Sebi: Sebi proposes changes to appointment of bond trustee
In a consultation paper submitted on Saturday, the market watchdog proposed replacing the term “consent” in the Sebi (Issue and Listing of Non-Convertible Securities) Rules or NCS Regulations with “debenture receiver agreement”.
A trustee agreement (DTA) is a contract that legally validates the appointment of a trustee and is considered by regulators to be more significant than the previously used term ‘consent’.
These changes will enable investors to make more informed decisions when investing in bonds.
Earlier, the working group had noted that while the issuer obtains the consent of the bond trustee before initiating the transfer, the DTA is executed between them later. However, it added that the consent does not appear to have any kind of legal sanctity. Hence, the working group agreed that the legal document validating the appointment of the bond trustee is the DTA and not the consent. Sebi also said that “the bond trustee agreement should be made accessible to investors using a ‘QR code’ in the offering document.” This digital access will enable investors to review the agreement, have full knowledge of the roles and obligations of the trustee, and easily access important information.
The Securities and Exchange Board of India (Sebi) has invited public comments and suggestions on the consultation document by September 6.
These measures follow the recommendations of a working group tasked with improving ease of doing business in the financial sector in line with the government’s targets set in its 2023-2024 fiscal year budget.
