Timelines shortened in relation to listing of privately placed debt securities

1.     

In-principle Approval now required prior to uploading the placement memorandum on electronic book provider platform (EBP)

Under terms of Regulation 6 of the SEBI (Issue and listing of Non-convertible Securities) Regulations, 2021 and Regulation 4A of the SEBI (Issue and Listing of Municipal Debt Securities) Regulations, 2015, an ‘in-principle’ approval is required to be obtained from the stock exchange(s) where the issuer intends to list its NCS (Approval). Prior to the Amendment, the Operational Circular did not provide any timelines for receipt of the Approval. However, it was a requirement to have the Approval prior to uploading the placement memorandum on the EBP. As per the Amendment, issuers (which has previously issued debt securities on EBP) will now be required to be in receipt of the Approval, 2 days prior to issue opening date (T), and first-time issuers on EBP will now be required to be in receipt of the Approval, prior to T-5 days. In case of issuances through non-EBP, issuers are now required to be in receipt of the Approval, prior to ‘T’.

2.     

Introduction of timelines for ISIN allocation

Issuer are required to make application to a depository to procure International Securities Identification Number (ISIN) for their NCS. The Amendment has introduced the timeline for the same and it is now required that issuers obtain the ISIN on or before T+1 days and prior to pay-in, for EBP issuances and non-EBP issuances. Further, the issuers are also required to apply to both depositories for admission of such proposed debt issuances on or before T+1 days and prior to pay-in. Previously, ISINs were being obtained on the pay-in date.

3.     

Reduction of timelines for listing

The existing timelines prescribed under the Operational Circular required the issuers to have their NCS listed on the stock exchange(s) in T+4 days. In pursuance of efficacy in the listing process and to expedite the availability of NCS for trading by the investors, the Amendment has reduced the timeline for listing to T+3 days. Now, within the newly introduced timeline of T+3 days, the issuers are required to: ®  in case of EBP issuances, make a final listing application for listing of non-convertible securities or municipal debt securities, and, in case of non-EBP issuances, make an application for listing of non-convertible securities, municipal debt securities, securitised debt instruments or security receipts ® receive final listing permission from the stock exchange(s) ® have the ISIN activated by depositories.

4.     

Firm timelines introduced for settlement of NCS

For settlement of issuances under EBP, the following activities shall be completed within T+1 or T+2 days (on the basis of the settlement cycle chosen by the issuers): ® pay-in by the bidders or allotees ®  communication of receipt of money to the issuers ®  finalisation of allocation by the issuers ® payment of stamp duty by the issuers ®  filing of corporate action file with the depositories by the registrar transfer agent ®  conclusion of corporate action or demat credit by depositories ® pay-out of funds to the issuers ® issue of credit confirmation letter by depositories to the issuers.

There was no timeline provided for settlement of non-EBP issuances under the Operational Circular. Pursuant to the Amendment, for settlement of non-EBP issuances, the following activities shall be completed within T+2 days: ®  receipt of funds by the issuers from investors ® finalisation of allocation by the board or committee of the board of issuers ® payment of stamp duty by the issuers ® filing of corporate action file with the depositories by the registrar transfer agent ® conclusion of corporate action or demat credit by depositories ® issue of credit confirmation letter by depositories to the issuers.

5.     

Removal of prohibition on utilisation of proceeds of subsequence placements

The Operational Circular earlier provided that in case the issuer fails to receive the final listing approval from the stock exchange(s) within the prescribed timeline, in addition to payment of penalty, the issuer was also prohibited from utilising the issue proceeds of its subsequent two privately placed issuances of NCS. The Amendment has done away with the prohibition of on utilisation of the proceeds of two subsequent issues and now the issuers are only responsible for payment of penalty (1% per annum from the deemed date of allotment over the coupon or dividend rate for the period of delay to the investor) for delay in listing.

Pre-Issue Activities

1.     

In-principle Approval

Prior to T-2 or T-5 (for first time issuers)

Prior to T

2.     

PM upload

Prior to T-2 or T-5 (for first time issuers)

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3.     

Bidding Announcement

Issuer shall provide bidding start time and close time to EBP, on or before T-1

On or before T-1

Issue period (open and close date) is to be disclosed by the issuer in the placement memorandum.

4.     

Day of bidding / Issue open date

T

T

5.     

ISIN Allocation

On or before T+1

On or before T+1

6.     

Settlement

On or before T+1 or T+2 (basis the settlement cycle chosen by the issuer)

On or before T+2

7.     

Allocation by issuers

On or before T+1 or T+2 (basis the settlement cycle chosen by the issuer)

On or before T+2

8.     

Filing of corporate action

On or before T+1 or T+2 (basis the settlement cycle chosen by the issuer)

On or before T+2

9.     

Credit confirmation by depositories

On or before T+1 or T+2 (basis the settlement cycle chosen by the issuer)

On or before T+2

10.                        

Payment of stamp duty

On or before T+1 or T+2 (basis the settlement cycle chosen by the issuer)

On or before T+2

Post-Issue Activities

11.                        

Security Creation

On or before T+3

On or before T+3

12.                        

Listing

On or before T+3

On or before T+3