The Securities Exchange Board of India (SEBI) on October 28, 2022, issued a circular regarding revision in chapter V of the Operational Circular no. SEBI/HO/DDHS/P/CIR/2021/613 dated August 10, 2021, pertaining to the denomination of issuance and trading of Non-convertible Securities.
The chapter V of the said circular mandates that the face value of each debt security or non-convertible redeemable preference share issued on a private placement basis shall be Rs.10 lakh and the trading lot shall be equal to the face value.
Several market participants, including issuers, have requested a review of the said denominations, submitted their representations to the SEBI, and stated that if the face value and the trading lot are reduced, more investors can participate, which in turn will enhance the liquidity in the corporate bond market.
The following amendments have been stated:
• Paragraph 1.1. has been replaced with the following:
“1.1. The face value of each debt security or non-convertible redeemable preference share issued on a private placement basis shall be Rs. One lakh.”
• Paragraph 2.1. has been replaced with the following:
“2.1. The face value of the listed debt security and non-convertible redeemable preference share issued on a private placement basis traded on a stock exchange or OTC basis shall be Rs. One lakh.”
This circular will be applicable to all issues of debt securities and non-convertible redeemable preference shares, on a private placement basis, through new ISINs, on or after January 1, 2023.
[Circular No. SEBI/HO/DDHS/P/CIR/2022/00144]
