SEBI revises norms for appointment of an independent third-party reviewer/certifier for green debt security

The Securities and Exchange Board of India (“SEBI”) has issued the revised framework for appointment of third-party reviewer/certifier for green debt securities. Accordingly, Chapter IX (Green Debt Securities) of the Master Circular for issue and listing of Non-Convertible Securities, Securitised Debt Instruments, Security Receipts, Municipal Debt Securities, and Commercial Paper stands amended. The circular is effective immediately.

Key highlights of the amendment are as follows:

1. The issuer must appoint an independent third-party reviewer/certifier to confirm that the green debt securities comply with the SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021, including review/certification of processes such as project evaluation and selection criteria, and eligible project categories.

2. The reviewer must be independent of the issuer, its directors, senior management, and key managerial personnel and should be remunerated in a manner that avoids conflicts of interest. He shall also have the expertise in assessing ESG debt securities.

3. The scope of the review conducted by the independent third-party reviewer/certifier must be specified in the offer document.

4. The independent review may take the form of a Second Party Opinion, Verification, Certification, or Scoring/Rating, as recommended by the International Capital Market Association.

5. The issuer must ensure that the details regarding the independent third-party reviewer are adequately disclosed in the offer document.

Source: SEBI