SEBI’s Circular on Reduction of Timeline for Listing of Debt Securities and Non – Convertible Redeemable Preference Shares

Introduction

In a recent circular[1] dated 26th September 2024, the Securities and Exchange Board of India has reduced the timeline requirements for listing debt securities and non – convertible redeemable preference shares (NCRPS) along with a shortened listing timeline of T + 3 days which has replaced the already existing timeline of T + 6 days for public issue of NCRPS.

According to the present framework, the listing of debt securities and NCRPS which were issued through public offerings had to be completed through T + 6 working days and under this regime, the issuers were mandated to refund the amount of application money if the listing of securities were not made in that period. Additionally, any failure to meet such listing timelines made it obligatory upon the issuers to refund or unblock the application money within a period of two working days from the scheduled date of listing since any delay beyond this period would result in the issuer being liable to pay 15% annual interest to the investors.

Introduction to T + 3 Working Days Timeline

According to the circular, the T + 3 working days timeline shall be introduced on an optional basis for a period of one year starting 1st November, 2024 post which it shall become mandatory for all public issues starting on/after 1st November, 2025. The provisions of the circular shall be applicable under two phases.

Under the voluntary basis, the option to adopt the T + 3 timeline shall be available to the issuers for public issues of debt securities and NCRPS opening on or after 1st November. On mandatory basis, from 1st November 2025 the same shall be applicable upon all public issuers of debt securities and NCRPS shall be required to comply with the updated timeline. Additionally, the circular has also included the detailed Annexure pertaining to the new indicative timeline for listing of debt securities and NCRPS under the T + 3 system.

Conclusion

The present initiative by SEBI has made a significant effort to streamline the listing process and align the same with the timeline for the privately placed debt securities and other specified securities along with deciding to reduce the timeline for listing public issues of debt securities and NCRPS to T + 3 working days. This shortened timeline has also ensured that the issuers can access the funds with increased convenience and benefit faster from the liquidity and convertibility of their investments.

This will also act as a significant step towards reduction in timeline for the listing of debt securities and increasing the investor confidence. Through reduction of period between issue closure and commencement of trading, issuers can access capital with increased speed and gain quicker access to the investments and funds which aligns with the SEBI’s objective of fostering a more dynamic, responsive and investor friendly financial market which ensures that both the issuers and investors mutually benefit from the schemes and benefits of the market.

[1] https://www.sebi.gov.in/legal/circulars/sep-2024/reduction-in-the-timeline-for-listing-of-debt-securities-and-non-convertible-redeemable-preference-shares-to-t-3-working-days-from-existing-t-6-working-days-as-an-option-to-issuers-for-a-period-of-_87014.html