Regulation 4 - General Conditions - Securities and Exchange Board of India (Issue And Listing Of Non-Convertible Redeemable Preference Shares) Regulations, 2013

CHAPTER II ISSUE REQUIREMENTS FOR PUBLIC ISSUES General Conditions. 4. 1 [(1) No issuer shall make any public issue of non-convertible redeemable preference shares if as on the date of filing of draft offer document or final offer document as provided in these regulations: (a) the issuer or the person in control of the issuer or its promoter or its director is restrained or prohibited or debarred by the Board from accessing the securities market or dealing in securities; or (b) the issuer or any of its promoters or directors is a wilful defaulter or it is in default of payment of interest or repayment of principal amount in respect of non-convertible redeemable preference shares issued by it to the public, if any, for a period of more than six months.] (2) No issuer shall make a public issue of non-convertible redeemable preference shares unless the following conditions are satisfied, as on the date of filing of draft offer document and final offer document as provided in these regulations, - (a) it has made an application to one or more recognized stock exchanges for listing of such securities therein: Provided that where the application is made to more than one recognized 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 non-convertible redeemable preference shares on the recognized stock exchanges where the application for listing has been made; (c) it has obtained a credit rating from at least one credit rating agency registered with the Board and is disclosed in the offer document: Provided 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 dematerialization of the non-convertible redeemable preference shares that are proposed to be issued to the public, in accordance with the Depositories Act, 1996 and regulations made thereunder; (e) the minimum tenure of the non-convertible redeemable preference shares shall not be less than three years; and (f) the issue has been assigned a rating of not less than AA- or equivalent by a credit rating agency registered with the Board. (3) The issuer shall create a capital redemption reserve in accordance with the provisions of the Companies Act, 1956; (4) The issuer shall not issue non-convertible redeemable preference shares for providing loan to or acquisition of shares of any person who is part of the same group or who is under the same management, other than to subsidiaries of the issuer; Explanation: For the purpose of this regulation, the terms part of the same Group and under the same management shall have the same meaning as provided in the explanation to regulation 23 of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009. (5) In case of public issue of non-convertible redeemable preference shares, the issuer shall appoint one or more merchant bankers registered with the Board at least one of whom shall be a lead merchant banker. ******** 1 Substituted for sub-regulation (1) by the SEBI (Issue and Listing of Non-Convertible Redeemable Preference Shares) (Amendment) Regulations, 2016 w.e.f. 25-05-16. Prior to substitution, sub-regulation (1) read as under: (1) No issuer shall make any public issue of non-convertible redeemable preference shares if as on the date of filing of draft offer document and final offer document as provided in these regulations, the issuer or the promoter of the issuer, has been restrained or prohibited or debarred by the Board from accessing the securities market or dealing in securities and such direction or order is in force.