SEBI AND MERCHANT BANKING

1. SEBI ISSUE AND LISTING
OF DEBT SECURITIES
REGULATION 2008

2. The regulation of SEBI is applicable to following issues
 Listing of debt securities through public offer or an private placement
by recognised stock exchange
 Bonds issued by Government or other bodies specified by SEBI
 Security receipts and securitised debt instrument

3. Issue requirement for public issues
• Made an application to a recognised stock exchange for listing
,specific stock exchange should be mentioned
• Obtained in principle approval for their listing
• Obtained credit rating from at least one SEBI registered credit agency
which should be disclosed in the offer document
• Entered into agreement with SEBI registered depository for their
dematerialisation

4. The issuer should appoint
 SEBI registered merchant bankers atleast one of would be the lead
manager
 Debenture trustee
 Not issue debt securities to provide loan to acquisition of shares of ,
any person who is part of the same group/under the same management

5. Disclosure in/ filing of offer document
 Disclosure specified in schedule 2 of the companies act
 Disclosures/additional disclosures specified by the SEBI

6. Advertisement for public issues
1. Not to be misleading in material particulars which is
manipulative/deceptive
2. Be truthful/fair/clean and not contain an untrue/ misleading
statement/promise forecast
3. Not contain any extraneous matters to the contents of the offer
document
4. Urge the investors to invest only on the basis of the information
contained in the offer document

7. Abridged prospectus/application forms
The issuer/ lead merchant banker should ensure that every copy of
application is accompanied by a copy of the abridged prospectus
which should contain extraneous matters.
Adequate space will be provided for the investors to fill the various
details.

8. Trust Deed
A trust deed securing the issue of debt securities should be executed in
the favour of trustees within 3 months of the closure of the issue. It
should contain the clauses prescribed under section 117-A of the
companies act and mentioned in SEBI debenture trustees regulation

9. Debenture Redemption Reserve(DRR)
The issuer should create a DRR in accordance with the provisions of
the companies act and circulars issued by the Government. Any
distribution of the dividend would require the approval of trustees if
the issue has defaulted in payment of
 Interest
 Redemption
 Creation of security

10. Listing of debt securities
Mandatory listing- the issuer of debt securities to the public should
make an application for listing to a recognised stock exchanges. It
should comply with the conditions of listing as specified in the listing
agreement with the concerned stock exchange. The condition to be
mentioned specifically on the which security is traded

11. Relaxation of rule 19 securities contracts (regulation)
rules
The SEBI has relaxed the rules relating to
A. The documents to be forwarded along with the application to the
stock exchange for listing and the conditions precedent to the
listing of securities
B. Issued to the public by an infrastructure company/ Government
company/statutory authority/corporation/any special purpose
vehicle setup by any of them engaged in infrastructure sector

12. Conditions for continuous listing/trading of debt
securities
a) Continuous listing- all the issuers making public issue of debt
securities/seeking their listing issued on private placement basis
should comply with conditions of listing specified in the respective
listing agreements every rating should be reviewed by the rating
agency
b) Trading- the debt securities issued to the public or on a private
placement basis should be traded and such trades should be cleared
/settled in recognised stock exchanges subject to conditions specified
by SEBI

13. Obligations of Intermediaries/issuers
 Debenture trustees
 Issuer/lead merchant banker
the obligation of Debenture trustees and merchant bankers should be
executed as per SEBI guidelines. They should ensure fair transaction
with disclosing all the information to investors

14. `Action in case of violation of regulations
1. Inspection by SEBI
2. Directions by SEBI
Power of SEBI to issue general order/circular- the SEBI
has power to order about specification in issue of debt
securities