INDIA Trends and Developments Contributed by: Anish Mashruwala, Utsav Johri, Megha Upadhyaya and Sahil Unadkat, JSA
High-value debt listed securities In 2021, amendments were introduced to the LODR Regulations, pursuant to which high-value debt listed entities (HVDLEs) – ie, listed entities that have listed NCDs with an outstanding value of INR500 crores and above – were required to comply with prescribed corporate governance norms, which were previously applicable only to entities that had listed equity securities. The LODR Regulations have now been further amended, and the threshold for determination of an HVDLE has been raised from INR500 crores to INR1,000 crores. Additionally, a new chapter on corporate governance norms has been intro- duced that is applicable specifically to entities that have only listed high-value non-convertible debt securities (and that do not have any equity securities listed). The prescribed corporate gov- ernance norms include conditions such as: • the requirement of having at least one female director on the board and at least 50% of the board comprising non-executive directors; • constitution of specified committees; • formulation of policy on materiality of related party transactions; • no objection from the debenture trustee/ debenture holders (meeting the prescribed threshold) in the case of material related party transactions and subsequent material modifi- cations; and • corporate governance requirements for mate- rial subsidiaries of HVDLEs. Standardisation of documents and other proposals After consultations with various stakeholders, the SEBI recently approved proposals for stand- ardisation of debenture trust deeds (DTDs) to be formulated by an industry standards forum and used by all issuers of listed NCDs. Any devia-
banks as lenders under the erstwhile regulations on overseas investments. Sources of funds for outbound acquisitions by Indian corporates include funding by banks, NBFCs, AIFs and FPIs at the Indian level, in addition to ECBs raised from offshore financi- ers. Further, lenders at the OI Subsidiary and the OI SDS level include offshore banks, financial Indian regulators and regulations have been pragmatic, with a strong consideration for ease of doing business – an approach that is reflected in some of the recent regulatory amendments. Certain recent regulatory developments affect- ing the acquisition space have related to listed non-convertible debentures (NCDs), and the Securities and Exchange Board of India (SEBI) has been proactive in introducing regulations to strengthen the listed bond market in India. After the introduction of the SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021 (the “NCS Regulations” ), the SEBI has issued multiple circulars with a view to encouraging an increase in market participation in the listed NCD market and to ensuring higher governance from issuers of NCDs. The SEBI has also taken steps to consolidate various circulars issued by it, by introducing master circulars such as the master circular for debenture trustees and the master circular for issue and listing of non-convertible securities. Further, the SEBI has also introduced some key amendments to the SEBI (Listing Obli- gations and Disclosures Requirements) Regula- tions, 2015 (the “LODR Regulations” ) pertaining to the listing of NCDs. Some of the key propos- als and changes from the SEBI in relation to listed NCDs are discussed below. institutions and debt funds. Regulatory Developments
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