On 28-10-2022, the Securities and Exchange Board of India (‘SEBI’) has issued a circular on reduction in denomination for debt securities and non- convertible redeemable preference shares to protect the interest of investors in securities and to promote the development of, and to regulate the securities market. The provisions of this circular are applicable on all issues on or after 1-01-2023.

Key Points:

  1. In an Operational Circular dated 10-08-2021, SEBI mandated that the face value of such shares issued on a placement basis should be Rs. 10 Lakh and the trading lot should be equal to the face value.

  2. After receiving representations regarding reduction of the face value and trading lot so that more investors can participate which will enhance the liquidity in the corporate bond market, SEBI made amendments to Chapter V of the Operational Circular.

  3. Face value of each is reduced to Rs 1 Lakh for both:

    1. debt security or non-convertible redeemable preference share issued on private placement,

    2. listed debt security and non-convertible redeemable preference share issued on private placement basis traded on a stock exchange or OTC basis.

*Kriti Kumar, Editorial Assistant has reported this brief.

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