Recent Securities Law Updates

A. SEBI allows filing of Shelf Prospectus even for Issuance and Listing of Debt Securities

With a view to foster fund raising options and at the same time enabling frequent issuers of Debt Securities to raise money without having to file separate prospectus for regulatory clearance for every issuance, the Market Regulator, SEBI, in line with the powers extended by Section 31 of the Companies Act, 2013, amended SEBI (Issue and Listing of Debt Securities) Regulations, 2008 thereby allowing specific categories of entities to file shelf prospectus for public issuance of debt securities. The Shelf Prospectus shall be needed to be filed with SEBI, Recognised Stock Exchanges as well as ROC.
Ms. Anjali Aggrawal
Vice President
The main highlights of the amendments are outlined as follows:

    1. For public issuance of debt securities, following entities may file shelf prospectus:

        a. Public Financial Institutions as defined under clause (72) of section 2 of the Companies Act, 2013, and scheduled banks as defined under clause (e) of section 2 of the Reserve Bank of India Act, 1934;
        b. Issuers authorized by the notification of Central Board of Direct Taxes to make public issue of tax free secured bonds, with respect to such tax free bond issuances;
        c. Infrastructure Debt Funds – Non-Banking Financial Companies regulated by Reserve Bank of India;
        d. Non-Banking Financial Companies registered with Reserve Bank of India, Housing Finance Companies registered with National Housing Bank and Listed Entities subject to compliance with the below-mentioned criteria:
          1. net-worth of Rs. 500 Crore or more as per the audited financials of the preceding financial year;
          2. track record of at least three years of distributable profits; 
          3. credit rating of not less than "AA-" category or equivalent by a credit rating agency;
          4. no regulatory action is pending against the company or its promoters or directors before the Board, Reserve Bank of India or National Housing Bank;
          5. no default in repayment of deposits or interest payable thereon, redemption of debentures or preference shares or payment of dividend to any shareholder, or repayment of any term loan or interest payable thereon to any public financial institution or banking company, in the last three financial years.
          In addition to the above stated criteria, Listed Entities may file Shelf Prospectus provided the Equity Shares or Debt Securities of the said entities are listed on recognized stock exchange for a period of at least 3 years immediately preceding the issue.
      2. To ensure sanctity of the shelf-prospectus in view of dynamic business environment, it is stipulated that not more than four issuances be made through a single shelf prospectus and prior to each such issue, the Companies shall be needed to file an updated Information Memorandum.

    CP’s Viewpoint:

    The Companies Act, 1956 allows only financial institutions or banks to file Shelf Prospectus. However, the new Companies Act widens the prospects by authorizing SEBI to allow the entities at its own discretion to raise funds through multiple issues under the roof of one prospectus i.e. shelf prospectus. SEBI, with the intent to cater the needs of volatile capital market and dynamic business environment, broadened the avenues for the Entities who are in frequent need of funds.

    B. Intimation of Trading Window Closure to Stock Exchange(s)

    Stock Exchanges have directed the Listed Entities to promptly disclose the price sensitive information along with the applicable trading window period, in compliance with Clause 36 of the Listing Agreement read with the SEBI (Prohibition of Insider Trading) Regulations, 1992.
    As per the SEBI (Prohibition of Insider Trading) Regulations, 1992, the trading window shall be, inter-alia, closed for the following events:
    • Declaration of financial results (quarterly, half-yearly and annually).
    • Declaration of dividends (interim and final).
    • Issue of securities by way of public/rights/bonus etc.
    • Any major expansion plans or execution of new projects.
    • Amalgamation, mergers, takeovers and buy-back.
    • Disposal of whole or substantially whole of the undertaking.
    • Any changes in policies, plans or operations of the company.
    Accordingly, all the Listed Companies are advised to intimate to the Stock Exchanges about the details of closure of trading window, along with any price sensitive information and ensure compliance with the same.
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