SEBI circular on reduction in denomination for debt securities and non- convertible redeemable preference shares– 28 th October, 2022

(Revision in Chapter V of the Operational Circular for issue and listing of Non-convertible Securities, Securitised Debt Instruments, Security Receipts, Municipal Debt Securities and Commercial Paper)

SEBI vide its Circular dated 28 th October, 2022 made amendments in Chapter V (Denomination of issuance and trading of Non-convertible Securities) of the Operational Circular:

Sr. No. Part/Chapter/Section /Sub-section(s) Chapter V of Operational Circular revised dated 28 th October, 2022 Chapter V of Operational Circular dated 10 th August, 2022 Comment 1. Paragraph 1.1 of Chapter V of Operational Circular dated 10 th August, 2022 shall be replaced with the following: The face value of each debt security or non-convertible redeemable preference share issued on private placement basis shall be Rs. One lakh. The face value of each debt security or non-convertible redeemable preference share issued on private placement basis shall be Rs. Ten lakh. Due to this amendment, limit for issue of the face value of each debt security or non-convertible redeemable preference share issued on private placement basis has been reduced to Rs. One lakh which previously was of Rs. Ten lakh. 2 . Paragraph 2.1 of Chapter V of Operational Circular dated 10 th August, 2022 shall be replaced with the following: The face value of the listed debt security and non-convertible redeemable preference share issued on private placement basis traded on a stock exchange or OTC basis shall be Rs. One lakh. The face value of the listed debt security and non-convertible redeemable preference share issued on private placement basis traded on a stock exchange or OTC basis shall be Rs. Ten lakh. Due to this amendment, the face value of the listed debt security and non-convertible redeemable preference share issued on private placement basis traded on a stock exchange or OTC basis has been reduced to Rs. One lakh which previously was of Rs. Ten lakh.

SEBI in the circular said that it has received representations from various market participants, including issuers, requesting for review of the said denominations. In particular, non-institutional investors consider the high ticket size as a deterrent which restricts their ability to access the market for corporate bonds. If the face value and trading lot is reduced, more investors can participate, which in turn will enhance the liquidity in the corporate bond market.

It is to be noted that the provisions of this c