SEBI considers easing rules of non-convertible securities for issuers

SEBI considers easing rules of non-convertible securities for issuers

It has sought public comments by 15 August

The Securities and Exchange Board of India (SEBI) considering easing rules for issuers of non-convertible securities by replacing the requirement to send hard copies of financial statements and annual reports to security holders with web links and quick response (QR) codes for assessment.

The move will reduce costs, prevent paper waste, and promote regulatory consistency. The market regulator would set timelines for sending financial information to debenture holders, ensuring compliance across varied listed entities.

SEBI’s consultation paper suggested that issuers should send a letter providing the QR code and web link, including the exact path (where complete details of the annual report are available), to holders of non-convertible securities.

The provision of a QR code will be incorporated for easy access to debenture holders.

The consultation paper further read, "Unlike entities having listed specified securities, there are issuers having listed non-convertible securities, which are not constituted under the Companies Act, 2013. Hence, the timelines specified for sending the copy of financials to debenture holders are not applicable. Therefore, there’s a need to specify timelines within which the issuer must comply with the requirements.”

For this, SEBI proposed that for listed entities (companies) the timelines specified under the Companies Act should be applicable. As for the listed entities constituted under some other Act or statute, the provisions of their parent Act or statute should be applicable.

However, in the absence of any such provision, a timeline of 21 days should be provided under the Companies Act provisions.