Mineral production grows by 8 percent in February (See 'Corp Brief') SARFAESI Act - Court refrains to adjudicate matter on merits when matter is already pending in DRAT : HC (See 'Legal Desk') Coal production in April up by 7.4% (See 'Corp Brief') SEBI Act - Appellants have made case for stay as rigours of directions of SEBI order would adversely affect business of Appellant as well as their clients : SAT (See 'Legal Desk') Trade Mark Act - Marks 'BETSONE' and 'BETASON' are deceptively similar to registered trademark 'BETNESOL' and visually, phonetically and structurally alike, with minimal alterations : HC (See 'Legal Desk') Voting by tribal communities blossoms as ECI's outreach to them bears fruit (See 'Corp Brief') SARFAESI Act - No fault can be found with respondent financial institution invoking Section 14 of SARFAESI Act by approaching District Magistrate, Rewa : HC (See 'Legal Desk') Ministry of Parliamentary Affairs observes Swachhata Pakhwada (See 'Corp Brief') Arbitration Act - Arbitral award cannot be interfered with if view of arbitral tribunal is plausible one : HC (See 'Legal Desk') IBC - Asset memorandum shall not be accessible to any person during liquidation : IBBI (See 'Legal Desk') Critical Minerals Summit concludes (See 'Corp Brief') Cr.P.C. - While adjudicating on bail application court is duty bound to ensure that accused's right to life and right to health is not violated : HC (See 'Legal Desk') PMLA - Petitioner cannot claim bail as matter of right for treatment only at specialized hospital of his choice : HC (See 'Legal Desk') SEBI (Research Analysts) Regulations, 2014 for ontravention of RA Regulations Certificate of Registration of Noticee Gaurav Sarda can be cancelled : SEBI (See 'Legal Desk') REC Ltd declares financial results, records highest ever annual net profit (See 'Corp Brief') Trade Marks Act - Defendant's adoption of Trademark is not in good faith and potential confusion encroaches upon Plaintiff's statutory trademark rights : HC (See 'Legal Desk') SEBI Act - Noticee was maintaining call records which were sent to SEBI : SEBI (See 'Legal Desk') Arbitration - Petition u/s 29A for extension of mandate of Arbitral Tribunal can be filed even after mandate has expired : HC (See 'Legal Desk') Mines Ministry to hold 2-day Critical Minerals Summit (See 'Corp Brief') IBC - When one party owes debt to another and creditor is claiming under written agreement providing for rendering 'service', debt is operational debt if claim of debt has some connection with service : SC (See 'Legal Desk') Companies Act - Stamp duty @5% market value of property is liable to be paid only when property is situated within State of Madhya Pradesh otherwise not : HC (See 'Legal Desk') SEBI Act - Final opportunity of inspection of documents and cross-examination of witnesses should be given to Appellants : SAT (See 'Legal Desk') SARFAESI Act - Mere discovery of new or important matter or evidence is not a sufficient ground for review ex debito justitiae : HC (See 'Legal Desk') Conference organized on Maritime Amrit Kaal Vision 2047 (See 'Corp Brief') PMLA -Bail application can be dismissed as petitioner failed to satisfy conditions for grant of bail : HC (See 'Legal Desk') CSIR, NIScPR organize national workshop to celebrate World Intellectual Property Day (See 'Corp Brief') SEBI Act - Appellants have failed to substantiate their claim of financial distress nor have they brought any new fact or circumstances requiring grant of interim relief : SAT (See 'Legal Desk') ACC delivers lifetime highest annualised PAT (See 'Corp Brief') Trade Mark Act - Marks are visually phonetically and deceptively similar to Plaintiffs' trademarks : HC (See 'Legal Desk') SJVN inaugurates First Multi-purpose Green Hydrogen Pilot Project (See 'Corp Brief') IBC - Even if CIRP commences, Directors, who are incharge of affairs of Company cannot be absolved of any wilful default committed by borrower Company : HC (See 'Legal Desk') REC to extend loan of Rs 1869 Cr for Kiru Hydro Electric Project (See 'Corp Brief')

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SEBI issues consultation paper on consolidation and reissuance of debt securities

Published: Feb 03, 2017

By TIOLCORP News Service

MUMBAI, FEB 03, 2017: THE Securities and Exchange Board of India (SEBI) has issued a consultation paper on consolidation and reissuance of debt securities under the  SEBI (Issue and Listing of Debt Securities) Regulations, 2008.  Despite several technical problems felt in carrying out consolidation and re-issuance, SEBI felt that such a measure would help in building secondary market liquidity in corporate bonds. The consultation paper has been prepared with the objective of seeking public comments/views on the proposals mentioned in this paper. Apart from the proposals mentioned in the paper, other suggestions/ inputs, to develop the secondary market for corporate bonds, are also invited from the public at large.

Option A: One ISIN per quarter:

It is proposed that the issuers can have only ISIN per quarter, i.e total of 4 ISINs in a financial year. In case the issuer raises funds by way of private placement of debt securities in a particular quarter, then for the whole of that quarter, the issuer can have only one ISIN. Further, if the issuer makes another issuance of debt security in the same quarter, whose maturity is in the same quarter as that of the maturity of the existing debt instrument, then the issuer must consolidate both the issuers under the same existing ISIN by adjusting the difference in the issue price. The debt may be issued either at a discount or at a premium.

If the issuer makes another issuance of debt security in the same quarter, whose maturity does not fall in the same quarter as that of the maturity of the existing debt instrument, then the issuer has the flexibility to obtain a new ISINs for that particular issuance. However, the total number of ISINs in a financial year shall not exceed 4 i.e. 1 ISIN per quarter. It has been pointed out that if the restriction as above are implemented, it may lead to a situation of liquidity mismatch and bunching of liabilities for the issuer. In order to resolve this issue, it is proposed that the issuer can as a onetime exercise make a choice of having bullet maturity payment or in order to avoid bunching of liabilities, the issuer can make equated quarterly payment or equated monthly payment of the maturity proceeds within that financial year. This will enable the issuers to stagger the redemption amount across the year by amortizing the repayments. However this should clearly be disclosed in the information memorandum

Option B:One ISIN in a period of two months:

SEBI has proposed that the issuers can have only ISIN in a period of two months, i.e., total of 6 ISINs in a financial year. In case the issuer raises funds by way of private placement of debt securities in a two month period, then for the whole of that two months, the issuer can have only one ISIN. Further, if the issuer makes another issuance of debt security in the same period of two months, whose maturity is in the same half year as that of the maturity of the existing debt instrument, then the issuer must consolidate both the issues under the same existing ISIN by adjusting the difference in the issue price.

Active Consolidation: Switches-Conversion

Switching or Conversion, would offer investors the opportunity to convert their holdings of smaller debt securities into larger debt securities of same issuer.A switching or conversion can be viewed as a repurchase of the debt securities in advance of maturity where payment for these repurchases would be in terms of newly issued more-liquid benchmark securities. Thus, a bond switching or conversion is a repurchase in advance of maturity, where other debt securities would be supplied as payment. The less-liquid debt securities would usually be paired with liquid benchmarks that are of similar maturity and coupon rate. Here, it may be pointed out that switching or conversion rate or ratio mostly depend on the secondary market prices at the time of the announcement of a conversion. However, due to lack of liquidity here the pricing may be a concern. Hence the following is proposed for carrying out the switching or conversion.

The detailed consultation paper can be accessed at [http://www.tiolcorplaws.com/corporate-law/upload/ConsultationPaperSEBI.PDF].

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