On September 7, 2021, SEBI amended the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“SEBI Listing Regulations”) and extended corporate governance norms for ‘High-Value Debt Listed Entities’ (“HVDLEs”), which previously only applied to entities with listed equity or securities convertible into equity. Set out below is a summary of the changes made by SEBI:

  1. SEBI has extended various corporate governance requirements that apply to entities with listed equity or securities convertible into equity to HVDLEs. For instance, provisions relating to board composition, committee composition, related party transactions, and governance requirements with respect to subsidiaries, independent directors, employees/ senior management etc. and promoters would also apply to HVDLEs.
  2. A HVDLE is a listed entity that has listed its non-convertible debt securities (“NCD”) and has an outstanding value of listed NCDs of INR 500 core or more. As on the date of the amendment notification, an entity would be considered an HDVLE on the basis of value of principal outstanding as on March 31, 2021.
  3. If an entity that has listed NCDs triggers the specified threshold during the course of the year, it shall ensure compliance with these provisions within six months from the date of such trigger.
  4. These requirements shall apply on a ‘comply or explain’ basis until March 31, 2023, and on a mandatory basis thereafter. In this regard, SEBI has stated that HVDLEs shall endeavor to comply with the enhanced corporate governance provisions and achieve full compliance by March 31, 2023. If it is unable to do so, it shall explain the reasons for such non-compliance/ partial compliance and the steps initiated to achieve full compliance in the quarterly compliance report to be filed under the SEBI Listing Regulations.

Authored by Abhinav Bhalaik, Partner, Armaan Patkar, Principal Associate, and Chirag Shah, Senior Associate

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