Key Takeaways:
Equitable treatment to IDR holders
Terms / Structure of IDRs
Information to stock exchange / investors
Terms of Securitised Debt Instruments
3. 3
Legends used in the Presentation
IDR Indian Depository Receipts
LE Listed Entity
Reg. Regulation
SARFAESI Act Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act
SE Stock Exchange
SEBI Securities and Exchange Board of India
4. 4
Presentation Schema
Equitable treatment
to IDR holders
Terms / Structures
of IDRs
Record date /
Voting
Delisting of IDRs
Definitions under SEBI (Issue
and listing of securitized
debt instruments and
security receipts) Reg., 2008
Disclosure of information
having bearing on
performance / operation of LE
and / or price sensitive
information
Information to
investors
Terms of securitised
debt instrument
5. Reg. 74- Equitable treatment to IDR holders
5
LE shall ensure that IDR Holders are treated in a manner equitable with security
holders in home country, if it has listed its equity shares or other securities
representing equity shares on the SE(s) in countries other than its home country
Equitable treatment for all corporate actions, except those which are not
permitted by Indian laws
Equitable treatment at the time of takeover / delisting / buy back of LE’s equity
shares
LE shall also ensure protection of interests of IDR holders particularly with
respect to all corporate benefits permissible under Indian laws and the laws of its
home country and shall address all investor grievances adequately
6. 6
Reg. 75- Advertisements in Newspapers
Information to be
published-
Periodical financial
results which are
required to be disclosed
and
Notices given to IDR
holders by
advertisement
Languages
One English daily national
newspaper circulating in
the whole / substantially
the whole of India and
One Hindi national daily
newspaper in India
7. 7
Dividend shall be paid as per the timeframe applicable in LE’s home
country / other jurisdictions where its securities are listed, whichever is
earlier, so as to reach the IDR Holders on or before the date fixed for
payment of dividend to holders of its equity share or other securities.
LE shall not forfeit unclaimed dividends before the claim becomes
barred by law in the home country, as applicable, and such forfeiture,
when effected, shall be annulled in appropriate cases
IDRs shall have two-way fungibility in the manner specified by the
Board from time to time
Reg. 76- Terms of IDRs
8. 8
Reg. 77- Structure of IDRs
•ensure that the underlying shares of IDRs shall rank pari-passu with
the existing shares of the same class and
•Disclosures shall be made in the annual report if LE has different
classes of shares based on different criteria
•not exercise a lien on
•the fully paid underlying shares and partly paid underlying shares,
against which the IDRs are issued
•Except in respect of moneys called or payable at a fixed time in respect
of such underlying shares
•stipulate that any amount paid up in advance of calls of underlying
shares against which IDRs are issued may carry interest but shall not in
respect thereof confer a right to dividend or to participate in profits,
subject to the requirements of laws and reg. of its home country
LE shall-
9. Reg. 78- Record date
9
A record date shall be fixed for the purpose of payment of dividends / distribution of
any other corporate benefits to IDR holders, if it is required in its home country /
other jurisdictions where its securities are listed
Notice shall be given to the recognized SE(s) at least 4 working days in advance by
specifying the purpose of the record date
10. Reg. 79- Voting
10
LE shall send out proxy forms to IDR Holders in all cases either
directly / through an agent mentioning that a security holder may
vote either for / against each resolution
Voting rights of the IDR Holders shall be exercised in accordance with
the depository agreement
11. 11
Reg. 80- Delisting of IDRs
LE shall give fair and reasonable treatment to IDR
holders, if it decides to delist its IDRs
LE shall comply with such norms and conditions
for delisting IDRs as specified by the Board / SE in
this regard
If the underlying equity shares are delisted, then
LE shall delist and cancel the IDRs too.
13. Reg. 81- Applicability
13
All Special purpose distinct entity issuing securitised debt
instruments &
Trustees of such entity shall ensure compliance with each of
the provisions of these reg.
Securitised debt instruments herein after will be referred as instruments
Definitions as defined under SEBI (Issue and listing of securitized debt instruments
and security receipts) Reg., 2008
Asset pool means the total debt or receivables, assigned to a
special purpose distinct entity and in which investors of such
scheme have beneficial interest
14. Contd.
14
•An option retained and exercisable by the originator to
purchase the debt or receivables assigned to a special
purpose distinct entity, if the residual value of such debt
or receivables falls below a specified percentage of the
price at which it is assigned
Clean up call
option
•Any arrangement intended to decrease the likelihood of
default on the securitised debt instruments, including
subordination, insurance, letter of credit, over-
collateralisation, undertakings and guarantees
Credit
enhancement
•Any right that generates / results into a cash flow
•Mortgage debt
•Such receivables arising out of securities as specified by
the Board
•Any financial asset as per sec. 2 (1) (l) of SARFAESI Act,
2002
Debt or
receivables
15. Contd.
15
Investor
Securitised debt instrument - Any person holding any securitised debt instrument
which acknowledges the interest of such person in the debt or receivables assigned to
the special purpose distinct entity
Security receipts – A qualified buyer holding security receipts which acknowledges
the interest in the financial asset assigned to the issuer
Any person who agrees to provide funds to the special purpose
distinct entity for settlement of of payments due to investors in
accordance with the schedule of payments contained in the terms of
issue of the securitised debt instruments issued to them, in the event
of any short term cash flow shortfalls of the special purpose distinct
entity
A person who is liable, whether under a contract / otherwise, to pay a
debt or receivables or to discharge any obligation in respect of a debt
or receivables
Liquidity
provider
Obligor
16. Contd.
16
Originator- the assignor of debt or receivables to a special purpose distinct entity for the
purpose of securitisation
Regulated activity- In relation to special purpose distinct entity means any of its
activity which are regulated by the Board under the Act and these regulations and
includes making a public offer of securitised debt instruments, making disclosures in
connection with such issue, the performance of obligations relating to public offer or
listing and redemption of such instruments, management and administration of the
schemes under which such instruments are issued, valuation and maintenance of
accounts which have a bearing on value of such instruments, and any other related
activity as may be specified by the Board
Scheme- scheme for issue of securitised debt instruments in accordance with this reg.
for issue of security receipts under SARFAESI Act, 2002 and/or regulations/guidelines as
provided by the RBI and are proposed to be listed on a recognised SE
17. Contd.
17
•Means acquisition of debt or receivables by any special purpose
distinct entity from any originator or originators for the purpose
of issuance of securitised debt instruments to investors based on
such debt or receivables and such issuance
Securitization
•Certificate / instrument by whatever name called issued by a
special purpose distinct entitySecuritized debt
instrument
•Any person appointed by the special purpose distinct entity
and who is responsible for the management or collection of
the asset pool or making allocations or distributions to holders
of the securtitised debt instrument in accordance with this
reg. but does not include a trustee for the issuer if the trustee
receives such allocations or distributions
Servicer
18. Contd.
18
Special purpose distinct entity- means a trust which acquires debt or receivables out of
funds mobilized by it by issuance of securitised debt instruments through one or more
schemes, and includes any trust set up by the National Housing Bank (NHB) under the
NHB Act, 1987 (53 of 1987) / by the National Bank for Agriculture and Rural
Development (NABARD) under the NABARD Act, 1981 (61 of 1981)
Sponsor- means
(i) any person who establishes or promotes a special purpose distinct entity for the
purposes of issuance of Securitised debt instrument or
(ii) an asset reconstruction company who has established / promoted a trust which has
issued security receipts
Trustee- means a trustee of a special purpose distinct entity
19. Reg. 82-Intimation and filings with SE(s)
19
• Intention to issue new instruments either through a public issue /on private
placement basis shall be intimated to the SE prior to issuing such securities, if the LE
proposes to list such privately placed debt securities
• Intimation: At least 2 working days in advance (excluding the date of meeting and
date of intimation)
• Event: Meeting of LE’s board of trustees, at which the recommendation / declaration
of issue of instruments / any other matter affecting the rights / interests of holders of
instruments is proposed to be considered
• Statements, reports / information including financial information pertaining to
schemes shall be submitted to SE within 7 days from the end of the month / actual
payment date, either by LE / through the servicer, on a monthly basis in the format as
specified by the Board from time to time
• If the periodicity of receivables is not monthly, reporting shall be made for relevant
periods
• LE shall also provide the loan level information, without disclosing particulars of
individual borrowers, to the SE in manner specified by it, either by itself or through
the servicer
20. Reg. 83- Disclosure of information having bearing
on performance / operation of LE and / or price
sensitive information
20
• All information having bearing on the on performance/operation of the LE and price
sensitive information shall be promptly informed to the SE
• Prompt information shall imply that the SE must be informed must as soon as practically
possible and without any delay and that the information shall be given first to the SE(s)
before providing the same to any third party
21. Schedule III- Part D
21
Any attachment / prohibitory orders restraining LE from transferring instruments from
the account of the registered holders and particulars of the numbers of instruments so
affected and the names of the registered holders and their demat account details
Any action that shall result in the redemption, conversion, cancellation, retirement
in whole / in part of any instruments
Any action that shall affect adversely payment of interest on instruments
Any change in the form / nature of any of its instruments that are listed on the SE(s)
/ in the rights / privileges of the holders thereof and to make an application for
listing of the said securities as changed, if the SE(s) so requires
Expected default in timely payment of interest or redemption or repayment amount /
both in respect of the instruments listed on the recognised SE(s) as soon as the same
becomes apparent
Information that are required to be informed promptly-
22. Contd.
2222
Changes in the General Character / nature of business /
activities, disruption of operation due to natural calamity
etc.
Revision in rating as a result of credit rating done
periodically
Delay / default in payment of interest / principal amount to
the investors for a period of > 3 months from the due date
Any other change that shall affect the rights and obligations
of the holders of instruments, any other information not in
the public domain necessary to enable the holders of the
listed instruments to clarify its position and to avoid the
creation of a false market in such listed securities
Any other information having bearing on the operation /
performance of the LE as well as price sensitive information
23. Reg. 84- Credit rating
23
Every rating obtained by the LE with respect to instruments shall be
periodically reviewed, preferably once a year, by a credit rating agency
registered by the Board
Any revision in such rating(s) shall be disseminated by the SE(s)
24. 24
Reg. 85- Information to Investors
Loan level information without disclosing the particulars of individual borrowers to its
investors shall be provided by the LE either by itself / through the service provider
Information regarding revision in rating as a result of credit rating done periodically as
specified in reg. 84
The above information may be provided to the investors in electronic form / fax if so
consented by the investors
Email address of the grievance redressal division and other relevant details shall be
prominently displayed on LE’s website and in the various materials / pamphlets/
advertisement campaigns initiated by LE for creating investor awareness
25. 25
LE shall not forfeit unclaimed interest and principal and the same shall be, transferred
to the Investor Protection and Education Fund after a period of 7 years, established
under the SEBI (Investor Protection and Education Fund) Reg., 2009
Reg. 86- Terms of securitized debt instruments
No material
modifications shall
be made to the
structure of
instruments in
terms of coupon,
conversion,
redemption /
otherwise
Without the prior
approval of
recognised SE(s)
where such
instruments are
listed
And such
application for
approval can be
made by LE to SE(s)
only after the
approval of trustees
LE shall ensure timely interest / redemption payment
Where credit enhancement is provided LE shall ensure to make credit enhancement to
listed instruments at all times
26. Contd.
26
And this sub-reg. shall not restrict the recognised SE from delisting / suspend /
remove the instruments of LE at any time and for any reason which it considers
proper in accordance with the applicable legal provisions
•LE shall not select any of its listed instruments for redemption
otherwise than on pro rata basis / by lot, unless the terms of issue
provide otherwise and shall submit the details to recognised SE(s)
promptly
•LE shall remain listed till the maturity / redemption of instruments /
till the same are delisted as per the procedure laid down by the
Board
27. Reg. 87- Record date
27
A record date shall be fixed for payment of interest / payment of repayment or
redemption amount / for such other purposes as specified by the recognized
SE(s)
Notice shall be given to the recognized SE(s) at least 7 working days in advance
(excluding the date of intimation and record date) / as many days as the SE(s)
may agree / require by specifying the purpose of the record date