Sebi proposes changes to regulations regarding debenture trustees

Markets regulator Sebi on Wednesday proposed certain changes to regulations related to debenture trustees.

A consultation paper has been issued to provide clarity on the term 'pecuniary relationship' of Debenture Trustee (DT) with the issuer under the existing norms and stakeholders can submit their comments till September 11.

At present, there are restrictions on appointment of an entity as a DT in case of a certain level of pecuniary relationship with the issuer.

The curbs will be applicable if the entity's pecuniary relationship with the issuer amounts to 2 per cent or more of its gross turnover or total income or Rs 50 lakh or such higher amount as may be prescribed, whichever is lower.

The gross income will be calculated for the two immediately preceding financial years or during the current financial year.

Against this backdrop, some DTs have sought clarity on whether the remuneration being drawn by DTs from the issuer is included or excluded from the purview of 'pecuniary relationship' at the time of ascertaining eligibility.

A working group set up by Sebi suggested that remuneration payable to DTs should not be considered while assessing the pecuniary relationship of the DT with the issuer.

In the consultation paper, the regulator has proposed to exclude pecuniary relationship from computation of remuneration payable to DTs is appropriate and adequate.

There is also the proposal for "disclosure of remuneration/revenue received in respect of debenture trusteeship services as a percentage of the total remuneration/ revenue received by DT from the said issuer in respect of all services (including services other than the debenture trusteeship services)".