On 9-2-2023, the Securities and Exchange Board of India (‘SEBI’) clarified on the compliance by the first- time issuers of debt securities under SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021 (‘NCS’) with Regulation 23(6). The circular came into effect on 9-2-2023.

Key Points:

  1. Stock Exchanges must take an undertaking from the first- time issuers stating that they ensure that their Articles of Association (‘AOA’) will be amended within a period of six months from the date of the debt securities.

  2. The undertaking will be taken at the time of granting the in-principle approval.

  3. The issuer has to comply within 6 months and report the compliance to Stock Exchanges.

  4. Regulation 23(6) read along with Regulation 2(1)(r) of NCS Regulations requires the AoA of an issuer that is a company to include provisions with respect to the requirement for the board of directors, to appoint such person nominated by the debenture trustee in terms of clause(e) of sub-regulation (1) of regulation 15 of the SEBI (Debenture Trustees) Regulations, 1993. The regulation also provides a time period upto September 30, 2023, for existing debt listed issuers to amend their AoA.

*Kriti Kumar, Editorial Assistant has reported this brief.

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