The Securities and Exchange Board of India has put out the draft listing agreement for stock exchanges with respect to listing of all debt securities either through public issue or private placement.
The listing agreement is patterned more or less on the lines of the agreement for listing equity issuances with the only difference being in terms of interest payments on the debt instruments.
The letters of allotment will be issued simultaneously as in the case of equities. Certificates would be issued within one month from the date of lodgment for transfer among others.
As in the case of equities the issuer will have to agree to close its transfer books for purposes of issue of shares for conversion of debentures or of shares arising out of right attached to debentures.
For physical certificates, the notice period is 42 days for book closure and in the case of dematerialised securities it is 30 days.
The time gap between two book closures and record dates would be atleast 30 days.
The Issuer has to notify the exchange at least seven days in advance of the date of the meetings of its board of directors for considering any corporate action in respect of the debt issuances.
The issuer will notify the exchange at least twenty-one days in advance of the date on and from which the interest on debentures and bonds, and redemption amount of debentures and bonds will be payable and will issue simultaneously the interest warrants and cheques for redemption money or redeemable shares or debentures and bonds.
The issuer will within 15 minutes of closure of the meetings of its Board of Directors to consider any corporate action intimate to the Exchange such action.
The issuer will also forward to the exchange an annual return immediately after each annual general meeting of at least the top fifty holders of each class of security along with particulars such as the number of security held and address of each holder.
The disclosures have been made applicable to all classes of listed companies except for listed banks.
Issuers who change their name suggesting any new line of business (including software business) shall disclose the turnover and income from such new activities separately in the annual results.
Companies, which have changed their names after January 1, 1998 or change, the name hereafter shall make such disclosures and shall continue to make these disclosures for a period of three years from the date of change in the name.
The Issuer will have to promptly notify the exchange, as and when any loan of the Issuer is classified as a non-performing asset as per the norms of Reserve Bank of India by any bank or financial institution.
The issuer will also have to inform the exchange regarding any change in the rating of its debt securities. Unaudited results on a quarterly basis have to be furnished to the exchange.
Issuers have the option to publish consolidated quarterly financial results in addition to the un-audited quarterly financial results of the parent company as currently required under the Clause 34 of the Listing Agreement.
The Issuer has to agree that it shall be a condition precedent for issuance of new securities excepting Mutual Funds, that it shall deposit with the exchange before the opening of the subscription an amount calculated at 1 per cent of the amount of securities offered for subscription to the public or to the holders of existing securities of the issuer for ensuring compliance, within the prescribed or stipulated period, of all prevailing requirements of law.
About 50 per cent of the security deposit should be paid to the exchange in cash. The balance amount can be provided for by way of a bank guarantee.
The amount to be paid in cash is limited to Rs 3 crores (Rs 30 million). The amount deposited will be released by exchange after the issuer obtains no objection certificate from Sebi.
The company agrees that it will furnish on a quarterly basis a statement to the exchange indicating the variations between projected utilisation of funds and projected profitability statement made by it in its prospectus actual profitability
The issuer will also agree that it shall have a debenture trustee for a debt issue on a continuous basis that is the onus of appointing a debenture trustee should lie on the company.The issuer will create and maintain security ensuring adequate security cover at all times, submit a certificate of the same by an independent entity on a regular basis to exchanges.