SEBI Regulations on Shelf Prospectus

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The Securities Exchange Board of India (SEBI) has issued the SEBI (Issue and Listing of Debt Securities) (Amendment) Regulations, 2014 which prescribes the classes of companies or entities who may file shelf prospectus under section 31 of the Companies Act, 2013. These regulations permit not only existing listed companies meeting certain criteria but also banks, infrastructure debt funds, public financial institutions etc to file a shelf prospectus which would save time and efforts of all those involved in the public issue of debt securities and their listing.

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SEBI Regulations on Shelf Prospectus

  1. 1. FIRST NOTES KPMG IN INDIA 3 February 2014 SEBI Regulations on Shelf Prospectus First Notes on: Financial Reporting Corporate law updates Regulatory and Other Information Disclosures Sector: All Banking and Insurance Information, Communication, Entertainment Consumer and Industrial Markets Infrastructure and Government Section 31 of the Companies Act, 2013 which has been notified on 12 September 2013, prescribes that classes of companies as may be prescribed by the Securities and Exchange Board of India (SEBI) may file a shelf prospectus with the Registrar at the stage of the first offer of securities included therein. 3. Infrastructure Debt Funds – Non-Banking Financial Companies regulated by Reserve Bank of India; or 4. Non-Banking Financial Companies registered with Reserve Bank of India and Housing Finance Companies registered with National Housing Bank complying certain criteria like net worth of at least INR 500 crore, track record of distributable profits for the last three years, rating of not less than ‘AA-‘ category or equivalent, no pending regulatory action against the company/promoters/directors before the prescribed authorities and no default in repayment of deposits or interest payable thereon, redemption of debentures or preference shares, payment of dividend to any shareholder, or repayment of any term loan or interest payable thereon to any public financial institution or banking company, in the last three financial years. 5. Listed entities complying with the criteria as mentioned in point 4 above, in addition to, the condition that their shares or debt securities be listed for at least three years immediately preceding the issue and compliance with the terms of the listing agreement. The SEBI vide its notification dated 31 January 2014 has amended the SEBI (Issue and Listing of Debt Securities) Regulations, 2008, by issuing the SEBI (Issue and Listing of Debt Securities) (Amendment) Regulations, 2014 (“the regulations”). The regulations prescribe that a shelf prospectus shall have the same meaning as assigned to it in section 31 of the Companies Act 2013. Relevant to: The SEBI has notified that the following companies or entities may file shelf prospectus for public issuance of their debt securities: All 1. Public financial institutions as defined under clause (72) of section 2 of the Companies Act, 2013, and scheduled banks as defined under clause (e) of section 2 of the Reserve Bank of India Act, 1934; or 2. Issuers authorised by the notification of Central Board of Direct Taxes to make public issue of tax free secured bonds, with respect to such tax free bond issuances; or Audit committee CFO Others Transition: Immediately Within the next 3 months Post 3 months but within 6 months Post 6 months © 2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  2. 2. First Notes - 3 February 2014 These regulations require a copy of the information memorandum containing the disclosures as specified in the Companies Act, 196 or Companies Act, 2013, as applicable, to be filed with the stock exchanges and the SEBI, immediately on filing the same with the Registrar. The regulations also prescribe that not more than four issuances can be made through a single shelf prospectus, which can be valid for a period not exceeding one year as prescribed under the Companies Act, 2013. Our comments The regulations released by the SEBI enable different classes of companies/entities, in addition to those already listed, to take benefit of the shelf prospectus route which would save time and costs for these companies/entities and at the same time protect the interests of the investors by allowing only companies/entities with a certain level of standing to avail the route of shelf prospectus. The Bottom Line Companies intending to launch a public issue of debt securities and their listing should evaluate the shelf prospectus route as prescribed by the SEBI. © 2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  3. 3. KPMG in India Useful Links Ahmedabad Safal Profitaire B4 3rd Floor, Corporate Road, Opp. Auda Garden, Prahlad Nagar Ahmedabad – 380 015 Tel: +91 79 4040 2200 Fax: +91 79 4040 2244 Hyderabad 8-2-618/2 Reliance Humsafar, 4th Floor Road No.11, Banjara Hills Hyderabad 500 034 Tel: +91 40 3046 5000 Fax: +91 40 3046 5299 Bangalore Maruthi Info-Tech Centre 11-12/1, Inner Ring Road Koramangala, Bangalore 560 071 Tel: +91 80 3980 6000 Fax: +91 80 3980 6999 Kochi 4/F, Palal Towers M. G. Road, Ravipuram, Kochi 682 016 Tel: +91 484 302 7000 Fax: +91 484 302 7001 Chandigarh SCO 22-23 (Ist Floor) Sector 8C, Madhya Marg Chandigarh 160 009 Tel: +91 172 393 5777/781 Fax: +91 172 393 5780 Kolkata Unit No. 603 – 604, 6th Floor, Tower 1, Godrej Waterside, Sector – V, Salt Lake, Kolkata – 700091 Tel: +91 33 44034000 Fax: +91 33 44034199 Chennai No.10, Mahatma Gandhi Road Nungambakkam Chennai 600 034 Tel: +91 44 3914 5000 Fax: +91 44 3914 5999 Mumbai Lodha Excelus, Apollo Mills N. M. Joshi Marg Mahalaxmi, Mumbai 400 011 Tel: +91 22 3989 6000 Fax: +91 22 3983 6000 Delhi Building No.10, 8th Floor DLF Cyber City, Phase II Gurgaon, Haryana 122 002 Tel: +91 124 307 4000 Fax: +91 124 254 9101 Pune 703, Godrej Castlemaine Bund Garden Pune 411 001 Tel: +91 20 3058 5764/65 Fax: +91 20 3058 5775 Back issues are available to download from: www.kpmg.com/in www.kpmg.com/in The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. © 2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. This document is means for ecommunication2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative © only. (“KPMG International”), a Swiss entity. All rights reserved.

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