On Friday, the Securities and Exchange Board of India (SEBI) suggested revisions to reduce the compliance burden for companies that list non-convertible debentures (NCDs).
The entities in the financial sector will find it easier to comply with this change.
This action is consistent with what the government said in the FY 2023–2024 Budget: “To simplify, ease and reduce the cost of compliance, financial sector regulators will be requested to carry out a comprehensive review of existing regulations. For this, they will consider suggestions from public and regulated entities…”
Additionally, SEBI recommended in the consultation paper that the approval and verification procedures for the financial results of institutions with listed non-convertible securities be arranged like that of equity-listed organizations.
This would simplify the processes and guarantee that, as with equity-listed firms, financial results are approved by the board of directors and signed by an authorized official.
Additionally, the regulator suggested harmonizing the disclosure requirements for fraud and default by senior management in companies having listed non-convertible securities with those that apply to companies with equity listings.
In the consultation document, SEBI announced that it would also shorten the period—possibly from seven to three working days—by which businesses having listed non-convertible securities must notify stock exchanges of record dates. Market players will have plenty of time to react to this plan.
The requirement that all disclosures made by listed companies holding non-convertible securities be submitted in the XBRL (eXtensible Business Reporting Language) format was also put forth by the regulator’s Corporate Bonds and Securitization Advisory Committee.
The modification will lessen duplication and streamline the filing procedure.
The entities must currently submit files in both PDF and XBRL formats.
Relaxing restrictions on ISINs
It also suggested eliminating the limitations on the use of International Securities Identification Numbers (ISINs) for securities that were not listed at the end of 2023, provided that ISINs are later listed.
This action will ease the transition for entities having numerous ISINs to a listed status and lessen the regulatory burden on them.
By September 6, the SEBI is asking the public for feedback on the consultation paper.
