The Securities and Exchange Board of India (SEBI) on April 18, 2022 has issued operational guidelines for “Security and Covenant Monitoring using Distributed Ledger Technology (DLT)” to strengthen the process of security creation and monitoring of security created, asset cover and covenants of the non-convertible securities and to ensure uniqueness of the assets of the issuer offered as security, appropriate validation/ duplicate checks based on parameters identified for each asset type have been put in place in the system. Debenture Trustees, on a yearly basis, shall also reconcile and eliminate duplicate entries for an asset in the system. Further, for data exchange and verification across depositories, format for unique Asset ID assigned to an asset has also been standardised to a 12-digit alphanumeric string.
Initially, movable assets viz furniture, equipment, inventory etc., current assets viz portfolio of advances/ receivables, etc. and any other asset of similar nature shall be tracked at portfolio level.
This shall be applicable to all the issuers proposing to issue non-convertible securities on or after April 01, 2022 and they shall record the details in the system before activation of ISIN. Depositories shall allot or unfreeze an existing ISIN (in case of re-issuance), as applicable only after confirming recording of abovementioned information by issuers.
SEBI will provide a relaxation till July 01, 2022 to issuers who are unable to record details in the system after providing explanation to Depositories, post which ISIN shall not be allotted to an issuer for non-compliance. Further, for existing outstanding non-convertible securities, issuers shall enter the details into the DLT system on or before September 30, 2022.
[PR No. 13/2022]
