Sebi amends debenture trustee regulations
Markets regulator Sebi has put in place new regulations for debenture trustees, wherein an entity will not be prohibited from acting as a trustee if the government provides guarantees for the debenture issued.
The norms comes following recommendations of a Sebi- appointed task force that examined the "challenges in performing the obligations and duties as Debenture Trustees (DTs) to protect the interests of the debenture holders".
The amendments seek to fortify the existing provisions to enable the DTs to perform the task of securing the interest of investors and also harmonise the existing provisions with those of the Companies Act, 2013.
Earlier, several provisions in the DT Regulations had reference to the erstwhile Companies Act, 1956, which have been repealed and replaced by the new companies law.
Among various changes, Sebi has changed the definition of principal officer, who is entrusted with overseeing the activities of the DT, to include Key Management Personnel (KMP) who in turn can be the CEO, managing director, company secretary, whole-time Director, CFO or such other officer.
Earlier, a person could not act as a DT in case of any issue of debentures by an associate. Now, a person cannot be appointed as a DT if he beneficially owns shares in the company, is a promoter, director or KMP or an employee of the company or its holding, subsidiary or associate company, Sebi said in a notification dated July 13.
Sebi said that DT would be responsible for communicating promptly to the debenture holders defaults, if any, with regard to payment of interest or redemption of debentures and action taken by the trustee.