset classes wherein there is no regulatory guideline on frequency
of the valuation of a specific asset class then it shall be on quarterly basis.
1.4 In case, the issuer has more than one Debenture Trustee for its listed debt
securities, then the Issuer shall prepare such certificate separately for each
Debenture Trustee.
1.5 The assets that are not paid for shall not be included as part of any security
cover calculation.
1.6 In case security cover offered for the debt securities comprises the assets of
the Issuer only, the security cover shall be prepared on standalone basis.
13 SEBI/HO/MIRSD/MIRSD_CRADT/CIR/P/2022/67 dated May 19, 2022
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1.7 In case debt securities are secured by creation of charge on the assets of a
third party/ subsidiary/ group/ holding company; or assets of the Issuer are
offered for securing the debt securities issued by a third party/ subsidiary/
group/ holding company; or assets of the Issuer are offered for securing the
other liabilities of third party/ subsidiary/ group/ holding company, the Issuer
shall make disclosure in two separate tables on security cover as follows:
a) Table for security cover on standalone basis for the Issuer and;
b) Table on net summary basis on consolidated level in order to provide the
overall/ holistic picture of the borrowings and security cover provided by
the Issuer.
1.8 Obligations of the Issuer in case of third party/ subsidiary/ group/ holding
company assets being offered as underlying security:
a) The book value for security cover shall be certified by the statutory auditor
of the third party/ subsidiary/ group/ holding company with respect to third
party/ subsidiary/ group/ holding company assets being offered as
underlying security.
b) In case, security cover comprises exclusive charge on third party/
subsidiary/ group/ holding company assets, the security cover certified by
the statutory auditor of the concerned third party/ subsidiary/ group/
holding company shall include details of such assets including the book
value of such assets.
c) In case, security cover comprises pari-passu charge/ second/ third
charge on third party/ subsidiary/ group/ holding company assets, the
security cover certified by the statutory auditor of the concerned third
party entity shall include the detail of all encumbrances on such assets.
1.9 Further, in order to adequately capture details regarding other debt securities,
viz. unsecured debentures, subordinated debt, other debt issuances which fall
in the lower priority order in the waterfall mechanism for liquidation/ resolution
proceeds, an additional column named “Debt not backed by any assets offered
as security” shall be incorporated in the security cover certificate and the same
shall be covered under such column.
2. Manner of preparation and submission of security cover certificate by
Debenture Trustee(s)
2.1 Debenture Trustee on a quarterly basis shall certify the market value of assets
based on the due diligence carried out by it or through independent
professionals and shall submit the security cover certificate as per Annex-VA.
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Debenture Trustee shall certify the security cover in respect of the secured debt
securities, to the extent that the security is held by it.
2.2 In case the Issuer has more than one Debenture Trustee for its listed debt
securities, then Debenture Trustees may choose a common independent
professional for preparation of security cover certificate.
2.3 In case of reduction in the computed value of security cover in comparison to
the previous quarter or previously calculated security cover, the Debenture
Trustee shall record the reason for such variation in the security cover
certificate. Clarification, if any, in this regard, may be obtained by Debenture
Trustee from the Issuer.
3. Calculation of Security Cover Ratios
In order to standardize calculation of security cover ratio as prescribed in Annex-
VA, the following formulas shall be used:
3.1 Exclusive security cover shall be calculated in the following manner:
Value of assets having 𝐸𝑥𝑐𝑙𝑢𝑠𝑖𝑣𝑒 charge
Exclusive 𝑆𝑒𝑐𝑢𝑟𝑖𝑡𝑦 𝐶𝑜𝑣𝑒𝑟 =
outstanding value of corresponding debt + Interest accrued
3.2 Pari-passu security cover shall be calculated in the following manner:
Value of assets having pari−passu charge
Pari-passu 𝑆𝑒𝑐𝑢𝑟𝑖𝑡𝑦 𝐶𝑜𝑣𝑒𝑟 =
outstanding value of corresponding debt + Interest accrued
4. Affixing Unique Document Identification Number (UDIN) to the security
cover certificates:
The security cover certificates as required under the provisions of this operational
circular shall contain, as applicable, the UDIN generated in the manner prescribed
by the relevant regulatory authority.
5. Qualifications/ disclaimers in security cover certificates:
The Debenture Trustee shall ensure that the qualifications/ disclaimer (by
whatever name called), does not impair the rights of holders of debt securities in
terms of security provided. Further, if the Debenture Trustee is of the opinion that
Page 38 of 91
such qualifications/ disclaimer are affecting the rights of holders of debt securities,
the Debenture Trustee shall take corrective action in this regard.
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Annex-VA
Format of Security Cover Certificate
Column B Colum n Colum n Colum n Column Column Gv Colum Column Colum Column K Column L Column M Column N Column O
Column A C i Dii Eiii Fiv n Hvi Ivii n J
Exclusive Exclusive Pari- Pari- Pari-Passu Assets Elimination (Total Related to only those items covered by this certificate
Charge Charge Passu Passu Charge not (amount in C to H)
Charge Charge offered
negative
Particulars as )
Security
Assets Other debt Carrying /book Carrying
shared by assets on amount value for value/book
Pari- which considered exclusive charge value for pari-
D o w c e f e h s a r c i t s c i r s f h i e i p c t t t a h f i t o o i e s n r Debt for Debt for p h a d o s e s ld u b e t r th P p e a a r s r e s i u - i s th ( a m d n u o o e r n e t c o e V c M a A h l a s a u r s r e k e g f e t e o s t d r a m n s o a s t r e k ts e t w v h a e lu re e is V M a P l a u a r e r k i f e - o t r p a m n s a o a s s t r e s k t u s e c t w h v h a a r e l g u re e e is Value T (= ot K a + l L +M+
relate which which (includes charge exclusive on ascertainable or passu ascertainable or N)
this Other this debt for (excluding plus, pari- Exclusive applicable charge applicable
certificate Secured certificate which items passu basis (For Eg. Bank Assetsviii (For Eg. Bank
being Debt being this covered charge) Balance, DSRA, Balance, DSRA,
issued issued certificate in column market value is market value is
is issued & F) not applicable) not applicable)
other
debt
with pari- Relating to Column F
passu
charge)
Book Book Yes/ No Book Book
Value Value Value Value
ASSETS
Property,
Plant and
Equipment
Capital
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Work-in
Progress
Right of
Use Assets
Goodwill
Intangible
Assets
Intangible
Assets under
Development
Investments
Loans
Inventories
Trade
Receivables
Cash and
Cash
Equivalents
Bank
Balances
other than
Cash and
Cash
Equivalents
Others
Total
LIABILITIE S
Page 41 of 91
Debt
securities to
which this
certificate
pertains
Other debt
sharing pari-
passu charge
with above
debt
Other Debt
Subordinated
debt
not to
Borrowings be filled
Bank
Debt
Securities
Others
Trade
payables
Lease
Liabilities
Provisions
Others
Total
Cover on
Book
Value
Page 42 of 91
Cover on
Market
Valueix
Exclusive Pari-Passu
Security Security
Cover Cover
Ratio Ratio
i. This column shall include book value of assets having exclusive charge and outstanding book value of debt for which this certificate is issued.
ii. This column shall include book value of assets having exclusive charge and outstanding book value of all corresponding debt other than column C.
iii. This column shall include debt for which this certificate is issued having any pari-passu charge - Mention Yes, else No.
iv. This column shall include a) book value of assets having pari-passu charge b) outstanding book value of debt for which this certificate is issued and c).
other debt sharing pari-passu charge along with debt for which certificate is issued.
v. This column shall include book value of all other assets having pari-passu charge and outstanding book value of corresponding debt.
vi. This column shall include all those assets which are not charged and shall include all unsecured borrowings including subordinated debt and shall
include only those assets which are paid-for.
vii. In order to match the liability amount with financials, it is necessary to eliminate the debt which has been counted more than once (included under
exclusive charge column as also under pari-passu). On the assets side, there shall not be elimination as there is no overlap.
viii. Assets which are considered at Market Value like Land, Building, Residential/ Commercial Real Estate to be stated at Market Value. Other assets
having charge to be stated at book value/Carrying Value.
ix. The market value shall be calculated as per the total value of assets mentioned in Column O.
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Chapter VI: Periodical/ Continuous Monitoring by Debenture Trustee14
A Debenture Trustee shall undertake independent periodical assessment of
compliance with covenants or terms of the issue of listed debt securities.
1. Monitoring of security created/ assets on which charge is created
1.1. Chapter II of this operational circular has prescribed the manner in which
Debenture Trustees shall carry out due diligence for creation of security at the
time of issuance of debt securities. As required under Regulation 15(1)(s) &
15(1)(t) of the DT Regulations, Debenture Trustee shall carry out due diligence
on continuous basis.
1.2. Towards this, the issuer and the Debenture Trustee shall ensure that the terms
and conditions relating to periodical monitoring are incorporated in the debenture
trust deed15. These terms and conditions shall, inter-alia, entail that the Issuer
shall provide relevant documents/ information within a considerable timeline so
as to enable the Debenture Trustee shall submit the following reports/ certification
to Stock Exchange within the timelines specified:
Reports/Certificate Periodicity
Security cover Certificate (in the format as Quarterly basis within 75 days
specified in Annex-IIIA to this operational from end of each quarter except
circular) last quarter when submission is to
be made within 90 days.
A statement of value of pledged securities
A statement of value for Debt Service Reserve
Account or any other form of security offered
Net worth certificate of guarantor in case debt Half yearly basis within 75 days
securities are secured by way of personal from end of each half-year.
guarantee)
Financials/value of guarantor prepared on Annual basis within 75 days from
basis of audited financial statement etc. of the end of each financial year.
guarantor(secured by way of corporate
guarantee)
Valuation report and title search report for the once in three years within 75 days
immovable/movable assets, as applicable. from the end of the financial year.
14 SEBI/HO/MIRSD/CRADT/CIR/P/2020/230 dated November 12, 2020
15 For existing debt securities as on November 12, 2020 vide circular SEBI/HO/MIRSD/CRADT/CIR/P/2020/230,
listed entities and debenture trustee(s) were given 120 days to enter into supplemental/amended debenture trust
deed incorporating the changes in the debenture trust deed
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1.3. Further, in case of pari-passu charge, wherein multiple Debenture Trustees are
holding charge over the same assets, a lead Debenture Trustee may be decided
amongst the Debenture Trustees based upon the amount of the charge each
Debenture Trustees holds and accordingly the exercise of carrying out the
valuation and preparation of the valuation report may be carried out by the lead
Debenture Trustees.
2. Monitoring of covenants16
2.1. On a quarterly basis, the Issuer shall furnish to the Debenture Trustee the
compliance status with respect to financial covenants of the listed debt securities
which shall be certified by the statutory auditor of the Issuer.
2.2. Regulation 15(f) of the DT Regulations mandates the Debenture Trustee to
monitor the breach of covenants. In order to ensure effective monitoring, a
Debenture Trustee shall:
a) Establish board approved internal policies with respect to proactive and
effective monitoring of breach of covenants and such policy shall inter-alia
include:
i. procedure of monitoring of breach of covenants; and
ii. clearly defined role and responsibilities of the employees engaged in the
process of monitoring of breach of covenants including delegation of
authority with respect to the process of monitoring of breach of
covenants.
b) Formulate the category wise list of covenants applicable to the particular
issuance defining the frequency of each covenant to be monitored viz.
continuous, quarterly, half-yearly, annual etc. The covenants may be
categorized as financial covenants, affirmative covenants, negative covenants
etc. A guidance notes for the list of covenants prepared in consultation with
Debenture Trustees is enclosed as Annex-VIA.
c) Initiate action in case of breach of covenants viz. accelerated payment,
borrowing restriction, not to declare dividend before payment, declaration of
event of default, etc. in accordance with the terms of issue/ Offer Document/
Debenture Trust Deed.
d) Independently monitor any breach of covenants from continuous monitoring of
any public disclosure on Stock Exchange, company filings, news articles in
electronic/ print media or any information available in public domain apart from
periodical information/ documents submitted by the issuer.
16 SEBI/HO/MIRSD/MIRSD_CRADT/CIR/P/2022/67 dated May 19, 2022
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e) Furnish a status report on its website and to the Stock Exchange for further
dissemination on a quarterly basis. Such status report shall contain the
covenants breached in the preceding quarter and the actions taken by the
Debenture Trustee for the same as per the format prescribed under Chapter
VI of this operational circular.
3. Disclosures by Debenture Trustee17:
3.1. In order to enhance transparency with respect to the no-objection certificate
(NOC)/ no-dues certificate/ consent/ permission (by whatever name called) issued
by the Debenture Trustee, it shall make the following disclosures to the Stock
Exchange:
a) No-objection Certificate (NOC)/ no-dues certificate/ consent/ permission (by
whatever name called) issued by Debenture Trustee to the Issuer in terms of
contractual obligations arising out of offer document/ debenture trust deed or
any other transaction document related to debt securities, including the
consent/ NOC for further borrowing by issuer within two working days of
issuance of such consent/ no-objection certificate; and
b) Any breach of the minimum security cover within two working days of such
breach.
17 SEBI/HO/MIRSD/MIRSD_CRADT/CIR/P/2022/67 dated May 19, 2022
Page 46 of 91
Annex-VIA
Guidance note on list of Covenants
Sr. Category Sub-type (As applicable) Covenant (As applicable)
No.
1. Accounts/  Debt Service Reserve amount  Covenant as to amount to be
funds/  Interest Service Reserve maintained, manner of creation
reserves Account and/or funding of account, Date
maintained  Major maintenance reserve till required to be maintained or
 Escrow account/RERA account date on which to be created,
manner of creation including
 Debenture Redemption
period for renewal,
Reserve
replenishment, invocation
 Debenture Reserve Fund
(amount, date, period, etc.),
 Recovery Expense Fund
manner of maintenance (ratio,
 Account details
percentage etc.), bank account
 Any other Fund/Account
number (if applicable) etc.
2. Financial  Debt Service Coverage Ratio  Covenant as to maintenance as
(DSCR) a ratio or percentage of ….
 Interest cover (state), Not less than/ Not
 Net Debt to EBITDA exceeding x, Time Bucket etc.
 Gross Debt to EBITDA
 Debt cap
 Debt Equity ratio
 Debt/Tangible Net Worth
 Gross Non-Performing Assets
 PAR 90 and write off
 Net Non-Performing Assets/
Tangible Net
 Worth
 Debt to Value Ratio
 CAR (Capital Adequacy Ratio)
(Tier I
 CAR)
 Current Ratio
 Dividend ratio (Dividend/PAT)
 Liquidity
 Asset liability mismatch
 Any other ratio (state the ratio
and define the formula)
 Payment of Interest on due
dates
 Payment of principal on due
dates
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3. Affirmative  Security Cover as per terms of  Covenant as to Ratio or
Issue percentage, not less than, third
 Title of Security/asset party interest/title, rentals,
negative lien, insurance, ROC
and CERSAI filing etc.
4. Affirmative or  Credit rating  Covenant as to minimum rating
restrictive  Credit downgrade (Rating symbol), Standalone
basis, consolidated, CE/SO
rating, notch downgrade, etc.
5. Negative  Purpose/end-use  Change in Key Managerial
 Change in nature and conduct Personnel (KMP), Auditor,
of business Board of Directors,
 Change in management shareholding, restriction with
 Fund raising/ borrowing/ amount, date till which
encumbrance applicable, any change or
restriction with specifics,
modification of charge/ creation
of further charge,
indebtedness/further investment
etc.
6. Default  Default of principal or interest or  Covenant as to extra interest
both payable, cure period allowed,
 Security creation default investment allowed,
additional infusion required etc.
Page 48 of 91
Chapter VII: Disclosures on the website of a Debenture Trustee 18
1. Disclosure by Debenture Trustee on its website
The Debenture Trustee shall make the following disclosures on its website as
specified below:
Disclosures Periodicity Format
Revision in Credit ratings Continuous basis within Table 1 of Annex-VIIA
T+1 day from receipt of
information
Status of payment of Table 2 of Annex-VIIA
principal by the Issuer
interest
Monitoring of security cover Q u a rterly basis within 75 Table 3 of Annex-VIIA
certificate and Quarterly days of end of each quarter
compliance report of the except last quarter when
Issuer. submission is to be made
within 90 days
Details of Debenture issues Half-yearly basis within Table 4 of Annex-VIIA
handled by Debenture 75 days of the end of each
Trustee and their status half-year
Status of information Table 5 of Annex-VIIA
regarding breach of
covenants/terms of the
issue, if any action taken by
debenture trustee
Complaints received by Table 6 of Annex-VIIA
debenture trustee(s)
including default cases
Status regarding Annual basis within 75 Table 7 of Annex-VIIA
maintenance of days of the end of the
accounts maintained financial year
under supervision of
debenture trustee
Status of information Table 8 of Annex-VIIA
regarding any default by the
Issuer and action
taken by debenture trustee
Monitoring of Utilization Table 3 of Annex-VIIA
Certificate
18 SEBI/HO/MIRSD/MIRSD_CRADT/CIR/P/2022/67 dated May 19, 2022 and
SEBI/HO/MIRSD/CRADT/CIR/P/2020/230 dated November 12, 2020
Page 49 of 91
2. Disclosure of compensation arrangement with clients by Debenture Trustee
on its websites19
A Debenture Trustee shall disclose the nature of compensation arrangement with its
clients on its website, including the minimum fee to be charged (in absolute terms or
as a percentage of the issue size) and factors determining the same.
3. Calendar of interest/ redemptions, due and paid, to be displayed on the
website of Debenture Trustee for the financial year
3.1. A Debenture Trustee shall display on its website the ISIN wise details of interest/
redemption due to the holders of listed debt securities in respect of all issues
during a financial year within five working days of start of financial year.
3.2. A Debenture Trustee shall also update such details for any new issue of debt
securities handled during the financial year within five days of closure of the Issue.
3.3. A Debenture Trustee shall also update the status of payment ISIN-wise against
such issuers not later than one day from the due date. In case the payment is
made with a delay by the issuer, Debenture Trustee shall update the calendar
specifying the date of such payment, with a remark ‘delayed payment’.
19 SEBI/ HO/ MIRSD/ DOS3/CIR/P/2019/68 dated May 27, 2019
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Annex-VIIA
1. Revision in Credit ratings
S. No. Name of the Listed ISIN Immediate Previous Credit Rating Revised Credit Rating
Entity
Credit Date of Credit Rating Credit Credit Rating Date of Hyperlink of the press
Rating Rating Agency Rating Agency Review releases by the Credit rating
Agency
2. Status of payment of interest/principal by the listed entity
S.No. Name of the listed ISIN Due Date of Actual date of Status of Payment Date of information Date of Details of
entity Payment of Payment of (Default / Delayed / given to Exchange information given action taken
Interest/ Interest/ Non-Cooperation, by the debenture to CRA by the by debenture
Principal Principal No trustee debenture trustee trustee, if
Information etc.) any
3. Monitoring of Utilization Certificate and Security Cover
Name of Issue Issue Whether Periodical Utilization Certificate Security cover
the listed Type size (in Secured/ status/performance Certificate
entity (Public/ ₹ Unsecured reports/ Quarterly Date of Delay (if Security Security Date of Delay (if any
(including Privately crores) Compliance receipt of any) & Cover cover ratio Security in
ISIN ) placed reports/ Financial the reasons Certificate maintained cover submission)
listed) statements certificate (including provided by certificate & reasons
submitted by the follow up (debenture (including
listed entity
done by trustee/ follow up
(Yes/No)
debenture statutory done by
trustee) auditor/other debenture
pls specify) trustee)
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4. Details of Debenture issues handled by debenture trustee and their status
Type Debenture issues at end of last Debenture issues accepted Debenture issues fully redeemed Debenture issues outstanding as Cumulating
half year ended March / Sep during half year ended March / during half year on last day of half year issues
20… Sep 20… ended March / Sep 20… ended March / Sep 20… handled up
to the half
year ended
March /
Sep 20…
Secured Unsecured Total Secured Unsecured Total Secured Unsecured Total Secured Unsecured Total No. Amt.
No. Amt. No. Amt. No. Amt. No. Amt. No. Amt. No. Amt. No. Amt. No. Amt. No. Amt. No. Amt. No. Amt. No. Amt.
Public
Rights
Privately
Placed
Listed
Total
5. Status of information regarding breach of covenants/terms of the issue, if any action taken by debenture trustee
S. No. Name of Covenants / Security to be Date of Date of Date of intimation Delay if any (in no. of Reasons Further action
the Listed terms of enforced due to actual detecting given to debenture days) for the taken, if any
Entity issue (if any breach of
breach the breach holders, stock delay
(ISIN) ) breached covenant/terms of by the exchanges, SEBI, In detecting In
debenture etc. (if applicable)
during the issue including the breach intimation
trustee
quarter
any revised due
date (if any)
Page 52 of 91
6. Complaints received by Debenture Trustee including default cases
No. of pending No. of No. of complaints No. of complaints Nature of the Complaint(s) Steps taken to Remarks, if
Complaints at complaints resolved during pending at the end resolve the any
Delay in Delay in Any
the end of last received the half year of half year (for pending
other
half year during the (within more than 30 days) complaints
payment of payment
half year 30 days)
of interest
redemption
7. Status regarding maintenance of accounts maintained under supervision of Debenture Trustee
a. Debenture Redemption Reserve/Debenture Redemption/ maintenance of funds as per Companies (Share Capital and Debentures) Rules, 2014
S.N Name of the Issue Type Type of Issue Size ISIN (that is Amount Status of maintenance of DRR Details of
o. Listed Entity (Public/ entity (in ₹ crores) maturing in outstanding (15%/ 10% of the amount maturing action taken, if
Privately (NBFC/ the current in the year, applicable as per any
placed HFC/FI/ FY) Companies
listed)
Other) (Share Capital and Debentures)
Rules, 2014)
b. Recovery expense fund
S.N Name of the Type of Issue Issue Size/ Value Any addition in the Details of usage of the Additional remarks
o. Listed Entity (Public/ Size (in of recovery Recovery Expense funds, if any , during the
(including ISINs) Privately ₹ fund fund during the quarter quarter
Placed) crores) maintained
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c. Accounts/ funds to be maintained in case of Municipal Debt Securities
S.No. Name of the Type of Issue Issue Size Size/ Value of Fund/account maintained Action taken by
Listed Entity (Public/ Privately (in ₹ crores) debenture trustee, if any
Placed) (in case of shortfall etc.)
No lien escrow Interest payment Sinking fund
account account account
8. Status of information regarding any default by listed entity and action taken by Debenture Trustee
Name of Issue Issue Secured Default of Year Date of Result of the voting (receipt of Date of Date of Date and Date of
the listed Type size / interest/ of intimating/ consents), if applicable convening enforcement details of conclusion
entity (Public/ (in ₹ Unsecured redemption default sending the of security any other of recovery
(including Privately crores) amount (1st/ notice to Negative Positive Other meeting (Filing with actions proceeding
ISIN) placed (Yes/ No) 2nd/ the consent for consent consent of DRT/NCLT (Appointment s
listed) along with 3rd/ ..) debenture enforcement for s, if any debenture as of
the amount holders of security signing holders applicable) nominee
outstanding the ICA director,
joining
ICA, etc. )
Page 54 of 91
Chapter VIII: Provisions relating Debenture Trust Deed, Sharing and
Dissemination of Information by Debenture Trustee
1. Contents of Debenture Trust Deed20
Certain clauses that are included in the trust deed, limit or extinguish the obligations
of Debenture Trustee in relation to any rights or interests of holders of debt securities
or are in conflict with the provisions of the DT Regulations. Such clauses in the existing
or new debenture trust deed shall not be applicable and shall stand null and void.
2. Sharing of information regarding Issuer between Debenture Trustees and
CRAs21
2.1. DT Regulations require the Debenture Trustees to share information regarding
the Issuers that are their clients, with CRAs. The purpose of the said requirement
is to enable CRAs to perform their obligations effectively.
2.2. Towards this, Debenture Trustees and CRAs shall share information including but
not limited to, as specified in Annex-VIIIA, in respect of issues/ issuers which
would help them in effective discharge of their duties.
2.3. Debenture Trustees and CRAs shall assign designated email addresses for
sending and receiving such information and ensure appropriate action, if any,
based on the information received.
3. Monitoring of payment of Interest/ repayment of Principal and sharing of such
information with CRAs by Debenture Trustees22
3.1. Debenture Trustee shall have adequate systems to ascertain the status of
payment of interest/ repayment of principal by the Issuer on due dates in timely
manner and efficiently share such information with the CRAs which shall include
the following:
3.1.1. The Debenture Trustee shall, at least seven days prior to the due date of
payment of interest/ repayment of principal, seek ISIN-wise information from
Issuers regarding the status of payment of interest/ repayment of principal
on or before the due date. While seeking such information, the Debenture
Trustee shall also intimate to CRAs.
3.1.2. If the Issuer confirms the status of such payment/ repayment or where no
information is received from the Issuer on or before the due date, the
20 Circular No. CIR/MIRSD/25/2011 dated December 19, 2011;
21 Circular CIR/MIRSD/3/2013 dated March 15, 2013;
22 SEBI/HO/MIRSD/MIRSD3/CIR/P/2017/ 72 dated June 30, 2017
Page 55 of 91
Debenture Trustee shall accordingly provide ISIN-wise information to the
CRAs latest by one day after such due date which shall state the following:
a) Information about payment made on or before the due date or;
b) Information about delay/ default in payment or;
c) No information forthcoming from the Issuer on the payment status.
3.1.3. In cases where the CRAs have been informed as per point no. 3.1.2 above
that no information is forthcoming from the Issuer on the payment/
repayment status, the Debenture Trustee shall update the payment/
repayment status to CRAs as and when any such information is available
with the Debenture Trustee.
3.2. The Debenture Trustee shall also ascertain the status of payment/ repayment by
the Issuer on the due dates from various independent sources available at its
disposal which, inter alia, include the websites of Stock Exchanges, holders of
listed debt securities and quarterly reports submitted by Issuer.
3.3. The Debenture Trustee in its communication to the Issuer as mentioned in point
no. 3.1.1 above shall inform that non-furnishing of information regarding status of
payment/ repayment by due date or non-disclosure of information with respect to
timely payment by the Issuer on Stock Exchange website may be considered as
suppression of material information and may attract provisions of Section 12A of
the Securities and Exchange Board of India Act, 1992 and SEBI (Prohibition of
Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations,
2003.
3.4. If no information regarding payment/ repayment by the Issuer is received by the
Debenture Trustee by due date or such information is not disclosed by the Issuer
on the Stock Exchange website, then, the Debenture Trustee shall make
reference to SEBI accordingly and disclose the non-availability of such
information on its website. Failure to make such reference to SEBI and non-
disclosure on the website shall be considered as aiding and abetting the Issuer in
suppression of material information and may attract provisions of Section 12A of
the Securities and Exchange Board of India Act, 1992 and SEBI (Prohibition of
Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations,
2003.
4. Dissemination of Information on Listed Debt Securities23
The Debenture Trustee shall disclose the information to the holders of debt
securities and the general public by issuing a press release regarding default by
Issuer to pay interest on listed debt securities or redemption amount, failure to
create a charge on the assets and revision of rating assigned to the listed debt
23 SEBI/HO/MIRSD/MIRSD3/CIR/P/2017/ 72 dated June 30, 2017
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securities. Further, such information shall also be placed on the website of the
Debenture Trustee, the issuer and the stock exchanges. It is clarified that such
actions shall be taken by the Debenture Trustee promptly and in any case not later
than next day of the occurrence of such events.
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Annex-VIIIA
Sharing of information between Debenture Trustees and Credit Rating Agencies
1. Information from Credit Rating Agencies to Debenture Trustees
a) Rating assigned/revised for debt securities along with the rationale for the same.
b) Press release, outstanding ratings etc. in respect of debt securities.
c) Non-cooperation by the issuers with respect to sharing necessary information for
monitoring the credit quality of the rated instrument with Credit Rating Agencies.
d) Press release and separate communication to Debenture Trustee on withdrawal
of rating post redemption of entire amount due towards.
2. Information from Debenture Trustees to Credit Rating Agencies
a) Whether the asset in respect of which security has been created is free from any
encumbrance and adequate to ensure security cover for the debt securities or if
there is any breach of the terms of creation of the security. This information shall
be shared on a half yearly basis.
b) Funds transferred to Debenture Redemption Reserve (DRR), depletion of the DRR
/invocation of guarantee which could affect the payment of debt obligations. This
information shall be shared annually.
c) Details of redemption of the issue.
d) Any default committed including the default in payment of interest or redemption
of debt or delay in creation of security.
e) Any change or restructuring of the terms of the issue.
f) Periodic reports from lead banks about the progress of the project for which funds
have been raised through debentures and certificate from issuer's auditors in
respect of utilization of funds.
g) Details of grievances filed by debenture-holders and action taken to resolve them.
h) Non-cooperation by the issuer with respect to furnishing required reports/
certificates/ information.
Information pertaining to points c to h shall be shared on receipt.
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Chapter IX: Redress of Investors’ Grievances
The primary obligation on resolution of complaints is that of the issuer. The dispute
resolution mechanism administered by stock exchanges covers such listed companies
and the holders of debt securities.
1. Investor Charter24
1.1. In order to facilitate investor awareness about various activities where an investor
has to deal with Debenture Trustees for availing various services, SEBI has
developed an Investor Charter for Debenture Trustees, inter-alia detailing the
services provided to Investors, timelines for various Debenture Trustee services
provided, Rights and Obligations of Investors and Grievance Redress
Mechanism.
1.2. In this regard, all the registered Debenture Trustees shall take necessary steps
to bring the Investor Charter, as provided at ‘Annex–IXA’ to the notice of investors
by way of:
a) disseminating the Investor Charter on their websites/through e-mail;
b) displaying the Investor charter at prominent places in offices etc.
1.3. Trustee Association of India (TAI) shall also disseminate the Investor Charter on
its website.
1.4. Additionally, in order to bring about transparency in the Investor Grievance
Redress Mechanism, it has been decided that all the registered Debenture
Trustees shall disclose on their respective websites, the data on complaints
received against them or in respect of debt securities issues dealt by them and
redress thereof, latest by seventh of the succeeding month, as per the format
enclosed at Annex-IXB to this operational circular.
2. Exclusive e-mail ID to redress of Investor Complaints25
In order to address the issue of having a direct and quicker forum for enabling
investors to register their complaints expeditiously, a Debenture Trustee shall
designate an e-mail ID of the grievance redress division/ compliance officer
exclusively for the purpose of registering complaints by investors. It shall display the
email ID and other relevant details prominently on its website and in the various
materials/ pamphlets/ advertisement campaigns initiated by it for creating investor
awareness.
24 SEBI/HO/MIRSD/MIRSD_CRADT/P/CIR/2021/675 dated November 30, 2021
25 MIRSD/DPS III//Cir-01/07 dated January 22, 2007
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3. Redress of investor grievances through SEBI Complaints Redress System
(SCORES) platform26
3.1. The Debenture Trustee shall send its details, in the format specified in Annex-
IXC to SEBI in hard copy and by email to scores@sebi.gov.in and obtain
SCORES user id and password immediately within a period of one month from
the date of registration. The email-id to be furnished by the Debenture Trustee for
receiving SCORES user id and password from SEBI has to be preferably a
corporate email id and necessarily a permanent one. Failure by any SEBI
registered Debenture Trustees to obtain the SCORES user ID and password
would not only be deemed as non-redress of investor grievances but also indicate
willful avoidance of the same.
3.2. The Debenture Trustee shall submit the details in hard copy (Annex-IXC) to the
Department/ Division of SEBI which has granted them registration to operate in
the securities market. SCORES user id and password of the Debenture Trustee
shall be created only after receiving approval from the concerned Department/
Division of SEBI.
3.3. The Debenture Trustee shall review its investors’ grievances redress mechanism
so as to further strengthen it and correct the existing shortcomings, if any. The
SEBI registered Debenture Trustee to whom a complaint is forwarded through
SCORES, shall take immediate efforts on receipt of a complaint, for its resolution,
within thirty days. The SEBI registered Debenture Trustee shall keep the
complainant duly informed of the action taken thereon.
3.4. The Debenture Trustee shall update the ATR along with supporting documents,
if any, electronically in SCORES. ATR in physical form need not be sent to SEBI.
The proof of dispatch of the reply of the SEBI registered Debenture Trustee to the
concerned investor should also be uploaded in SCORES and preserved by the
SEBI registered Debenture Trustee, for future reference.
3.5. Action taken by a Debenture Trustee will not be considered as complete if the
relevant details/ supporting documents are not uploaded in SCORES and
consequently, the complaints will be treated as pending.
3.6. A complaint shall be treated as resolved/ disposed/ closed only when SEBI
disposes/ closes the complaint in SCORES. Hence, mere filing of ATR by a
Debenture Trustee with respect to a complaint will not mean that the complaint is
not pending against them.
26 Circular No. CIR/ OIAE/ 1/ 2014 dated Dec 18, 2014
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3.7. Failure by a Debenture Trustee to file ATR under SCORES within thirty days of
date of receipt of the grievance shall not only be treated as failure to furnish
information to SEBI but shall also be deemed to constitute non-redress of investor
grievance.
4. Dissemination of Information regarding Grievance Redress Mechanism27
For information of all investors who deal/ invest/ transact in the market, the following
shall be prominently displayed in the offices of Debenture Trustees:
Dear Investor,
In case of any grievance / complaint against the Intermediary:
Please contact Compliance Officer of the Intermediary (Name and Address) /
email-id (xxx.@email.com) and Phone No. - 91- XXXXXXXXXX.
You may also approach CEO / Partner / Proprietor (Name) / email id
(xxx.@email.com) and Phone No. - 91-XXXXXXXXXX.
If not satisfied with the response of the intermediary, you can lodge your
grievances with SEBI at http://scores.gov.in or you may also write to any of the
offices of SEBI. For any queries, feedback or assistance, please contact SEBI
Office on Toll Free Helpline at 1800 22 7575 / 1800 266 7575
27 CIR/MIRSD/3/2014 dated August 28, 2014;
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Annex–IXA
INVESTOR CHARTER – DEBENTURE TRUSTEES
1. Vision and Mission Statement for Investors
Vision:
 Strive to protect the interest of investors in debt securities by acting as a trusted
Debenture Trusteeship service provider.
Mission:
 To safeguard the interests of the investors in listed debt securities through
adherence to regulatory guidelines.
 To achieve highest level of operational efficiencies through well-defined internal
processes and domain expertise.
2. Details of services provided by Debenture Trustee.
 Facilitating documentation, exercising due diligence and timely creation of security
for debt securities.
 Ensuring creation of securities by the Issuer and holding of security including safe
custody of documents.
 Monitoring of payment of interest/redemption of principal.
 Monitoring security cover and other financial covenants.
 Dissemination of rating revision/ payment of interest/ redemption information by
disclosing on Trustee’s website/ with Credit Rating Agencies/ Stock Exchanges
 Timely and Effective resolution of investor complaints.
 Ascertain that the debentures have been converted or redeemed in accordance
with the conditions under which they were offered to the investors.
 Enforcement of security as per terms of issue/ regulatory guidelines.
 Appoint a nominee director on the Board of the Issuer in case of event of default.
 Exercise due diligence to ensure compliance with the provisions of the Companies
Act, 2013, the SEBI Regulations and the debenture trust deed by the Issuer.
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3. Guidance pertaining to timelines for various services provided
Timeline
S
Type of Activity/ Service (within no. of
No.
days)
Disclosure by Debenture Trustee on Website or Stock Exchanges, as
1.
applicable
On continuous basis
a. Revision in Credit ratings of debt securities 1
b. Status of payment of interest/ repayment of principal by the Issuer 1
On quarterly basis
Monitoring of Security Cover Certificate for secured debt listed
a. debt securities 75/90
Statement of value of pledged securities to Stock Exchange 75/90
b.
c. Status of Quarterly compliance report submitted by the Issuer 75/90
On half yearly basis
Details of issuances of listed debt securities handled by Debenture
a. 75
Trustee and their status
Status of information regarding breach of covenants/ terms of the
b. 75
issue, if any action taken by debenture trustee
Complaints received by debenture trustee(s) including default
c. 75
cases
Net worth certificate of guarantor to stock exchange (in case
d. 75
listed debt securities are secured by way of personal guarantee)
On annual basis
Financials/value of guarantor prepared on basis of audited
a. financial statement etc. of the guarantor(in case listed debt 75
securities are secured by way of corporate guarantee)
Status regarding maintenance of accounts maintained under
b. 75
supervision of debenture trustee
Status of information regarding any default by the Issuer and
c. 75
action taken by debenture trustee
d. Utilization Certificate submitted by the Issuer 75
Once in three years
Valuation report and title search report for the immovable/movable
a. 75
assets, if any.
2. Other services/activities
a. Providing copy of debenture trust deed to investor 7
b. Redress of Investor Grievances by Debenture Trustee 30
Notice to be issued by Debenture Trustees in case of change in
c. terms of debt securities including rollover, redemption of debt 15
securities etc.
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4. Guidance pertaining to special circumstances
BREACH OF COVENANT AND/OR EVENT OF DEFAULT
The Debenture Trustee shall take following steps in case of breach of covenants
or terms of issue and/or event of default:
a) send a notice to the investors within 3 days of breach of covenants or terms of
issue and/or event of default.
b) convene the meeting of investors within 30 days of breach of covenants or
terms of issue and/or event of default.
c) to enforce security or enter into the Inter Creditor Agreement or as decided in
the meeting of investors.
5. Rights and Obligations of Investors
Investor Right – Right to
a) To inspect debenture trust deed, to obtain copy of debenture trust deed and
related documents as per prevailing state stamp laws.
b) Receive notice of any change in terms of debt securities including rollover,
redemption etc. or of breach of covenants and/or event of default from
debenture trustees.
c) of compromise or arrangement, to sanction any variation in the rights of the
investors and to sanction any compromise or arrangement proposed to be
made between the Issuer and investor(s)
d) Call for a meeting to be convened by the debenture trustee on requisition in
writing signed by investors holding at least 1/10th in value of the debentures
for the time being outstanding.
e) To lodge complaints with respect to their debt securities including non-receipt
of interest and or principal etc. with Debenture Trustee.
f) Receive information from Issuers as per SEBI Regulations and Companies Act,
2013.
Investor Obligations – under obligation to
a) Read the information memorandum and debenture trust deed carefully before
taking investment decision.
b) Keep updated record with Depository Participant including bank details,
address, email ID of first holder, PAN etc. at all times.
c) Keep themselves updated with all information on public domain such as,
debenture trustee website, Stock Exchange, India bond Info etc. and any other
platform introduced from time to time.
d) Participate in the meeting called by the Debenture Trustee.
e) Cooperate with debenture trustee and provide information to debenture trustee
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f) Respond to debenture trustee’s requests/ letters/ notices with clear and
specific mandate within the time period specified in the letter/ notice by the
debenture trustee.
6. Details of grievance redress mechanism
6.1. Investor shall check the website of debenture trustees for the dedicated grievance
email ID and other relevant details of the grievance redress division/compliance
officer for the purpose of registering grievances/ complaints and any enquiry.
6.2. For lodging the grievance, the investor can write to the debenture trustee’s
dedicated grievance email ids or letter or can directly lodge complaints on the link
provided by Debenture Trustee on its website.
6.3. While lodging a complaint it is necessary for investor to mention following:
a) Nature of Complaint
b) Name of Issuer Company
c) Holding details including ISIN
d) Full Name of Debenture Holder
e) PAN
f) Correct Email ID
6.4. Upon receipt of the complaint, the Debenture Trustee after due verification shall
send intimation of redress/ resolution of complaint via email / letter as applicable
within the timeline.
6.5. In case a complaint is required to be escalated to the issuer by the debenture
trustee, the same shall be escalated within seven days of receipt of complaint.
6.6. If the investor is not satisfied with the redress/resolution of the complaint by the
debenture trustee, or the issuer, investor can lodge the complaint on the SEBI
Complaints Redress System - SCORES (https://scores.gov.in/) or harness the
dispute resolution mechanism specified by SEBI from time to time with respect to
the Issuer.
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Annex-IXB
Data of complaints against Debenture Trustee to be displayed on its website-
Format for disclosing of data of complaints on its website:
1. Data for the month ending
S. Received Carried Received Total Resol Pending at the Average
from forward during Pending ved* end of the Resoluti
No.
from the # month** on time^
previous month (in days)
month
Pendin Pendin
g for g for
less more
than 3 than 3
month month
s s
1 Directly
from
Investors
2 SEBI
(SCORES)
3 Stock
Exchange
s (if
relevant)
4 Other
Sources (if
any)
5 Grand
Total
*Should include complaints of previous months resolved in the current month, if any.
**Should include total complaints pending as on the last day of the month, if any. ^Average
resolution time is the sum total of time taken to resolve each complaint in the current month
divided by total number of complaints resolved in the current month.
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2. Month – wise complaints data on half yearly basis:
S Month Carried Received Resolved Pending
No. forward from
previous
month
1 July, 2021
2 August, 2021
3 September, 2021
4 October, 2021
5 November, 2021
6 December, 2021
Grand Total
3. Trend of annual (Financial Year) disposal of complaints (for 5 years on rolling
basis)
S No. Year Carried forward Received Resolved Pending
from previous year
1 2017-18
2 2018-19
3 2019-20
4 2020-21
5 2021-22
Grand Total
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Annex-IXC
AUTHENTICATION FOR SCORES BY SEBI REGISTERED DEBENTURE TRUSTEE
1. Name of SEBI registered Debenture Trustee:
2. Nature of registered intermediary:
3. SEBI registration no.
4. PAN of SEBI registered Debenture Trustee:
5. Date of SEBI registration of Debenture Trustee
6. SEBI registration valid up to:
7. Office address of the intermediary:
8. The details of the concerned person of the Debenture Trustee to whom User id and
password will be sent:
Name:
Designation:
Email id: (corporate and permanent email id)
Mobile no.
Telephone No.:
Fax No.:
Place: Signature:
Date: Name:
Designation:
Seal:
Note: A scanned copy to be sent by email to scores@sebi.gov.in followed by hard copy
to the concerned Department/Division of Securities and Exchange Board of India, Plot
No. C4-A, 'G' Block, Bandra Kurla Complex, Mumbai -400 051
Important: Please note that SCORES has the provision for updating SEBI registered
Debenture Trustee's details by the intermediary itself. Any field (except the e-mail id
which is permanent) such as registered office address, name/details of the compliance
officer, telephone numbers, etc. should be changed by the SEBI registered Debenture
Trustee immediately when warranted.
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Chapter X: Breach of Covenants, Default and Remedies28
1. Event of default
1.1. Regulation 51 read with the Explanation to Clause A (11) in Part B of Schedule III
of SEBI 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.
1.2. In the manner of calling ‘event of default’, due to the presence of multiple ISINs
which may have been issued under the same offer document or a single ISIN
which may have been split across multiple offer documents 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 offer documents.
2. Process of convening meeting of holders of debt securities and consent of
investors for enforcement of security and for signing the Inter Creditor
Agreement (ICA)
2.1. 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)
Directions 2019 which inter alia specified the mechanism for resolution of stressed
assets by Lenders [viz. Scheduled Commercial Banks, All-India Term Financial
Institutions, Small Finance Banks, Systemically Important Non-Deposit Taking
Non-Banking Finance Companies (NBFCs) as well as Deposit Taking NBFCs].In
terms thereof, investors in debt securities, being financial creditors, are
approached by other lenders to sign an agreement, referred to as the ICA, under
specific terms detailed in the framework as stipulated by RBI.
2.2. Regulation 59 of SEBI LODR Regulations provides that material modification in
the structure of debt securities shall be made only after obtaining the consent of
the requisite majority of investors. Regulation 39 of the SEBI NCS Regulations,
applicable in case of public issue of debt securities, stipulates a period of fifteen
days for giving notice in case of roll-over of debt securities and further provides
for approval to be obtained from not less than three-fourth of the holders by value
of such debt securities.
2.3. As the resolution plan in the ICA may involve restructuring including roll-over of
debt securities, requiring the consent of the investors, the process to be followed
for seeking consent for enforcement of security and/or entering into an ICA shall
be as under:
28SEBI/HO/MIRSD/CRADT/CIR/P/2020/203 dated October 13, 2020;
Page 69 of 91
2.3.1. The Debenture Trustee shall send a notice to the investors within three days
of the event of default by registered post/ acknowledgement due or speed
post/ acknowledgement due or courier or hand delivery with proof of
delivery as also through email as a text or as an attachment to email with a
notification including a read receipt, and proof of dispatch of such notice or
email, shall be maintained.
2.3.2. The notice shall contain the following:
a) A provision for negative consent for proceeding with the enforcement of
security; and
b) A provision for positive consent for signing the ICA (in case the
Debenture Trustee is approached by other lenders for signing/ joining
the ICA); and
c) the time period within which the consent needs to be provided, viz.
consent to be given within 15 days from the date of notice; and
d) the date of meeting to be convened.
e) A disclosure to the effect that in case requisite consents are not
received either for enforcement of security or for signing ICA, then the
Debenture Trustee shall take further action, if any, as per the decision
taken in the meeting of the holders of listed debt securities.
2.3.3. Debenture Trustee shall convene the meeting of holders of listed debt
securities within 30 days of the event of default:
Provided that in case the default is cured between the date of notice and
the date of meeting, then the convening of such a meeting may be
dispensed with.
2.3.4. In view of Regulation 15(2)(b) of SEBI (Debenture Trustees) Regulations,
1993, in case of debt securities issued by way of public issue, the notice
sent by the Debenture Trustee shall not contain the consent as per para
2.3.2.a) and the requirement to convene a meeting for enforcement of
security, as per para 2.3.4, shall not be applicable.
2.3.5. The Debenture Trustee shall take necessary action to enforce security or
enter into the ICA or as decided in the meeting of investors, subject to the
following:
a) In case(s) where the majority of holders of listed debt securities express
dissent, i.e. against enforcement of the security, the DEBENTURE
TRUSTEE shall not enforce security.
b) In case(s) where majority of holders of listed debt securities express
consent, i.e. to enter into the ICA, the DEBENTURE TRUSTEE shall
enter into the ICA.
c) In case requisite consents are not received either for enforcement of
security or for signing ICA, then the Debenture Trustee shall take further
action, if any, as per the decision taken in the meeting of the holders of
listed debt securities.
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d) The Debenture Trustee may form a representative committee of the
holders of listed debt securities to participate in the ICA or to enforce
the security or as may be decided in the meeting.
2.3.6. The consent of the majority of holders of listed debt securities shall mean
the approval of not less than 75% of the holders of listed debt securities by
value of the outstanding debt and 60% of the holders of listed debt securities
by number at the ISIN level.
3. Conditions for signing of ICA by Debenture Trustee on behalf of holders of
listed debt securities
3.1. The Debenture Trustee(s) may sign the ICA and consider the resolution plan on
behalf of the holders of listed debt securities upon compliance with the following
conditions:
a) The signing of the ICA and agreeing to the resolution plan is in the interest of
holders of listed debt securities and in compliance with the Companies Act,
2013 and the rules made thereunder, the Securities Contracts (Regulations)
Act, 1956 and the Securities and Exchange Board of India Act, 1992 and the
rules, regulations and circulars issued thereunder from time to time.
b) If the resolution plan imposes conditions on the Debenture Trustee that are not
in accordance with the provisions of Companies Act, 2013 and the rules made
thereunder, the Securities Contracts (Regulations) Act, 1956 and the Securities
and Exchange Board of India Act, 1992 and the rules, regulations and circulars
issued thereunder from time to time, then the Debenture Trustee shall be free
to exit the ICA altogether with the same rights as if it had never signed the ICA.
Under these circumstances, the resolution plan shall not be binding on the
Debenture Trustee(s).
c) The resolution plan shall be finalized within 180 days from the end of the review
period. If the resolution plan is not finalized within 180 days from the end of the
review period, then the Debenture Trustee shall be free to exit the ICA
altogether with the same rights as if it had never signed the ICA and the
resolution plan shall not be binding on the Debenture Trustee. However, if the
finalization of the resolution plan extends beyond 180 days, the Debenture
Trustee may consent to an extension beyond 180 days subject to the approval
of the investors regarding the total timeline. The total timeline shall not exceed
365 days from the date of commencement of the review period.
d) If any of the approved Resolution Plan are contravened by any of the
signatories to the ICA, the Debenture Trustee shall be free to exit the ICA and
seek appropriate legal recourse or any other action as deemed fit in the interest
of the investors.
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3.2. The Debenture Trustee shall ensure that the conditions mentioned in paragraphs
3.1 (b), (c) and (d) are suitably incorporated in the ICA, before signing of the ICA.
4. Action to be taken in case of breach of covenants or terms of issue
In case of breach of covenants or terms of the issue by the Issuer, the Debenture
Trustee shall take steps as outlined in paras 2.3.1 and 2.3.3 of this chapter and
thereafter take necessary action as decided in the meeting of holders of debt
securities in this regard.
Page 72 of 91
Chapter XI: Operational framework for transactions in defaulted debt
securities post maturity date/ redemption date29
The operational framework for transactions in defaulted debt securities (debt securities
where redemption amount has not been paid on maturity/ redemption date) has been
outlined in Chapter XI of the NCS operational circular. The obligations of Debenture
Trustee arising out of the same has been outlined below:
1. Role of Debenture Trustee:
1.1. In case the Issuer fails to intimate the status of payment of the debt securities
within stipulated timelines, then Debenture Trustee shall seek status of
payment from the issuer and/ or conduct independent assessment (from banks,
investors, rating agencies, etc.) to determine the same. Based on such
assessment, Debenture Trustee shall intimate Stock Exchange and Depositories
the status of payment of debt securities within nine working days of the maturity/
redemption date.
1.2. In case intimation of the status of payment of debt securities is not received by
Stock Exchanges and Depositories within stipulated timeline, transactions in such
debt securities shall continue to be restricted and such restrictions shall continue
until any further intimation is received from Issuer/ Debenture Trustee regarding
the status of payment of such debt securities.
2. Continuous assessment of default status:
2.1. In case the Issuer fails to intimate the updated status of payment of the concerned
debt securities within the stipulated timelines, the Debenture Trustee shall carry
independent assessment as given at paragraph 1 above and intimate the status
of payment of debt securities to the Stock Exchange and Depositories by the
seventh working day of April of each financial year.
2.2. In case of any developments that impact the status of default of the debt securities
(including restructuring of debt securities, NCLT/ NCLAT proceedings relating to
insolvency/ bankruptcy, repayment, etc.), the Issuer/ Debenture Trustee shall
intimate the Stock Exchanges and Depositories within one working day of such
development.
2.3. The process explained above shall be followed either till full payment on these
securities is made by the Issuer or the Issuer has been liquidated and money has
been realised after completion of recovery proceedings.
29 SEBI/HO/DDHS/P/CIR/2021/613 dated August 10, 2021 (as amended from time to time)
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Chapter XII: Centralised Database - Responsibilities of Debenture Trustee30
Debenture Trustee shall access the database to verify the information regarding default
history and other relevant information. In case of any discrepancy, Debenture Trustee
shall notify the same to Stock Exchanges and update the correct information in the
database, within the time stipulated below-
Activity Timelines
Verification and updating of default history information Within seven days of
about the instrument/ issuer, as applicable in the knowledge of default
database
30 SEBI/HO/DDHS/P/CIR/2021/613 dated August 10, 2021 (as amended from time to time);
Page 74 of 91
Chapter XIII: Reporting of regulatory compliance31
1. The Debenture Trustee shall furnish periodical reports to SEBI in the following
manner:
Report Periodicity Format
Half yearly compliance report Annex-XIIIA
Details of other activities carried Half-yearly basis -
out by Debenture Trustee(s) within 75 days of the
including type of activity, end of each half-year
description of activity etc.
Risk-Based Supervision report -
2. The half-yearly compliance report shall be reviewed by the Board of Directors of the
Debenture Trustee prior to the submission to SEBI.
31 SEBI/HO/MIRSD/MIRSD_CRADT/CIR/P/2022/67 dated May 19, 2022 and CIR/MIRSD/10/2011 dated June 20,
2011;
Page 75 of 91
Annex-XIIIA
COMPLIANCE CERTIFICATE FOR THE HALF YEAR ENDED SEPTEMBER / MARCH 20..
a) No conflict of interests with other activities
The activities other than debenture trusteeship performed by Debenture Trustee are not
in conflict with Debenture Trustee activities and appropriate systems and policies have
been put in place to protect the interests of debenture holders.
b) Change in status or constitution
Reporting of changes in status or constitution' of Debenture Trustee including the
following:
i. Amalgamation, demerger, consolidation or any other kind of
corporate restructuring falling within the scope of section 391 of the
Companies Act, 1956 (1 of 1956) or the corresponding provision of any
other law for the time being in force
ii. Change in Director, including managing director/ whole-time director
iii. Change in shareholding not resulting in change in control
If there is no change during the relevant quarter, it shall be indicated in the report.
c) Other Information
i. Details of arrest /conviction of key officials of Debenture Trustee
ii. Details of prosecution cases or criminal complaints filed by investors
against the Debenture Trustee
iii. Details of any fraudulent activity by the employees associated with
Debenture Trustee activities and action taken by the Debenture Trustee
iv. Details of conviction of any offence involving moral turpitude or any
economic offence by employees of Debenture Trustee
v. Action taken by the Debenture Trustee on the above issues
d) Compliance with registration requirements:
Certified that the requirements specified for SEBI registration as Debenture Trustee are
fulfilled, the details are as under;
i. Net worth (audited) as defined in the Regulations as on FY ended ………
(as per the latest audited financials)
ii. Any change in infrastructure since the last report / registration/ renewal
iii. Changes in Key personnel during the half year ended……….)
Name(s) of the Appointment / Date of Qualification Experience
key personnel Cessation appointment /
cessation
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e) Details of deficiencies and non-compliances
f) Details of the review of the report by the Board of Directors
i. Date of Board Review (DD/MM/YYYY)
ii. Observation of the Board of Directors on the deficiencies and non-compliances
and corrective measures initiated
Certified that we have complied with SEBI (Debenture Trustee) Regulations, 1993,
applicable provisions of SEBI (Issue and Listing of Non-convertible Securities) Regulations,
2021, Circulars issued by SEBI and any other laws applicable from time to time, other than
the deficiencies and non-compliances reported by us at Section(e) above.
Name of Compliance Officer
Email ID
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Chapter XIV: Guidelines on Outsourcing of Activities by
Debenture Trustee32
1. DT Regulations requires Debenture Trustees to render high standards of service and
exercise due diligence and ensure proper care in its operations. It has been observed
that often intermediaries resort to outsourcing with a view to reduce costs, and at
times, for strategic reasons.
2. Outsourcing may be defined as the use of one or more than one third party – either
within or outside the group - by a registered intermediary to perform the activities
associated with services which the intermediary offers.
3. The principles for outsourcing to be followed by Debenture Trustee are specified at
Annex-XIVA.
4. A Debenture Trustee desirous of outsourcing its activities shall not, outsource its core
business activities and compliance functions.
5. The Debenture Trustee shall comply with the provisions of SEBI {KYC (Know Your
Client) Registration Agency} Regulations, 2011 and guidelines issued thereunder
from time to time.
6. The Debenture Trustee shall be responsible for reporting of any suspicious
transactions/ reports to FIU or any other competent authority in respect of activities
carried out by the third parties.
32 CIR/MIRSD/24/2011 dated December 15, 2011;
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Annex-XIVA
PRINCIPLES OF OUTSOURCING FOR DEBENTURE TRUSTEES
1. A Debenture Trustee seeking to outsource activities shall have in place a
comprehensive policy to guide the assessment of whether and how those
activities can be appropriately outsourced. The Board/ partners (as the case
may be) {hereinafter referred to as the “the Board”} of the intermediary shall
have the responsibility for the outsourcing policy and related overall
responsibility for activities undertaken under that policy.
1.1 The policy shall cover activities or the nature of activities that can be
outsourced, the authorities who can approve outsourcing of such activities, and
the selection of third party to whom it can be outsourced. For example, an
activity shall not be outsourced if it would impair the supervisory authority’s right
to assess, or its ability to supervise the business of the Debenture Trustee. The
policy shall be based on an evaluation of risk concentrations, limits on the
acceptable overall level of outsourced activities, risks arising from outsourcing
multiple activities to the same entity, etc.
1.2 The Board shall mandate a regular review of outsourcing policy for such
activities in the wake of changing business environment. It shall also have
overall responsibility for ensuring that all ongoing outsourcing decisions taken
by the Debenture Trustee and the activities undertaken by the third-party, are
in keeping with its outsourcing policy.
2. The Debenture Trustee shall establish a comprehensive outsourcing risk
management programme to address the outsourced activities and the
relationship with the third party.
2.1 A Debenture Trustee shall make an assessment of outsourcing risk which
depends on several factors, including the scope and materiality of the
outsourced activity, etc. The factors that could help in considering materiality in
a risk management programme include-
a) The impact of failure of a third party to adequately perform the activity on
the financial, reputational and operational performance of the Debenture
Trustee and on the investors / clients;
b) Ability of the Debenture Trustee to cope up with the work, in case of non-
performance or failure by a third party by having suitable back-up
arrangements;
c) Regulatory status of the third party, including its fitness and probity status;
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d) Situations involving conflict of interest between the Debenture Trustee and
the third party and the measures put in place by the Debenture Trustee to
address such potential conflicts, etc.
2.2 While there shall not be any prohibition on a group entity/ associate of the
Debenture Trustee to act as the third party, systems shall be put in place to
have an arm’s length distance between the Debenture Trustee and the third
party in terms of infrastructure, manpower, decision-making, record keeping,
etc. for avoidance of potential conflict of interests. Necessary disclosures in this
regard shall be made as part of the contractual agreement. It shall be kept in
mind that the risk management practices expected to be adopted by a
Debenture Trustee while outsourcing to a related party or an associate would
be identical to those followed while outsourcing to an unrelated party.
2.3 The records relating to all activities outsourced shall be preserved centrally so
that the same is readily accessible for review by the Board of the Debenture
Trustee and/or its senior management, as and when needed. Such records
shall be regularly updated and may also form part of the corporate governance
review by the management of the Debenture Trustee.
2.4 Regular reviews by internal or external auditors of the outsourcing policies, risk
management system and requirements of the regulator shall be mandated by
the Board wherever felt necessary. The Debenture Trustee shall review the
financial and operational capabilities of the third party in order to assess its
ability to continue to meet its outsourcing obligations.
3. The Debenture Trustee shall ensure that outsourcing arrangements neither
diminish its ability to fulfill its obligations to customers and regulators, nor
impede effective supervision by the regulators.
3.1 The Debenture Trustee shall be fully liable and accountable for the activities
that are being outsourced to the same extent as if the service were provided in-
house.
3.2 Outsourcing arrangements shall not affect the rights of an investor or client
against the Debenture Trustee in any manner. The Debenture Trustee shall be
liable to the investors for the loss incurred by them due to the failure of the third
party and also be responsible for redress of the grievances received from
investors arising out of activities rendered by the third party.
3.3 The facilities / premises / data that are involved in carrying out the outsourced
activity by the service provider shall be deemed to be those of the registered
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Debenture Trustee. The Debenture Trustee itself and Regulator or the persons
authorized by it shall have the right to access the same at any point of time.
3.4 Outsourcing arrangements shall not impair the ability of SEBI/ SRO or auditors
to exercise its regulatory responsibilities such as supervision/inspection of the
Debenture Trustee.
4. The Debenture Trustee shall conduct appropriate due diligence in selecting
the third party and in monitoring of its performance.
4.1 It is important that the Debenture Trustee exercises due care, skill, and
diligence in the selection of the third party to ensure that the third party has the
ability and capacity to undertake the provision of the service effectively.
4.2 The due diligence undertaken by an Debenture Trustee shall include
assessment of:
a) third party’s resources and capabilities, including financial soundness, to
perform the outsourcing work within the timelines fixed;
b) compatibility of the practices and systems of the third party with the
Debenture Trustee’s requirements and objectives;
c) market feedback of the prospective third party’s business reputation and
track record of their services rendered in the past;
d) level of concentration of the outsourced arrangements with a single third
party; and
e) the environment of the foreign country where the third party is located.
5. Outsourcing relationships shall be governed by written contracts/
agreements/ terms and conditions (as deemed appropriate) {hereinafter
referred to as “contract”} that clearly describe all material aspects of the
outsourcing arrangement, including the rights, responsibilities and
expectations of the parties to the contract, client confidentiality issues,
termination procedures, etc.
5.1 Outsourcing arrangements shall be governed by a clearly defined and legally
binding written contract between the Debenture Trustee and each of the third
parties, the nature and detail of which shall be appropriate to the materiality of
the outsourced activity in relation to the ongoing business of the Debenture
Trustee.
5.2 Care shall be taken to ensure that the outsourcing contract:
a) clearly defines what activities are going to be outsourced, including
appropriate service and performance levels;
b) provides for mutual rights, obligations and responsibilities of the Debenture
Trustee and the third party, including indemnity by the parties;
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c) provides for the liability of the third party to the Debenture Trustee for
unsatisfactory performance/other breach of the contract
d) provides for the continuous monitoring and assessment by the Debenture
Trustee of the third party so that any necessary corrective measures can
be taken up immediately, i.e., the contract shall enable the Debenture
Trustee to retain an appropriate level of control over the outsourcing and
the right to intervene with appropriate measures to meet legal and
regulatory obligations;
e) includes, where necessary, conditions of sub-contracting by the third-party,
i.e. the contract shall enable Debenture Trustee to maintain a similar control
over the risks when a third party outsources to further third parties as in the
original direct outsourcing;
f) has unambiguous confidentiality clauses to ensure protection of proprietary
and customer data during the tenure of the contract and also after the
expiry of the contract;
g) specifies the responsibilities of the third party with respect to the IT security
and contingency plans, insurance cover, business continuity and disaster
recovery plans, force majeure clause, etc.;
h) provides for preservation of the documents and data by third party;
i) provides for the mechanisms to resolve disputes arising from
implementation of the outsourcing contract;
j) provides for termination of the contract, termination rights, transfer of
information and exit strategies;
k) addresses additional issues arising from country risks and potential
obstacles in exercising oversight and management of the arrangements
when Debenture Trustee outsources its activities to foreign third party. For
example, the contract shall include choice-of-law provisions and agreement
covenants and jurisdictional covenants that provide for adjudication of
disputes between the parties under the laws of a specific jurisdiction;
l) neither prevents nor impedes the Debenture Trustee from meeting its
respective regulatory obligations, nor the regulator from exercising its
regulatory powers; and
m) provides for the Debenture Trustee and /or the regulator or the persons
authorized by it to have the ability to inspect, access all books, records and
information relevant to the outsourced activity with the third party.
6. The Debenture Trustee and its third parties shall establish and maintain
contingency plans, including a plan for disaster recovery and periodic testing
of backup facilities.
6.1 Specific contingency plans shall be separately developed for each outsourcing
arrangement, as is done in individual business lines.
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6.2 A Debenture Trustee shall take appropriate steps to assess and address the
potential consequence of a business disruption or other problems at the third
party level. Notably, it shall consider contingency plans at the third party; co-
ordination of contingency plans at both the Debenture Trustee and the third
party; and contingency plans of the Debenture Trustee in the event of non-
performance by the third party.
6.3 To ensure business continuity, robust information technology security is a
necessity. A breakdown in the IT capacity may impair the ability of the
Debenture Trustee to fulfill its obligations to other market
participants/clients/regulators and could undermine the privacy interests of its
customers, harm the Debenture Trustee’s reputation, and may ultimately
impact on its overall operational risk profile. Intermediaries shall, therefore,
seek to ensure that third party maintains appropriate IT security and robust
disaster recovery capabilities.
6.4 Periodic tests of the critical security procedures and systems and review of the
backup facilities shall be undertaken by the Debenture Trustee to confirm the
adequacy of the third party’s systems.
7. The Debenture Trustee shall take appropriate steps to require that third
parties protect confidential information of both the Debenture Trustee and its
customers from intentional or inadvertent disclosure to unauthorized
persons.
7.1 A Debenture Trustee that engages in outsourcing is expected to take
appropriate steps to protect its proprietary and confidential customer
information and ensure that it is not misused or misappropriated.
7.2 The Debenture Trustee shall prevail upon the third party to ensure that the
employees of the third party have limited access to the data handled and only
on a “need to know” basis and the third party shall have adequate checks and
balances to ensure the same.
7.3 In cases where the third party is providing similar services to multiple entities,
the Debenture Trustee shall ensure that adequate care is taken by the third
party to build safeguards for data security and confidentiality.
8. Potential risks posed where the outsourced activities of multiple
intermediaries are concentrated with a limited number of third parties.
In instances, where the third party acts as an outsourcing agent for multiple
intermediaries, it is the duty of the third party and the Debenture Trustee to ensure
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that strong safeguards are put in place so that there is no co-mingling of information
/documents, records and assets.
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Chapter XV: Unauthenticated news circulated by SEBI registered market
intermediaries through various modes of communication33
1. It has been observed by SEBI that unauthenticated news related to various scrips are
circulated in blogs/ chat forums/ e-mail etc. by employees of Broking Houses/ Other
Intermediaries without adequate caution as mandated in the Code of Conduct.
2. Further, in various instances, it has been observed that the Intermediaries do not have
proper internal controls and do not ensure that proper checks and balances are in
place to govern the conduct of their employees. Due to lack of proper internal controls
and poor training, employees of such intermediaries are sometimes not aware of the
damage which can be caused by circulation of unauthenticated news or rumours. It is
a well-established fact that market rumours can do considerable damage to the
normal functioning and behaviour of the market and distort the price discovery
mechanisms.
3. In view of the above, a Debenture Trustee shall ensure that:
3.1. Proper internal code of conduct and controls is put in place.
3.2. Employees/ temporary staff/ voluntary workers etc. employed/ working in the
Offices of SEBI registered Debenture Trustees do not encourage or circulate
rumours or unverified information obtained from client, industry, any trade or any
other sources without verification.
3.3. Access to Blogs/ Chat forums/ Messenger sites etc. should either be restricted
under supervision or access should not be allowed.
3.4. Logs for any usage of such Blogs/ Chat forums/ Messenger sites (called by any
nomenclature) shall be treated as records and the same should be maintained as
specified by the respective Regulations which govern the concerned Debenture
Trustee.
3.5. Employees should be directed that any market related news received by them
either in their official mail/ personal mail/ blog or in any other manner, should be
forwarded only after the same has been seen and approved by the concerned
SEBI registered Debenture Trustee's Compliance Officer. If an employee fails to
do so, he/ she shall be deemed to have violated the various provisions contained
in SEBI Act/ Rules/ Regulations etc. and shall be liable for action. The Compliance
Officer shall also be held liable for breach of duty in this regard.
33 CIR/ISD/1/2011 dated March 23, 2011 and CIR/ISD/2/2011 dated March 24, 2011
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Chapter XVI: General Guidelines for dealing with Conflicts of Interest by
Debenture Trustee and its Associated Persons in Securities Market34
1. All intermediaries, recognised stock exchanges, recognised clearing corporations and
depositories (hereinafter collectively referred to as "such entities") are presently
governed by the provisions for avoidance of conflict of interest as mandated in the
respective regulations read with relevant circulars issued from time to time by SEBI.
On the lines of Principle 8 of the International Organisation of Securities Commissions
(IOSCO) Objectives and Principles of Securities Regulations, it has been decided to
put in place comprehensive guidelines to collectively cover such entities and their
associated persons, for elimination of their conflict of interest, as detailed hereunder.
2. The Debenture Trustee shall adhere to these guidelines for avoiding or dealing with
or managing conflict of interest. It shall be responsible for educating its associated
persons for compliance of these guidelines.
3. For the purpose of these guidelines, "associated persons" have the same meaning as
defined in Securities and Exchange Board of India Certification of Associated Persons
in the Securities Markets) Regulations, 2007.
4. Debenture Trustee and its associated persons shall,
4.1. lay down, with active involvement of senior management, policies and internal
procedures to identify and avoid or to deal or manage actual or potential conflict
of interest, develop an internal code of conduct governing operations and
formulate standards of appropriate conduct in the performance of their activities,
and ensure to communicate such policies, procedures and code to all concerned;
4.2. at all times maintain high standards of integrity in the conduct of their business;
4.3. ensure fair treatment of their clients and not discriminate amongst them;
4.4. ensure that their personal interest does not, at any time conflict with their duty to
their clients and client’s interest always takes primacy in their advice, investment
decisions and transactions;
4.5. make appropriate disclosure to the clients of possible source or potential areas of
conflict of interest which would impair their ability to render fair, objective and
unbiased services;
4.6. endeavour to reduce opportunities for conflict through prescriptive measures such
as through information barriers to block or hinder the flow of information from one
department/ unit to another, etc.;
34 SEBI Circular No. CIR/ MIRSD/ 5/ 2013 dated August 27, 2013;
Page 86 of 91
4.7. place appropriate restrictions on transactions in securities while handling a
mandate of issuer or client in respect of such security so as to avoid any conflict;
4.8. not deal in securities while in possession of material non - published information
4.9. not to communicate the material non-published information while dealing in
securities on behalf of others
4.10. not in any way contribute to manipulate the demand for or supply of securities in
the market or to influence prices of securities;
4.11. not have an incentive structure that encourages sale of products not suiting the
risk profile of their clients;
4.12. not share information received from clients or pertaining to them, obtained as a
result of their dealings, for their personal interest;
5. The boards of the Debenture Trustee shall put in place systems for implementation of
the provisions of this chapter and provide necessary guidance enabling identification,
elimination or management of conflict of interest situations.
6. The said guidelines shall be in addition to the provisions, if any, contained in
respective regulations/ circulars issued by the Board from time to time regarding
dealing with conflict of interest, in respect of Debenture Trustee.
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Glossary
Term Description
ATR Action Taken Report
Central Registry of Securitization Asset Reconstruction
CERSAI and Security Interest
CIBIL Credit Information Bureau (India) Limited
CRA Credit Rating Agency
DLT Distributed Ledger Technology
DRR Debenture Redemption Reserve
DSRA Debt Service Reserve Account
DT Debenture Trustees
Securities and Exchange Board of India
DT Regulations (Debenture Trustees) Regulations, 1993
DTD Debenture Trust Deed
Earnings Before Interest, Taxes, Depreciation, and
EBITDA Amortisation
ERP Enterprise Resource Planning
FAR Fixed Asset Register
FIU Financial Intelligence Unit
IBBI Insolvency and Bankruptcy Board of India
ICA Inter Creditor Agreement
IM Information Memorandum
IMPS Immediate Mobile Payment Service
INR Indian National Rupee
IOSCO International Organisation of Securities Commissions
ISIN International Securities Identification Number
IU Information Utility
KYC Know Your Client
Securities and Exchange Board of India (Listing
Obligations and Disclosure Requirements) Regulations
LODR Regulations 2015
MRR Minimum Required Reserve
NBFCs Non-Banking Finance Companies
NCLAT National Company Law Appellate Tribunal
NCLT National Company Law Tribunal
Securities and Exchange Board of India (Issue and
NCS Regulations Listing of Non-Convertible Securities) Regulations, 2021
NEFT National Electronic Funds Transfer
NOC No Objection Certificate
OD Offer Document
PAN Permanent Account Number
PM Placement Memorandum
PPM Preliminary Placement Memorandum
RBI Reserve Bank of India
REF Recovery Expenses Fund
ROC Registrar of Companies
RTGS Real-Time Gross Settlement
SCORES SEBI Complaints Redress System
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SCRA Securities Contracts (Regulation) Act, 1956
SEBI Securities and Exchange Board of India
SRO Self-Regulatory Organisation
TAI Trustee Association of India
UDIN Unique Document Identification Number
UTR Unique Transaction Reference
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Annex-1
Part A - List of circulars superseded by the Operational Circular
Sl. Reference Number of
Date Name of the Circular
No. Circular
SEBI/ HO/ MIRSD/
1. April 09, 2018 Master Circular For Debenture Trustees
DOP2/ CIR/ P/ 2018/063
December Review of Regulatory Compliance, Periodic
2. CIR/MIRSD/25/2011
19, 2011 Reporting and Contents of Trust Deed
Sharing of information regarding issuer
March 15,
3. CIR/MIRSD/3/2013 companies between Debenture Trustees
2013
and Credit Rating Agencies
Clarification on monitoring of Interest/
SEBI/HO/MIRSD/MIRSD June 30, Principal repayment and sharing of such
4.
3/CIR/P/2017/72 2017 information with Credit Rating Agencies by
Debenture Trustees
June 20, Periodical Report- Grant of prior approval to
5. CIR/MIRSD/DT/10/2011
2011 Debenture Trustees
Standardisation of procedure to be followed
SEBI/HO/MIRSD/CRADT October 13,
6. by Debenture Trustee(s) in case of ‘Default’
/CIR/P/2020/203 2020
by Issuers of listed debt securities
Contribution by Issuers of listed or proposed
SEBI/HO/MIRSD/CRADT October 22,
7. to be listed debt securities towards creation
/CIR/P/2020/207 2020
of “Recovery Expense Fund”
Creation of Security in issuance of listed debt
SEBI/HO/MIRSD/CRADT November
8. securities and ‘due diligence’ by debenture
/CIR/P/2020/218 03, 2020
trustee(s)
SEBI/ HO/ MIRSD/
November Monitoring and Disclosures by Debenture
9. CRADT/ CIR/ P/
12, 2020 Trustee(s)
2020/230
SEBI/HO/MIRSD/MIRSD August 13, ‘Security and Covenant Monitoring’ using
10.
_CRADT/CIR/P/2021/618 2021 Distributed Ledger Technology
Operational guidelines for ‘Security and
SEBI/ HO/ MIRSD/ March 29,
11. Covenant Monitoring’ using Distributed
CRADT/ CIR/ P/ 2022/ 38 2022
Ledger Technology (DLT)
SEBI/HO/MIRSD/MIRSD Revised format of security cover certificate,
12. May 19, 2022
_CRADT/CIR/P/2022/67 monitoring and revision in timelines
Enhanced guidelines for debenture trustees
SEBI/HO/DDHS/DDHS_ August 04,
13. and listed issuer companies on security
Div1/P/CIR/2022/106 2022
creation and initial due diligence
SEBI/HO/MIRSD/MIRSD November
14. Investor Charter
_CRADT/P/CIR/2021/675 30, 2021
Clarification to SEBI circular dated August
SEBI/HO/DDHS/DDHS- 04, 2022 on enhanced guidelines for
December
15. RACPOD1/P/CIR/2022/1 debenture trustees and listed issuer
19, 2022
76 companies on security creation and initial
due diligence
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Part B - List of circulars wherein applicability to Debenture Trustees only have
been rescinded
Sl. Reference Number of
Date Name of the Circular
No. Circular
SEBI/MIRSD/DR- January 04,
1. Renewal of Certificate of Registration
2/SRP/Cir - 2/ 2005 2005
January 22, Exclusive e-mail ID for redress of Investor
2. MIRSD/DPS III//Cir-01/07
2007 Complaints
Designated e-mail ID for regulatory
3. MIRSD/ DPSIII/ Cir-21/ 08 July 07, 2008
communication with SEBI
Unauthenticated news circulated by SEBI
March 23,
4. Cir/ ISD/1/2011 Registered Market Intermediaries through
2011
various modes of communication
March 24, Addendum to Circular no. Cir/ISD/1/2011
5. Cir/ISD/2/2011
2011 dated March 23, 2011
Revised procedure for seeking prior
August 02,
6. CIR/MIRSD/14/2011 approval for change in control through
2011
single window
August 02, Processing of Investor Complaints in SEBI
7. CIR/MIRSD/13/2011
2011 Complaints Redress System (SCORES)
December 15, Guidelines on Outsourcing of Activities by
8. CIR/MIRSD/24/2011
2011 Intermediaries
General Guidelines for dealing with
Conflicts of Interest of Intermediaries,
August 27,
9. CIR/MIRSD/5/2013 Recognised Stock Exchanges, Recognised
2013
Clearing Corporations, Depositories and
their Associated Persons in Securities Market
August 28, Information regarding Grievance Redress
10. CIR/MIRSD/3/2014
2014 Mechanism
Redress of investor grievances through
December 18,
11. CIR/OIAE/1/2014 SEBI Complaints Redress System
2014
(SCORES) platform
Circular
Online Registration Mechanism for Securities
12. SEBI/HO/MIRSD/MIRSD1 May 02, 2017
Market Intermediaries
/CIR/P/2017/38
Circular
13. SEBI/HO/GSD/T&A/CIR/P May 16, 2017 Digital mode of payment
/2017/42
SEBI/ HO/ MIRSD/ Enhanced disclosure in case of listed debt
14. May 27, 2019
DOS3/CIR/P/2019/68 securities
Prior Approval for Change in control: Transfer
of shareholdings among immediate relatives
SEBI/HO/MIRSD/DOR/CI March 25,
15. and transmission of shareholdings and their
R/P/2021/42 2021
effect on change in control
SEBI/HO/MIRSD/DOR/CI March 26, Transfer of business by SEBI registered
16.
R/P/2021/46 2021 intermediaries to other legal entity
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