Regulation 5 - Eligibility Conditions for public issue - Securities and Exchange Board of India (Issue and Listing of Municipal Debt Securities) Regulations, 2015

CHAPTER III REQUIREMENTS FOR PUBLIC ISSUE 1 [ Eligibility Conditions for public issue 5. No issuer shall make a public issue of municipal debt securities unless the following conditions are complied with: (a) the issuer has surplus income as per its Income and Expenditure Statement in any of the immediately preceding three financial years or as per any other financial criteria as may be specified by the Board from time to time: Provided that where the issuer is a body corporate to which the Companies Act, 2013 applies, it shall not have negative net worth in any of immediately preceding three financial years; Provided that where the issuer is a body corporate to which the Companies Act, 2013 applies or is a Special Purpose Vehicle, which is set up for the purpose of raising funds for an person for performing one or more functions entrusted under Article 243W of the Constitution of India, the requirements at clause (a) shall be complied by the person being financed; (b) Any other conditions as may be specified by the Board from time to time. ] ************* NOTES:- 1. Substituted vide NOTIFICATION No. SEBI/LAD-NRO/GN/2019/40 dated 27-09-2019 before it was read as, General conditions. 5. (1) An issuer making public issue of debt securities shall only issue revenue bonds. (2) No issuer shall make a public issue of revenue bonds unless following conditions are complied with: (a) it has made an application to one or more recognised stock exchanges for listing of such securities therein: Provided that where the application is made to more than one recognised stock exchanges, the issuer shall choose one of them as the designated stock exchange: Provided further that where any of such stock exchanges have nationwide trading terminals, the issuer shall choose one of them as the designated stock exchange; Explanation.-For any subsequent public issue, the issuer may choose a different stock exchange as a designated stock exchange subject to the requirements of this regulation; (b) it has obtained in-principle approval for listing of its revenue bonds on the recognised stock exchanges where the application for listing has been made; (c) credit rating has been obtained from at least one credit rating agency registered with the Board and is disclosed in the offer document: Provided that the revenue bonds intended to be issued shall have a minimum investment grade rating: Provided further that where credit ratings are obtained from more than one credit rating agencies, all the ratings, including the unaccepted ratings, shall be disclosed in the offer document; (d) it has entered into an arrangement with a depository registered with the Board for dematerialisation of the revenue bonds that are proposed to be issued to the public, in accordance with the Depositories Act, 1996 and regulations made there under. (3) The revenue bonds shall have a minimum tenure of three years or such period as specified by the Board from time to time. (4) The revenue bonds shall have a maximum tenure of thirty years or such period as specified by the Board from time to time. (5) The issuer shall appoint one or more merchant bankers registered with the Board at least one of whom shall be a lead merchant banker. (6) The issuer shall create a separate escrow account for servicing of revenue bonds with earmarked revenue. (7) The issuer shall appoint a monitoring agency such as public financial institution or a scheduled commercial bank to monitor the earmarked revenue in the escrow account under sub-regulation (6): Provided that where the issuer is corporate municipal entity, it shall appoint a debenture trustee registered with the Board in accordance with the provisions of the Securities and Exchange Board of India (Debenture Trustees) Regulations, 1993 and Companies Act, 2013.