SEBI has issued a circular dated November 21, 20192 providing clarification on disclosure requirements for all listed entities on default of payment of interest/ repayment of principal amount on loans from banks/ financial institutions and unlisted debt securities.
The SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI LODR") presently requires the disclosure of material events/ information by listed entities to stock exchanges. Specific disclosures are required under the SEBI LODR Regulations in certain matters such as delay / default in payment of interest / principal on debt securities such as Non-Convertible Debt (NCDs), Non-Convertible Redeemable Preference Shares (NCRPS) etc. It had been observed that disclosures are generally not made by listed entities with respect to loans from banks and financial institutions.
The circular includes, inter alia, the following:
- Applicability: All listing entities which have listed any of the specified securities (equity and convertible securities), NCDs and NCRPS;
- Disclosure on default: Disclosure to be made when the company make a default in payment of the interest/instalment obligation on loans, including revolving facilities like cash credit, from banks / financial institutions and unlisted debt securities;
- Timing of the disclosure: The disclosures should be made by all listed entities for defaults which continue beyond 30 days. Such disclosure needs to be made no later than 30th day of such default. In case of unlisted debt securities i.e. NCDs and NCRPS, the disclosure shall be made promptly but not later than 24 hours from the occurrence of the default;
- Disclosures as applicable in terms of the circular shall be made beginning January 01, 2020.
Footnote
2 Bearing number SEBI/HO/CFD/CMD1/CIR/P/2019/140
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