Regulation 19 - Creation of Escrow Accounts - Securities and Exchange Board of India (Issue and Listing of Municipal Debt Securities) Regulations, 2015

1 [Creation of Escrow Accounts 19 . The issuer shall create a structured payment mechanism and maintain specific escrow accounts for the purpose of debt servicing of the municipal debt securities as 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, Creation of security for secured debentures. 19. (1) The debentures shall be secured by the creation of a charge, on the properties or assets or the receivables of the issuer, having a value which is sufficient for the due repayment of the amount of debentures and interest thereon: Provided that in case unsecured debentures are intended to be listed on stock exchange(s), then such debt securities shall either be backed by guarantee from State Government or Central Government or shall have a structured payment mechanism whereby the issuer shall deposit debt servicing amounts in the designated bank account at least 10 working days before due date of payment. (2) The total value of secured debentures issued shall not exceed the market value of immovable property/other assets or receivables of the issuer, for which a charge shall be created. (3) The issuer shall give an undertaking in the offer document that the assets on which charge is created are free from any encumbrances and if the assets are already charged to secure a debt, the permissions or consent to create second or paripasu charge on the assets of the issuer have been obtained from the earlier creditor. (4) The issue proceeds shall not be utilised until the documents for creation of security are executed.