SEBI Eases Physical Disclosure Norms For Non-Convertible Securities: An Analytical Overview

Posted On - 18 June, 2025 • By - Chirag Gupta

Introduction

On 5th June 2025, SEBI issued a circular providing limited relief from the compliance obligation under Regulation 58(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.1 This rule requires listed companies to forward physical copies of the important financial documents to the holders of non-convertible securities who have not registered their email IDs. Consistent with the extension of such relaxations by the Ministry of Corporate Affairs, SEBI has now exempted issuers from this requirement for a certain period on specified conditions. The circular seeks to minimize compliance costs while making disclosures available through other digital channels.

Understanding The Circular

Background of Previous Relaxation

  • SEBI had previously granted relaxation from Regulation 58(1)(b) of the SEBI LODR Regulations vide circular dated October 6, 2023.2
  • This relaxation was based on the Ministry of Corporate Affairs (MCA) General Circular No. 09/2023, dated September 25, 2023.3
  • It allowed listed entities to avoid sending physical copies of certain documents to holders of non-convertible securities until September 30, 2024, provided that the holders had not registered their email addresses.

About Regulation 58(1)(b) of LODR Regulations

This provision mandates that listed entities must send a hard copy of the statement containing salient features of all the documents (as required under Section 136 of the Companies Act, 2013 and rules made thereunder) to holders of non-convertible securities who have not registered their email addresses with the entity or depository.

MCA’s Further Relaxation (2024)

MCA issued General Circular No. 09/2024 on September 19, 2024, extending the above-mentioned relaxation.4

As per the MCA, companies are not required to send physical copies of:

  • Financial statements
  • Board’s Report
  • Auditor’s Report
  • Other documents required for AGMs conducted till September 30, 2025.

SEBI’s Extended Relaxation Based on MCA Circular

(A) For the period October 1, 2024 – June 5, 2025

  • Entities with listed non-convertible securities, that:
    – Complied with conditions of MCA General Circular No. 09/2024, and
    – Did not send hard copies of the salient features as per Section 136 to holders who have not registered email addresses,
  • Will not face any penal action for non-compliance with Regulation 58(1)(b) of SEBI LODR Regulations during this period.

(B) For the period June 6, 2025 – September 30, 2025

SEBI has extended similar relaxation subject to the following condition:

  • The advertisement published in accordance with Regulation 52(8) of SEBI LODR Regulations must:
    – Include the web-link to the statement containing salient features of all documents (as per Section 136 of Companies Act, 2013),
    – So that holders of non-convertible securities can access the information digitally.

Implications Of The Circular On Stakeholders

This circular has material implications for various stakeholders in the universe of debt securities, especially listed companies, non-convertible security holders, stock exchanges, and compliance professionals. The circular tries to find a pragmatic middle ground between legal compliance, administrative effectiveness, and changing investor communication norms in a digitally changing regulatory environment.

Listed Entities (Issuers of Non-Convertible Debt Securities)

For the issuers, the relaxation extension provides a meaningful operational relief. Hitherto, Regulation 58(1)(b) of the LODR Regulations has put companies to logistical effort in identifying non-registered email address holders and sending physical copies of financial statements to them. This provision, although driven by investor protection, has been frequently found to be administratively burdensome and economically inefficient, particularly when electronic media provide much higher reach and instantaneity.

The current circular enables issuers to continue evading this requirement, as long as they adhere to the Ministry of Corporate Affairs’ General Circular No. 09/2024 and adopt alternative measures such as posting the necessary information through a web link in their statutory advertisements. This minimizes both postal and printing expenses and brings regulatory requirements up to date with market conditions, where investor communication is mostly digital-first.

But issuers should not confuse this easement as a carte blanche waiver. The circular is narrowly defined; MCA norms compliance is still a requirement, and the requirement to publish exhaustive disclosures via other avenues (such as advertisements pursuant to Regulation 52(8)) continues. Failure to comply with these co-extensive requirements can still subject companies to reputational damage or scrutiny in future compliance reviews.

Holders of Non-Convertible Securities

For holders, particularly those who have not registered their email addresses, the functional effect is further movement away from physical communication. While this may be inconvenient to investors with low digital literacy or access, risk is reduced by requiring web-based disclosure. In requiring issuers to publish a direct web link to the relevant documents in widely distributed advertisements, the circular provides that the information continues to be available, if only through alternative means.

There is, nevertheless, a subtle change in the nature of the investor-company communication. Instead of passively receiving (as in postal dispatch), investors must actively search for information online. This asymmetry puts a mild burden on retail bondholders, especially elderly people and those in rural areas, who might not regularly visit company websites or financial newspapers. To that extent, although the move is operationally effective, it may be argued as marginally regressive from the perspective of inclusivity unless supplemented with investor education or outreach programs.

Stock Exchanges and Depositories

The circular places a correlative responsibility on stock exchanges to circulate the circular widely and ensure that listed entities are made aware of these relaxations. In reality, this means increased scrutiny on the part of exchanges to watch for compliance not only with Regulation 58(1)(b) but also with the fallback disclosure provision under Regulation 52(8). Exchanges will have to make their compliance checklists and electronic tools more sophisticated to ensure that entities applying the relaxation are also meeting their substituted disclosure requirements at the same time.

For depositories, while not specifically mandated under this circular, the continued regulatory reliance on email registrations emphasizes their key function in ensuring current and correct investor contact details. Depositories can expect to be pressured to incentivize or require additional email updates from account holders to bridge the gap in electronic communication.

Compliance Officers and Legal Teams

Governance-wise, this circular emphasizes the growing necessity of accuracy and proactive coordination among legal, secretarial, and investor relations groups. The officers responsible for compliance need to ascertain that the use of the circular is not in isolation but recorded as part of an overall policy stance aligned with MCA and SEBI directives. This involves:

  • Maintaining internal documents showing compliance with MCA Circular No. 09/2024
  • Ensuring advertisements under Regulation 52(8) are timely and contain the mandated web links, and
  • Maintaining communication logs in case regulatory scrutiny arises later.

Failure to treat this as a composite compliance package, as opposed to a standalone exemption, could lead to audit flags or enforcement action post-September 2025.

Conclusion

The circular reflects SEBI’s evolving approach to balancing regulatory compliance with the realities of a digitized market infrastructure. By continuing the exemption from physical dispatch obligations, it not only reduces issuers’ burdens of logistics and costs but also supports a move towards electronic availability of information. Meanwhile, it imposes some obligation on investors to seek out disclosures themselves. Although the transitional nature of this relaxation implies that a more permanent solution is to be expected, the conditions laid down – such as requiring web-link disclosures – confirm that transparency is non-negotiable. For issuers, it means strict procedural synchronization with both SEBI and MCA guidelines. For investors, particularly those who are outside the digital fold, the change poses both challenges and a challenge of adaptation.

  1. https://www.sebi.gov.in/legal/circulars/jun-2025/limited-relaxation-from-compliance-with-certain-provisions-of-the-sebi-listing-obligations-and-disclosure-requirements-regulations-2015_94423.html ↩︎
  2. https://www.sebi.gov.in/legal/circulars/oct-2023/limited-relaxation-from-compliance-with-certain-provisions-of-the-sebi-listing-obligations-and-disclosure-requirements-regulations-2015_77763.html ↩︎
  3. https://www.mca.gov.in/bin/ebook/dms/getdocument?doc=Mzc2OTExNzU1&docCategory=Circulars&type=open ↩︎
  4. https://www.mca.gov.in/bin/ebook/dms/getdocument?doc=Mzc2OTExNzU1&docCategory=Circulars&type=open ↩︎