SEBI Update: Clarification w.r.t. issuance and listing of perpetual debt instruments, perpetual non-cumulative preference shares and similar instruments under Chapter V of the SEBI (Issue and Listing of Non-convertible Securities) Regulations, 2021 dated 8th February, 2023

SEBI vide its Circular dated 8 th February, 2023 issued a notification regarding Clarification w.r.t issuance and listing of perpetual debt instruments, perpetual non-cumulative preference shares and similar instruments under Chapter V OF THE SEBI (Issue and Listing of Non-convertible Securities) Regulations, 2021.

The following has been stated:

It is clarified that only securities which have characteristics as stated below shall necessarily be required to comply with the provisions for issuance and listing as specified under Chapter V of the NCS Regulations and circulars issued thereunder:

The issuer is permitted by RBI to issue such instruments,

The instruments form part of non-equity regulatory capital,

The instruments are perpetual debt instruments, perpetual non-cumulative preference shares or instruments of similar nature and

The instruments contain a discretion with the issuer/ RBI for events including but not restricted to all or any of the below events: conversion into equity; write off of interest/ principal; skipping/ delaying payment of interest/principal; making an early recall;

changing any terms of issue of the instrument.

Further, the Stock Exchanges and Depositories are advised to:

make amendments to the relevant bye-laws, rules and regulations;

disseminate the provisions of this circular on their website;

communicate and create awareness amongst stakeholders; and

monitor the compliance of such issuances.

This Circular is applicable to Issuers who have listed and/ or propose to list Non-convertible Securities; Recognized Stock Exchanges; Registered Depositories; Registered Credit Rating Agencies, Debenture Trustees and Merchant Bankers and shall come into force with immediate effect.

Link: View Circular