Regulation 11 - Obligations of trustees - Securities And Exchange Board Of India (Issue And Listing Of Securitised Debt Instruments And Security Receipts) Regulations, 2008

Obligations of trustees 11. (1) A trustee shall carry out his duties and perform his functions under these regulations, the trust deed or other document, with due care and diligence. (2) The trustees shall ensure that the covenants in the trust deed and any other transaction document are complied with by the concerned parties 3 [ and shall take necessary steps in case of any breach of covenants in terms of the trust deed and transaction documents ] . 1 [ (3) A trustee shall,- (a) supervise the implementation of the covenants regarding creation of security for the securitised debt instruments; (b) do such acts as are necessary in the event the security becomes enforceable and supervise the enforcement of the security in the interest of the investors; (c) carry out such acts as are necessary for resolving the grievances of the investors and for the protection of interest of the investors; ensure on a continuous basis that the trust property of a particular scheme/tranche is available at all times to pay the securitised debt instruments holders of that particular scheme/tranche; (e) exercise due diligence to ensure compliance by the originators, with the listing agreements (if applicable), the trust deed or any other transaction document and if the originator is a banking company or non-banking financial company as defined in the Reserve Bank of India Act, 1934, trustee shall ensure that it has complied with the guidelines prescribed for securitisation by Reserve Bank of India; (f) 4 [ inform ] the board about any action, legal proceeding, etc., initiated against it in respect of any material breach or noncompliance by it, of any law, rules, regulations, directions of the Board or of any other regulatory body; (g) ensure that the securitised debt instruments have been repaid or redeemed in accordance with the provisions and conditions under which they were offered to the investors; (h) call for periodic reports from the originator regarding the performance of the underlying asset pool, atleast on quarterly basis; (i) communicate to the investors regarding the compliance by the servicer with its obligations and the actions taken 5 [ thereon ] , atleast on quarterly basis; (j) obtain a certificate from the auditor(s) of originator regarding the 6 [ status of ] disclosures of underlying asset pool assigned to the securitization trust, as made by the originator, on quarterly basis; (k) share such reports and auditors certificate as received from the originator or the auditor(s) of originator, with the credit rating agency which is rating the securitised debt instrument; 7 [ (l) call a meeting of all the investors on (i) a requisition in writing signed by at least one-tenth of the investors in value for the time being outstanding; or (ii) the happening of any event, which constitutes a servicer default or breach of covenants as specified in the trust deed or transaction documents, or which in the opinion of the trustee affects the interest of the investors; ] 8 [ (la) call a meeting of the investors, if required in the opinion of the trustee; (lb) call and conduct the meeting of investors in such manner as may be specified by the Board from time to time, subject to the following conditions: (a) in order to facilitate wider participation and collective sense, meetings shall be facilitated by video-conferencing and voting shall be facilitated by electronic means; (b) to facilitate timely decision-making, the sense of the meeting shall be ascertained on the basis of present and voting; (c) as to requisite majority, unless otherwise explicitly provided in these regulations or any other regulations framed by the Board or any other law for the being in force or the trust deed, any matter placed before the securitised debt instrument holders shall be decided by such securitised debt instrument holders, holding more than fifty per cent value of the outstanding securitised debt instruments: Provided that the terms of the issue of securitised debt instruments or trust deed may provide for a higher majority for taking such decision. Explanation: - For the purpose of these regulations, standards, if any, as specified by the Board with respect to the calling of meetings of securitised debt instrument holders shall mutatis mutandis apply to the calling of meetings of investors. ] (m) maintain the net worth as per the requirements specified in these regulations on a continuous basis and inform the Board immediately in respect of any shortfall in the net worth and take necessary corrective action to restore the net worth within a period of six months; (n) ensure that any change in registration status or any administrative, civil or penal action taken by Board 9 [ against the trustee under any of the applicable regulations ] or any material change in financial position 10 [ of the trustee ] which may adversely affect the interests of investors is promptly informed to the investors; (o) not relinquish responsibility as trustee in respect of the issue, unless and until another trustee is appointed in its place; (p) have necessary infrastructure to discharge its duties including the following: (i) collecting information and reports from servicers/originator; (ii) generating cash flow reports, payment reports and meet all reporting requirements required under the Board s or Reserve Bank of India s guidelines/circulars; (iii) recording investor information; (iv) entering and maintaining data for the special purpose distinct entity, including cash flows, audited financials, taxation aspects etc.; (v) issuing cheques/demand drafts or generating RTGS/NEFT requests etc., for interest and principal payments; (vi) sufficient access controls to ensure confidentiality of data; (vii) sufficient systems for backup and disaster recovery. (q) appoint a compliance officer for performing duties including: (i) monitoring the compliance of the acts, rules and regulations, notifications, guidelines, instructions, etc., issued by the Board, Central Government and State Government(s); (ii) redressal of investors grievances. ] 2 [ (r) redress investor grievances promptly but not later than twenty-one calendar days from the date of receipt of the grievance and in such manner as may be specified by the Board. ] 11 [ (4) The trustees shall be accountable for, and be the custodian of, the funds and property of the respective schemes and shall hold the same in trust for the benefit of the unitholders in accordance with these regulations and the provisions of trust deed. (5) The trustee shall ensure that the trust property is properly protected, held and administered by proper persons and by an appropriate number of such persons. (6) The trustee shall abide by the Code of Conduct as specified in Schedule III. (7) The trustee shall abide by the provisions of the Act and these regulations in respect of the regulated activities carried on by the special purpose distinct entity. ] ************* NOTES:- 1 . Inserted vide Notification No. SEBI-NRO/OIAE/GN/2015-16/001 dated 09-04-2015 2 . Inserted vide Notification No. SEBI/LAD-NRO/GN/2023/146 dated 16-08-2023 3 . Inserted vide F. No. SEBI/LAD-NRO/GN/2025/247 dated 05-05-2025 4 . Substituted vide F. No. SEBI/LAD-NRO/GN/2025/247 dated 05-05-2025 before it was read as, take appropriate measures for protecting the interest of the investors including informing 5 . Substituted vide F. No. SEBI/LAD-NRO/GN/2025/247 dated 05-05-2025 before it was read as, thereof 6 . Inserted vide F. No. SEBI/LAD-NRO/GN/2025/247 dated 05-05-2025 7 . Substituted vide F. No. SEBI/LAD-NRO/GN/2025/247 dated 05-05-2025 before it was read as, (l) call a meeting of all the investors on a requisition, in writing signed by at least one-tenth of investors in value for the time being outstanding or at the occurrence of an event, which constitutes a servicer default or which in the opinion of the trustees affects the interest of the investors; 8 . Inserted vide F. No. SEBI/LAD-NRO/GN/2025/247 dated 05-05-2025 9 . Inserted vide F. No. SEBI/LAD-NRO/GN/2025/247 dated 05-05-2025 10 . Inserted vide F. No. SEBI/LAD-NRO/GN/2025/247 dated 05-05-2025 11 . Inserted vide F. No. SEBI/LAD-NRO/GN/2025/247 dated 05-05-2025