SEBI on March 29th, 2022 published a circular specifying the manner of recording of changes by issuers and manner of monitoring by Debenture Trustees (DTs) and other agencies using Distributed Ledger Technology (DLT) . The circular will come into effect from 1st April, 2022 . Visit us: www.beacontrustee.co.in

1. OPERATIONAL GUIDELINES FOR
‘SECURITY AND COVENANT MONITORING’
USING
DISTRIBUTED LEDGER TECHNOLOGY (DLT)
(Security Exchange Board Of India)
29TH MARCH, 2022

2.  SEBI has specified the manner of recording of charges by Issuers and manner
of monitoring by Debenture Trustees (DTs), Credit Rating Agencies, etc.
 Now, All the securities issued which involves recording of asset details or
verification, allotment, listing and payment of interest or redemption will be
recorded in the Distributed Ledger Technology (DLT) system.
 A system generated unique identifier (Asset ID) of 12-digit alphanumeric string
will be allotted for each asset offered by Issuer as security for the non-
convertible securities as provide in the Annexure I
 In order to have uniqueness and effective asset creation and tracking, DLT
system will provide an alert to the Issuer and the DT by having appropriate
validation/ duplicate checks in the system

3.  This awareness will help in identifying possible duplicate entries for assets of
an issuer and this validation/duplication will be further checked based on the
parameters as per Annexure-II.
 The assets recorded in the DLT system will be tracked on at portfolio level and
no specific parameters for the underlying assets would be captured.
 It is mandatory for the depositories to ensure that there is only one unique
asset ID assigned to an asset of the issuer.
 Any event which reduces the security cover below the mandated/ stipulated
limit, as per the Listing Obligations and Disclosure Requirements Regulations,
2015, is required to be updated by the issuer in the system immediately.
 Such event is named as trigger event and depositories have been asked to
send such “trigger event” alert to all the concerned stakeholders.

4. Applicability of the guidelines:
 All issuers proposing to issue non-convertible securities on or after April 01, 2022
are required to record the details in the system before activation of ISIN.
 In case of re-issuance of the securities the depositories are advised to allot or
unfreeze an existing ISIN.
 In case of non-compliance by the issuer with regards to aforesaid requirements,
the issuer is required to provide and explanation to the depositories before July 01,
2022, after which ISIN will not be allotted to an issuer.
 For existing outstanding non-convertible securities, issuers will be required to
enter the details into the DLT system on or before September 30, 2022.
 The circular will come into effect from April 01, 2022 and the system will be
available for recording such operational tasks.

5. Duties of a Debenture trustee(DT) with
regards to security and covenant monitoring:
 DT are required to identify possible duplicate entries for assets of an issuer
 They are asked to check validation/duplication based on the parameters as
mentioned in the annexure II
 On detection of duplicate asset, DTs are required to cross check and verify the
details entered into the DLT system for assets creation.
 DTs, on a yearly basis are required to reconcile the list of assets recorded in the
system for an Issuer.
 DTs are required to take necessary steps to eliminate such duplicate entries in
the system and verify security cover thereof and take remedial action whenever
required.

6. Unique asset id will be generated on the following basis (Annexure I)
Asset ID = System Code + Asset Type + Asset Sub Type + Unique Number + Check Digit
System Code 2 characters ('IN' - for all asset types and sub-types)
Asset Type 2 character Alphanumeric
Asset sub-type 2 character Alphanumeric
Unique Number
5 character alphanumeric sequential (start with 00001 to
99999. Post full utilization of numbering then prefix will start
from A-Z.)
Check Digit 1 digit

7. Disclaimer
This article provides general information only. It is not intended as professional and / or financial advice
nor does any information in this article constitute a comprehensive or complete statement of the
matters discussed or the law relating thereto. The information presented in this section is subject to
change without notice. It may therefore not be accurate or current. The information in this newsletter is
not intended as an offer or recommendation to buy, sell or call on any security, product, service or
investment. Beacon Trusteeship’s Research Team examines and updates the information in this
section regularly. In spite of all our care and work, data still can have changed since our last update.
Data presented may not be accurate or up to date due to such changes or due to other reasons.
Therefore, Beacon Trusteeship does not accept any liability or guarantee for the accuracy or
completeness of the information presented here and does not warrant that the information is up to
date.
● Contact us on +91 95554 49955 Visit us on www.beacontrustee.co.in