SEBI Update: Disclosure to Stock Exchange

IN CASE OF DEFAULT IN PAYMENT OF INTEREST OR REPAYMENT OF PRINCIPAL AMOUNT OF LOAN BY LISTED ENTITIES DISCLOSURE TO MAKE TO STOCK EXCHANGE FROM JANUARY 01, 2020

  1. Applicability:
  • The applicability of this circular for the disclosure (including quarterly disclosure) shall be from January 01, 2020.
  • The circular shall be applicable to all listed entities which have listed any of the following securities with any of recognised stock exchange in India:
  • specified securities (equity and convertible securities),
  • NCDs (Non-Convertible Debts),
  • NCRPS (Non-Convertible Redeemable Preference Shares).
  1. With the view that corporates in India are primarily dependent on loans from the banking sector. Many banks and financial institutions are presently under considerable stress on account of large loans to the corporate sector turning into stressed assets / Non-performing Assets (NPAs). Some companies have also been taken up for initiation of insolvency and bankruptcy proceedings.
  1. SEBI vide circular dated November 21, 2019 has made it mandatory for all the listed entities that, in case of default by these entities in:
  • payment of interest on loan; or
  • instalment obligations on loans, including revolving facilities like cash credit, from banks / financial institutions and unlisted debt securities

to make a disclosure for the such default to the stock exchanges within next 24 hours if the default has been exceeding 30 days from the due date of such payment/ re-payment.

  1. Default means:
  • non-payment of the interest or principal amount on the date when the debt has become due and payable (‘pre-agreed payment date’); and
  • for revolving facilities like cash credit, an entity would be considered to be in ‘default’ if the outstanding balance remains continuously in excess of the sanctioned limit or drawing power, whichever is lower, for more than 30 days.
  1. Format for Disclosure:

The said circular has also specified formats as well in which the entity has to share the default details with the stock exchanges.

 

Circular reference no. SEBI/HO/CFD/CMD1/CIR/P/2019/140