SEBI suggests simplified rules for high-value debt listed entities
The aim is to ease compliance requirements
In its consultation paper, the Securities and Exchange Board of India (SEBI) has proposed increasing the threshold for identifying high-value debt listed entities (HVDLEs) from Rs.1,000 crore to Rs.5,000 crore, reducing the number by two-thirds – from 137 to 48 entities.
From the feedback from market participants, SEBI had observed that the current Rs.1000 crore limit was extremely low for large debt issuers, leading to regulatory burden.
The top 50 non-banking financial companies (NBFCs) have an average annual borrowing from Rs.10,000 crore to Rs.40,000 crore. This is merely 2-10 percent of their annual borrowing and does not constitute ‘high value’ in the current market scenario.
Meanwhile, the market regulator has also recommended aligning corporate governance norms for HVDLEs with those of equity-listed entities. This includes revisions in related-party transaction (RPT) rules, board composition, and secretarial audit requirements.
Other relaxations being considered include exemption from obtaining shareholder approval for nominee directors of financial sector regulators or those appointed by a court or tribunal.
It includes conditional relief in filling up vacancies of key staff, and exemption from the requirement of shareholder approval for the sale of assets of a material subsidiary to another, if the assets are within the group. SEBI has clarified shareholder approval requirements for directors over 75, easing compliance timelines for board committee vacancies, and standardising disclosure formats.
Additionally, it plans to harmonise rules for RPTs, introduce clearer norms for secretarial audits, and allow flexibility in compliance timelines during insolvency proceedings.