The Securities and Exchange Board of India (“SEBI”) has in a Circular dated November 12, 2020 detailed out the procedure for periodical monitoring and disclosures to be carried out by debenture trustees. The Circular will gain effect from quarter ended December 31, 2020 for listed debt securities.
The present Circular is in pursuance to the earlier circular on due diligence for creation of security which was reported in trail.
- Debenture trustees must incorporate the terms and conditions of periodical monitoring in the debenture trust deed in which the listed entity shall be liable to provide relevant documents/ information, as applicable, to enable the debenture trustee(s) to submit the reports/ certification to Stock Exchanges as specified below:
| Reports/Certificate | Periodicity | Format |
| Asset cover Certificate | Quarterly basis within 60 days from end of each quarter | Annexure A |
| A statement of value of pledged securities | – | |
| A statement of value for Debt Service Reserve Account or any other form of security offered | – | |
| Net worth certificate of guarantor (secured by way of personal guarantee) | Half yearly basis within 60 days from end of each half-year. | |
| Financials/value of guarantor prepared on basis of audited financial statement etc. of the guarantor(secured by way of corporate guarantee) | Annual basis within 75 days from end of each financial year. | – |
| Valuation report and title search report for the immovable/movable assets, as applicable. | – |
- For existing debt securities, listed entities and debenture trustees must enter into supplemental/amended debenture trust deed within 120 days from the date of this circular (by March 12, 2021) incorporating the changes in the debenture trust deed. In case, a listed entity has more than one debenture trustee for its listed debt securities, then debenture trustees may choose a common agency for preparation of asset cover certificate.
- On any breach of covenants or terms of issue by listed entity, the debenture trustee shall take steps as per SEBI Circular dated October 13, 2020.
- The Circular also lists out the various disclosures that debenture trustees are required to make on their websites. The periodicity and formats for the following disclosures are prescribed:
- Revision in Credit ratings
- Status of payment of interest/ principal by the listed entity
- Monitoring of Asset cover certificate and Quarterly compliance report of the listed entity.
- Details of Debenture issues handled by debenture trustee and their status
- Status of information regarding breach of covenants/terms of the issue, if any action taken by debenture trustee
- Complaints received by debenture trustee(s) including default cases
- Status regarding maintenance of accounts maintained under supervision of debenture trustee
- Status of information regarding any default by listed entity and action taken by debenture trustee
- Monitoring of Utilization Certificate
- The present Circular rescinds the periodical reporting format prescribed under SEBI Circular Dated December 19, 2011and the following reporting requirement are specified:
| Report | Periodicity | Format |
| Half yearly compliance report | Half-yearly basis within 30 days of the end of each half-year. | Annexure C |
| Details of other activities carried out by Debenture Trustee(s) including type of activity, description of activity etc. | – | |
| Risk-Based Supervision report | – |
Source: Securities and Exchange Board of India
