Now, if a company wants to list its debt instruments on a stock exchange to facilitate their tradings, it will have to maintain assets to the tune of the total value of the listed instruments to provide 100% security cover, said Sebi on Monday in its guidelines for the listing of bonds.
This will provide some cushion to bond holders. If the performance of the company dips and it cannot service its liability to the bond holders, they can recover the money by selling the assets, which are maintained by the company with a registrar to service the bonds.
Debt securities include corporate and government bonds, certificate of deposits, municipal bonds and other non-convertible debt instruments. The regulator has also tightened disclosure norms for the companies listing debt instruments.
Sebi said the issuer of debt instruments will have to inform the exchange about the credit rating, asset cover available, debt-equity ratio etc in a half-yearly communication. It will also have to notify the exchange regarding expected default in payment of interests or redemptions in respect of debt securities. Securities must be allotted to the public within 30 days of the closure of the issue, the guidelines said. In case the allotment is not made or refund orders have not been dispatched within 30 days of the closure of the issue, the issuer will have to pay an interest of 15% per annum.
In cases, where equity shares of issuer are not listed on exchanges, the issuer will "not forfeit unclaimed interest and such unclaimed interest shall be transferred to the Investor Education and Protection Fund".
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