Circular No. SEBI/HO/DDHS/DDHS_Div1/P/CIR/2022/106, dt. 04-08-2022

Enhanced guidelines for debenture trustees and listed issuer companies on security creation and initial due diligence

1. The SEBI Board, in its meeting on 28-9-2020, approved changes to the regulatory framework relating to debenture trustees (DTs), enhancing their role. Resultant amendments were made in the SEBI (Debenture Trustees) Regulations, 1993, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and erstwhile SEBI (Issue and Listing of Debt Securities) Regulations, 2008[1], pursuant to which a circular[2] on the creation of security and due diligence by DTs was issued.

2. Since the issue of the circular, SEBI has received feedback from market participants on the aspects of due diligence and security creation. On the basis of such feedback, it has been decided that certain aspects of the said circular be tweaked. Accordingly, the present circular laying down revised requirements relating to encumbrance, creation of security and related due diligence by DTs.

A. Manner of change in security/ creation of additional security/ conversion of unsecured to secured in case of already listed non-convertible debt securities :

3. Regulation 59 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR Regulations) provides for a change in terms of listed non-convertible debt securities. A change in the structure of non-convertible debt securities, inter-alia, may include:

nA change in security,

nCreation of additional security in case of already secured debt securities or

nCreation of security in case of unsecured debt securities.