DISCLOSURES BY
LISTED ENTITIES OF DEFAULTS ON PAYMENT OF INTEREST/ REPAYMENT OF PRINCIPAL
AMOUNT ON LOANS FROM BANKS / FINANCIAL INSTITUTIONS, DEBT SECURITIES, ETC.
INFORMATION:
SEBI (Listing
Obligations and Disclosure Requirements) Regulations, 2015 (“SEBI LODR Regulations”)
currently require disclosure of material events / information by listed
entities to stock exchanges. Specific disclosures are required under the SEBI
LODR Regulations in certain matters such as delay / default in payment of
interest / principal on debt securities, including listed Non-Convertible
Debentures, listed Non-Convertible Redeemable Preference Shares, Foreign
Currency Convertible Bonds (FCCBs) etc. Similar disclosures are presently not
stipulated with respect to loans from banks and financial institutions.
Corporates in India
are even today primarily reliant on loans from the banking sector. Many banks
are presently under considerable stress on account of large loans to the
corporate sector turning into stressed assets / Non performing Assets (NPAs).
Some companies have also been taken up for initiation of insolvency and
bankruptcy proceedings.
In order to address
this critical gap in the availability of information to investors, listed
entities shall comply with the requirements of this circular.
APPLICABILITY:
The circular shall be
applicable to all listed entities which have listed any of the following:
specified securities (equity and convertible securities), non-convertible debt
securities and non-convertible and redeemable preference shares.
The disclosures shall
be made to the stock exchanges when the entity has defaulted in payment of
interest / instalment obligations on debt securities (including commercial
paper), Medium Term Notes (MTNs), Foreign Currency Convertible Bonds (FCCBs),
loans from banks and financial institutions, External Commercial Borrowings
(ECBs) etc.
‘Default’ for the
purpose of this circular shall mean non-payment of interest or principal amount
in full on the pre-agreed date.
TIMING OF
DISCLOSURES:
The entities shall
make disclosures within one working day from the date of default at the first instance
of default in the format specified in Clause C1 and within 7 days from the end
of such quarter in the format specified in Clause C2 of this circular.
OTHER
INFORMATION:
Listed entities entity
shall also separately provide information pertaining to defaults to the concerned
Credit Rating Agencies in a timely manner and as may be specified by SEBI from time
to time.
This circular shall
come into effect with effect from October 1, 2017. This is to enable listed companies
to put appropriate systems in place for prompt submission of disclosures as stipulated
in this circular.
Stock Exchanges are
advised to bring the provisions of this circular to the notice of listed entities
and to disseminate the same on their websites.
This circular is
issued under Regulation 101 of SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015.
This circular is
available on the SEBI website at www.sebi.gov.in under the category “Legal
Framework/Circulars”
and link for the same is given below:
With Regards
CS Prakash Verma
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