Sebi notifies stricter delisting rules for non-convertible debt securities
will have to obtain permission from all holders of non-convertible debt securities within 15 working days of receiving the notification of delisting.
The present rule allows entities to delist by giving a prior intimation to the stock exchange about the meeting of the board of directors, where the proposal for a voluntary delisting is considered.
Unlike equity, wherein approval by a threshold majority is sufficient for approval of delisting, in the new framework, approval of 100 per cent of the debt security holders has been mandated for delisting of debt securities.
This is because, unlike equity which is a perpetual instrument, listed debt securities have a finite term to maturity.
In its notification issued on August 23, Sebi said the new framework for delisting of non-convertible debt securities would allow all listed non-convertible debt securities to be delisted voluntarily.
However, entities would not be authorised to delist certain securities while selectively listing others.
Also, it would not apply to the delisting of non-convertible debt securities in certain situations such as delisting as a consequence of any penalty or action initiated against the listed entity by stock exchanges; delisting pursuant to the redemption of the non-convertible debt securities.
Further, the mechanism would not apply to the delisting of a listed entity's non-convertible debt securities that have been delisted under a resolution plan authorised under the Insolvency Code.
In case of delisting pursuant to a resolution plan as per the provisions of the Insolvency Code, the details of delisting of non-convertible debt securities will be disclosed to the stock exchanges within one working day of the approval of the resolution plan
