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TMI BlogMaster Circular for Debenture Trustees (DTs)X X X X Extracts X X X X X X X X Extracts X X X X ..... forts have been made to incorporate applicable provisions of existing circulars issued by other Departments of SEBI relevant to Debenture Trustees. Yours faithfully, Surabhi Gupta Deputy General Manager Phone No. 022-26449315 Email id: [email protected] Table of Contents Section 1: Terms of Registration 1.1 Online Registration Mechanism for Debenture Trustees 1.2 Digital Mode of Payment 1.3 Grant of prior approval for change in control to Debenture Trustees 1.4 Surrender of Certificate of Registration 1.5 Designated e-mail ID for regulatory communication with SEBI Section 2: Obligations, Disclosures and Reporting requirements 2.1 Contents of Trust Deed 2.2 Sharing of information regarding Issuer Companies between Debenture Trustees and Credit Rating Agencies 2.3 Monitoring of Interest/ Principal repayment and sharing of such information with Credit Rating Agencies by Debenture Trustees 2.4 Dissemination of Information on Debentures 2.5 Centralized Database for Corporate Bonds/ Debentures 2.6 Periodic Reporting by the Debenture Trustees Section 3: Redressal of Investor Grievances 3.1 Exclusive e-mail ID for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er entities. 1.2.3 In order to identify and account such direct credit in the SEBI account, it has been decided that Debenture Trustees shall provide the information as mentioned in Annexure to SEBI once the payment is made. 1.2.4 The above information should be emailed to the respective department(s) as well as to Treasury Accounts division at [email protected]. Annexure Date Department of SEBI Name of Intermediary/ Other Entities Type of Intermediary SEBI Registration Number (if any) PAN Amount (in) Purpose of Payment (including the period for which payment was made e.g. quarterly, annually) Bank name and Account number from which payment is remitted UTR No 1.3 Grant of prior approval for change in control to Debenture Trustees SEBI Circular CIR/MIRSD/14/2011 dated August 02, 2011. 1.3.1 Debenture Trustees are required to obtain prior approval of SEBI in case of change in control. With a view to expedite the process of granting prior approval, SEBI has adopted a si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, for surrender in terms of the first proviso to Regulation 33B of Securities and Exchange Board of India (Intermediaries) Regulations, 2008 in the prescribed format placed as Annexure. 1.4.3 In all cases of transfer of business or client accounts to another registered Debenture Trustee, the clients shall not be subjected to any additional cost. Annexure Letter of Representation for Debenture Trustee To Securities and Exchange Board of India Dear Sir, Sub: Surrender of Certificate of Registration as Debenture Trustee, Registration No. __ . 1. We hereby surrender our certificate of registration as Debenture Trustee. 2. We enclose the original certificate of registration (or indemnity in case the certificate is lost or stolen) for cancellation. 3. We hereby confirm that: a. no complaint /disciplinary proceeding is pending against us; b. no investigation / inquiry by SEBI is pending against us with respect to our activities as a Debenture Trustee; c. as on date of application, we have paid all fees; d. we shall continue to be liable for all liabilities/obligations (including monetary penalties, if any) for violations, if any, of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9, 2011. 2.1.1 It has been observed during inspections that certain clauses are included in the trust deed that limit or extinguish the obligations of Debenture Trustees in relation to any rights or interests of investors or are in conflict with the provisions of the Regulations. It may be noted that such clauses in the existing or new trust deeds shall not be applicable and shall stand null and void. 2.2 Sharing of information regarding Issuer Companies between Debenture Trustees and Credit Rating Agencies Circular CIR/MIRSD/3/2013 dated March 15, 2013 2.2.1 SEBI (Debenture Trustee) Regulations, 1993 require the Debenture Trustees (DTs) to share information regarding the issuer companies that are their clients, with Credit Rating Agencies (CRAs). The purpose of the Regulations is to enable Credit Rating Agencies to perform their obligations effectively. 2.2.2 Debenture Trustees have also expressed the need to receive relevant information on issuer companies from Credit Rating Agencies. 2.2.3 In consultation with Debenture Trustees and Credit Rating Agencies, it has been decided that Debenture Trustees and Credit Rating Agencies shall share information with eac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oring of Interest/ Principal repayment and sharing of such information with Credit Rating Agencies by Debenture Trustees SEBI Circular No. SEBI/HO/MIRSD/MIRSD3/CIR/P/2017/ 72 dated June 30, 2017. 2.3.1 It is clarified that the Debenture Trustees shall have adequate systems to ascertain the status of payment of interest/ principal by issuer companies on due dates in timely manner and efficiently share such information with the Credit Rating Agencies in order to comply with the abovementioned provisions, which shall include the following: i) The Debenture Trustees shall, at least 7 days prior to the due date of interest/ principal payment, seek ISIN-wise information from issuer companies under intimation to Credit Rating Agencies advising them to confirm the status of payment of interest/ principal on or before the due date. ii) If the issuer company confirms the status of payment or where no information is received from the issuer company on or before the due date, the Debenture Trustees shall accordingly provide ISIN-wise information to the Credit Rating Agencies latest by one day after such due date which shall state the following: Information about payment mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o as to enable them to make a balanced and informed decision [Clause 15 of Code of Conduct read with Regulation 16]. It is clarified that if no information regarding payment by Issuer Company is received by the Debenture Trustees by due date or such information is not disclosed by the issuer company on the stock exchange website, then, the Debenture Trustees shall make reference to SEBI accordingly and disclose the non-availability of such information on their website. It is further clarified that failure to make such reference to SEBI in this regard and non-disclosure on its website shall be considered as aiding and abetting the issuer company in suppression of material information and may attract provisions of Section 12A of the Securities and Exchange Board of India Act, 1992 and SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003. 2.4 Dissemination of Information on Debentures SEBI Circular No. SEBI/HO/MIRSD/MIRSD3/CIR/P/2017/ 72 dated June 30, 2017. 2.4.1 The Debenture Trustees shall disclose the information to the investors and the general public by issuing a press release regarding default by Issuer Comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. Updation/verification of the relevant information in respect of legacy data for bonds/debentures with its records and confirmation to depositories Within 7 days from the receipt of the information 2.5.5 The Debenture Trustees shall update the information in the database on an ongoing basis, as mentioned above. 2.6 Periodic Reporting by the Debenture Trustees Circular No. CIR/ MIRSD/ 25/ 2011 dated Dec 19, 2011 2.6.1 The Debenture Trustees are required to furnish Half Yearly Report to SEBI in the format placed as Annexure in electronic form only (one file in pdf format and the other in excel format). The Compliance Officer of the Debenture Trustee shall send the report to SEBI at [email protected] on half yearly basis within three months of the expiry of the corresponding half year. 2.6.2 The Debenture Trustees shall also report compliance of Regulation 15 (1) (c) of SEBI (Debenture Trustee) Regulations, 1993, and the provisions mentioned under Paras 2.3 and 2.4 in the Half Yearly Reports. Circular No. SEBI/HO/MIRSD/MIRSD3/CIR/P/2017/ 72 dated June 30, 2017 2.6.3 The board of directors of Debenture Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Name of Compliance Officer Email ID Name of the Debenture Trustee Section II - REDRESSAL OF INVESTOR GRIEVANCES For the Half year ended Mar/ Sep 20 A. Status of Investor grievances Name of the issuer (tranche wise) Pending complaints at the end of the previous half year No. of complaints received during the half year No. of complaints resolved during the half year No of complaints pending at the end of half year B. Details of the complaints pending for more than 30 days Name of the Issuer No. of complaints pending for more than 30 days Nature of the Complaint (s) Steps taken for redressal Status of the complaint (if redressed, date of redressal) Delay in payment of interest Delay in payment of redemption Any other Name of Compliance Officer Email ID Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ances F. Details of the review of the report by the Board of Directors Date of Board Review (dd/mm/yyyy) Observation of the BoD on i. the deficiencies and non compliances ii. corrective measures initiated Certified that we have complied with SEBI (Debenture Trustee) Regulations, 1993, applicable provisions of SEBI (Issue and Listing of Debt Securities) Regulations, 2008, Circulars issued by SEBI and any other laws applicable from time to time except the deficiencies and non compliances those specifically reported at Section IV (E) above: Name of Compliance Officer Email ID Section 3: Redressal of Investor Grievances 3.1 Exclusive e-mail ID for redressal of Investor Complaints Circular No. MIRSD/DPS III//Cir-01/07 dated January 22, 2007. 3.1.1 In order to address the issue of having a direct and quicker forum for enabling investors to register their complaints expeditiously with the Debenture Trustees, it is felt desirable to designate an exclusive e-mail ID of the grievance redressal division / compliance officer in which the investors would be able to register their complaints and also take necessary follow-up actions as necessary. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or grievances but also indicate willful avoidance of the same. 3.2.4 The Debenture Trustees shall submit the details in hard copy (Form - B) to the Department/ Division of SEBI which has granted them registration to operate in the securities market. SCORES user id and password of the Debenture Trustee shall be created only after receiving approval from the concerned Department/ Division of SEBI. 3.2.5 The Debenture Trustees shall review their investors grievances redressal mechanism so as to further strengthen it and correct the existing shortcomings, if any. The SEBI registered Debenture Trustees to whom complaints are forwarded through SCORES, shall take immediate efforts on receipt of a complaint, for its resolution, within thirty days. The SEBI registered Debenture Trustees shall keep the complainant duly informed of the action taken thereon. 3.2.6 The Debenture Trustees shall update the ATR along with supporting documents, if any, electronically in SCORES. ATR in physical form need not be sent to SEBI. The proof of dispatch of the reply of the SEBI registered Debenture Trustees to the concerned investor should also be uploaded in SCORES and preserved by the SEBI regi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istered Debenture Trustee immediately when warranted. 3.3 Dissemination of Information regarding Grievance Redressal Mechanism Circular No. CIR/MIRSD/3/2014 dated August 28, 2014. 3.3.1 For information of all investors who deal/ invest/ transact in the market, it has now been decided that the information as provided below shall be prominently displayed in the offices of Debenture Trustees: Dear Investor, In case of any grievance / complaint against the Intermediary: Please contact Compliance Officer of the Intermediary (Name and Address) / email-id ([email protected]) and Phone No. - 91- XXXXXXXXXX. You may also approach CEO / Partner / Proprietor (Name) / email id ([email protected]) and Phone No. - 91-XXXXXXXXXX. If not satisfied with the response of the intermediary you can lodge your grievances with SEBI at http://scores.gov.in or you may also write to any of the offices of SEBI. For any queries, feedback or assistance, please contact SEBI Office on Toll Free Helpline at 1800 22 7575 / 1800 266 7575 Section 4: Others 4.1 Guidelines on Outsourcing of Activities by Debenture Trustees SEBI Circu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urced. For example, an activity shall not be outsourced if it would impair the supervisory authority s right to assess, or its ability to supervise the business of the intermediary. The policy shall be based on an evaluation of risk concentrations, limits on the acceptable overall level of outsourced activities, risks arising from outsourcing multiple activities to the same entity, etc. 1.2 The Board shall mandate a regular review of outsourcing policy for such activities in the wake of changing business environment. It shall also have overall responsibility for ensuring that all ongoing outsourcing decisions taken by the intermediary and the activities undertaken by the third-party, are in keeping with its outsourcing policy. 2. The intermediary shall establish a comprehensive outsourcing risk management programme to address the outsourced activities and the relationship with the third party. 2.1 An intermediary shall make an assessment of outsourcing risk which depends on several factors, including the scope and materiality of the outsourced activity, etc. The factors that could help in considering materiality in a risk management programme include- a) The impact of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrangements shall not affect the rights of an investor or client against the intermediary in any manner. The intermediary shall be liable to the investors for the loss incurred by them due to the failure of the third party and also be responsible for redressal of the grievances received from investors arising out of activities rendered by the third party. 3.3 The facilities / premises / data that are involved in carrying out the outsourced activity by the service provider shall be deemed to be those of the registered intermediary. The intermediary itself and Regulator or the persons authorized by it shall have the right to access the same at any point of time. 3.4 Outsourcing arrangements shall not impair the ability of SEBI/SRO or auditors to exercise its regulatory responsibilities such as supervision/inspection of the intermediary. 4. The intermediary shall conduct appropriate due diligence in selecting the third party and in monitoring of its performance. 4.1 It is important that the intermediary exercises due care, skill, and diligence in the selection of the third party to ensure that the third party has the ability and capacity to undertake the provision of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a third party outsources to further third parties as in the original direct outsourcing; f) has unambiguous confidentiality clauses to ensure protection of proprietary and customer data during the tenure of the contract and also after the expiry of the contract; g) specifies the responsibilities of the third party with respect to the IT security and contingency plans, insurance cover, business continuity and disaster recovery plans, force majeure clause, etc.; h) provides for preservation of the documents and data by third party ; i) provides for the mechanisms to resolve disputes arising from implementation of the outsourcing contract; j) provides for termination of the contract, termination rights, transfer of information and exit strategies; k) addresses additional issues arising from country risks and potential obstacles in exercising oversight and management of the arrangements when intermediary outsources its activities to foreign third party. For example, the contract shall include choice-of-law provisions and agreement covenants and jurisdictional covenants that provide for adjudication of disputes between the parties under the laws of a specific jurisdic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d party have limited access to the data handled and only on a need to know basis and the third party shall have adequate checks and balances to ensure the same. 7.3 In cases where the third party is providing similar services to multiple entities, the intermediary shall ensure that adequate care is taken by the third party to build safeguards for data security and confidentiality. 8. Potential risks posed where the outsourced activities of multiple intermediaries are concentrated with a limited number of third parties. In instances, where the third party acts as an outsourcing agent for multiple intermediaries, it is the duty of the third party and the intermediary to ensure that strong safeguards are put in place so that there is no co-mingling of information /documents, records and assets. 4.2 Unauthenticated news circulated by SEBI registered market intermediaries through various modes of communication Circular No. CIR/ISD/1/2011 dated March 23, 2011 4.2.1 It has been observed by SEBI that unauthenticated news related to various scrips are circulated in blogs/ chat forums/ e-mail etc. by employees of Broking Houses/ Other Intermediaries without adequate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exchanges, recognised clearing corporations and depositories (hereinafter collectively referred to as such entities ) are presently governed by the provisions for avoidance of conflict of interest as mandated in the respective regulations read with relevant circulars issued from time to time by SEBI. On the lines of Principle 8 of the International Organisation of Securities Commissions (IOSCO) Objectives and Principles of Securities Regulations, it has been decided to put in place comprehensive guidelines to collectively cover such entities and their associated persons, for elimination of their conflict of interest, as detailed hereunder. 4.3.2 Such entities shall adhere to these guidelines for avoiding or dealing with or managing conflict of interest. They shall be responsible for educating their associated persons for compliance of these guidelines. 4.3.3 For the purpose of these guidelines intermediaries and associated persons have the same meaning as defined in Securities and Exchange Board of India Certification of Associated Persons in the Securities Markets) Regulations, 2007. 4.3.4 Such entities and their associated persons shall, i) lay down, with active ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th conflict of interest, in respect of such entities SCHEDULE Circulars 1. Circular No. SEBI/MIRSD/DR-2/SRP/Cir - 2/ 2005 dated January 4, 2005. 2. Circular No. MIRSD/DPS III//Cir-01/07 dated January 22, 2007. 3. Circular No. MIRSD/ DPSIII/ Cir-21/ 08 dated July 7, 2008. 4. Circular No. CIR/ISD/1/2011dated March 23, 2011. 5. Circular No. CIR/ISD/2/2011 dated March 24, 2011. 6. Circular CIR/MIRSD/14/2011 dated August 02, 2011 7. Circular No. CIR/MIRSD/24/2011dated December 15, 2011. 8. Circular No. CIR/MIRSD/25/2011 dated December 19, 2011. 9. Circular No. CIR/MIRSD/3/2013 dated March 15, 2013. 10. Circular No. CIR/ MIRSD/ 5/ 2013 dated August 27, 2013 11. Circular No. CIR/IMD/DF/17/2013 dated October 22, 2013. 12. Circular No. CIR/MIRSD/3/2014 dated August 28, 2014 13. Circular No. CIR/ OIAE/ 1/ 2014 dated Dec 18, 2014. 14. Circular SEBI/HO/MIRSD/MIRSD1/CIR/P/2017/38 dated May 02, 2017. 15. Circular SEBI/HO/GSD/T A/CIR/P/2017/42 dated May 16, 2017 16. Circular No. SEBI/HO/MIRSD/MIRSD3/CIR/P/2017/ 72 dated June 30, 2017. - Circular - Trade Notice - Public Notice - Instructions - Office orders Tax Management India - taxman ..... X X X X Extracts X X X X X X X X Extracts X X X X
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