Secondary Market for Corporate Debt Securities
Any listed company making issue of debt securities on a private placement basis and listed on a stock exchange should comply with the following:
1. It should make full disclosures (initial and continuing) in the manner prescribed in Schedule II of the Companies Act. 19;6, SEUJ (Disclosure and Investor Protection) Guidelines, and the Listing Agreement with the exchanges. However, if the privately placed debt securities are in standard denomination of Rs 10 lakhs, such disclosures may he made only through websites of the stock exchange where the debt securities are sought to he listed.
3. The company should appoint a debenture trustee registered with the SEBI in respect of the issuer of debt securities.
4. TIle debt securities should be issued and traded in demat form.
5. The company should sign a separate listing agreement with the stock exchange in respect of debt securities and comply with the conditions of listing.
6. All trades with the exception of spot transactions, in a listed debt security, should be executed only on the trading platform of a stock exchange.
7. The trading in privately placed debts should only take place between qualified QIBs and high net worth individuals (HNls), in standard denomination of Rs 10 lakhs.
8. The requirement of Rule 19 (ZXb) of the Securities Contract (Regulation) Rules, 1957 would not be applicable to list 109 of privately placed debt securities on exchanges, provided all the above requirements are complied with.
9. If the intermediaries with the SEBI associate themselves with the issuance of private placement of unlisted debt securities, they will be held accountable for such issues. They will also be required to furnish periodic reports to SEBI in such format as may be decided by SEBI.