Sebi proposes simplified rules for high-value debt listed entities

In a consultation paper floated on Monday, the regulator also proposed measures to ease compliance requirements for such entities

The Securities and Exchange Board of India (Sebi) has proposed increasing the threshold for identifying high-value debt listed entities (HVDLEs) from ₹1,000 crore to ₹5,000 crore.

 

In a consultation paper floated on Monday, the regulator has also proposed measures to ease compliance requirements for such entities.

 

The increase in threshold could reduce the number of HVDLEs by nearly two-thirds — from 137 to 48 entities.

 

In the feedback from market participants, it was noted that the current ₹1000-crore threshold is disproportionately low for large debt issuers, leading to regulatory burden.

 

For instance, the top 50 non-banking financial companies (NBFCs) have an average annual borrowings in the range of ₹10,000 crore to ₹40,000 crore. The current threshold is just 2-10 per cent of their annual borrowing programme. This does not constitute a ‘high-value’ in the current market environment.

 

Alongside the threshold proposal, Sebi has suggested aligning corporate governance norms for HVDLEs with those of equity-listed entities. This includes revisions in related-party transaction (RPT) rules, board composition, and secretarial audit requirements.

 

Other relaxations being considered include exemption from obtaining shareholder approval for nominee directors of financial sector regulators or those appointed by court or tribunal.

 

It also includes conditional relief in filling up vacancies of key staff, and exemption from the requirement of shareholder approval for sale of assets of a material subsidiary to another, as long as the assets are within the group.

 

Through the proposals, Sebi has also tried to clarify shareholder approval requirements for directors over 75, easing compliance timelines for board committee vacancies, and standardising disclosure formats.

 

The regulator also plans to harmonise rules for RPTs, introduce clearer norms for secretarial audits, and allow flexibility in compliance timelines during insolvency proceedings.