Simplifying Corporate Bond Issuances

Continuing with the spate of regulatory announcements by SEBI over the turn of the new year, it yesterday issued a press release proposing simplification of the primary issuance process for corporate bonds. It has released a consultative paper on the “Draft SEBI (Issue and Listing of Debt Securities) Regulations, 2008” for comment until January 23, 2008. The paper aims at simplification of the debt issuance process with a view to reducing costs and enhancing transparency.

The press release summarises the purpose of the new regulations as follows:

“[I]t is proposed to simplify the primary debt market issuance process with a view to developing a vibrant, dynamic and transparent corporate debt market in the country. Simplification of the process is expected to make primary debt issuance cost effective and less time consuming.

Some of the major features of the draft regulations include rationalization of disclosure requirements, enhanced responsibilities to merchant bankers for exercising due diligence and issuance of certificates in regard to new issuances and mandatory listing of private placement of debt under Section 67(3) of Companies Act.

The paper states that while due diligence, proper disclosures and credit rating will be key elements of corporate debt issuances, these will be ensured by SEBI mainly through certifications issued by the merchant bankers, although the draft offer documents will be filed with SEBI and placed on the SEBI website (and of the exchange) for a period of seven working days.”

The paper makes provisions for e-issuances of corporate debt and has proposals for introducing simplified listing requirements of debt for already listed issuer.”

Also, see news reports in the Economic Times and Business Standard.

About the author

Umakanth Varottil

Umakanth Varottil is an Associate Professor at the Faculty of Law, National University of Singapore. He specializes in corporate law and governance, mergers and acquisitions and cross-border investments. Prior to his foray into academia, Umakanth was a partner at a pre-eminent law firm in India.

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