Regulation 4 - Eligible issuers - Securities and Exchange Board of India (Issue and Listing of Municipal Debt Securities) Regulations, 2015

CHAPTER II ELIGIBILITY 3 [ AND CONDITIONS ] 4 [ Eligible issuers. 4. No issuer shall be eligible to issue municipal debt securities under these regulations, unless the following criteria are complied with: (a) the issuer, proposing to issue municipal debt securities is eligible to raise funds under its constitution document; (b) the accounts of issuer shall be prepared in accordance with any of the following: i. National Municipal Accounts Manual or; ii. Municipal Accounts Manual as adopted by the respective State Governments; or iii. Accounting standards, applicable to issuers, as prescribed under the Companies Act or; iv. Accounting standards/policies, applicable to issuers, as specified in their constitution document. (c) the issuer has not defaulted in repayment of debt securities or loans obtained from banks or financial institutions, during the preceding three hundred and sixty five days; (d) no order or direction of restraint, prohibition or debarment by the Board is in force against the issuer or its promoters or its directors from accessing the securities market; (e) an issuer or its promoter, group company or director(s) thereof, should not have been named in the list of the wilful defaulters; (f) any of its promoter or director(s) has not been declared as a fugitive economic offender(s): 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 clauses (b) and (c) above shall be complied by the person being financed; ] ********** Notes 1. Substituted vide Notification No. SEBI/LAD/NRO/GN/2016-17/032 dated 15-02-2017 before it was read as (c) municipality shall not have negative net worth in any of the three immediately preceding financial years; 2. Substituted vide Notification No. SEBI/LAD/NRO/GN/2016-17/032 dated 15-02-2017 before it was read as (d) municipality shall not have defaulted in repayment of debt securities or loans obtained from Banks or Financial Institutions, during the last three hundred and sixty five days: Provided that where the issuer is a corporate municipal entity, the requirements at (b), (c) and (d) shall be complied by the Municipality which is being financed. Explanation.-For this purpose, the term default means where interest and/ or principal amount has remained overdue for a period of more than ninety days; 3. Inserted vide NOTIFICATION No. SEBI/LAD-NRO/GN/2019/40 dated 27-09-2019 4. Substituted vide NOTIFICATION No. SEBI/LAD-NRO/GN/2019/40 dated 27-09-2019 before it was read as Eligible municipalities. 4. No issuer shall be eligible to issue debt securities to public under these regulations, unless the following criteria are complied with: (a) municipality, whether proposing to issue debt securities itself or through corporate municipal entity, should be eligible to raise funds under its constitution; (b) accounts of municipality shall be prepared in accordance with National Municipal Accounts Manual or in accordance with similar Municipal Accounts Manual adopted by the respective State Government for at least three immediately preceding financial years; 1 [ (c) municipality shall have surplus income as per its Income and Expenditure Statement, in any of the immediately preceding three financial years or any other financial criteria as may be specified by the Board from time to time. Provided that a corporate municipal entity shall not have negative net worth in any of immediately preceding three financial years; ] 2 [ (d) municipality shall not have defaulted in repayment of debt securities or loans obtained from banks or financial institutions, during the last three hundred and sixty five days: Provided that where the issuer is a corporate municipal entity, the requirements at clauses (b) and (d) shall be complied by the municipality which is being financed; ] (e) no order or direction of restraint, prohibition or debarment by Board against the corporate municipal entity or its directors is in force; (f) the corporate municipal entity, its promoter, group company or director(s), should not have been named in the list of the wilful defaulters published by the Reserve Bank of India or should not have defaulted of payment of interest or repayment of principal amount in respect of debt instruments issued by it to the public, if any.