Insertion of new section 30B.
140. After section 30A of the principal Act, the following section shall be inserted, namely:––
Special provisions related to pooled investment vehicle.
“30B. (1) Notwithstanding anything contained in the Indian Trust Act, 1882 (2 of 1882.) or in any other law for the time being in force or in any judgment, decree or order of any Court, Tribunal or any other authority, a pooled investment vehicle, whether constituted as a trust or otherwise, and registered with the Securities and Exchange Board of India shall be eligible to borrow and issue debt securities in such manner and to such extent as may be specified under the regulations made by Securities and Exchange Board of India in this behalf.
(2) Every pooled investment vehicle referred to in subsection (1) shall, subject to the provisions of the trust deed, be permitted to provide security interest to lenders in terms of the facility documents entered into by such pooled investment vehicle.
(3) Where any pooled investment vehicle referred to in sub-section (1) defaults in repayment of principal amount or payment of interest or any such amount due to the lender, the lender shall recover the defaulted amount and enforce security interest, if any, against the trust assets, by initiating proceedings against the trustee acting on behalf of such pooled investment vehicle in accordance with the terms and conditions specified in the facility documents:
Provided that on initiation of the proceedings against the trust assets, the trustee shall not be personally liable and his assets shall not be utilised towards recovery of such debt.
(4) The trust assets, which remain after recovery of defaulted amount, shall be remitted to the unit holders on proportionate basis.”.
Notes on Clauses:
Clauses 138 to 140 of the Bill seeks to amend the provisions of the Securities Contracts (Regulation) Act, 1956.
It is proposed to define the expression “pooled investment vehicle”. It is further proposed to clarify that debt securities and such other marketable securities as well as the units issued by pooled investment vehicles are “securities”.
It is also proposed to insert a new section 30B in the said Act to specify that a pooled investment vehicle, whether constituted as a trust or otherwise, shall be eligible to borrow and issue debt securities and shall be permitted to provide security interest to lenders, in terms of the facility documents, entered into by such pooled investment vehicles. It further provides that in case of default, the lenders shall recover the defaulted amount against the trust assets, by initiating proceedings against the trustee acting on behalf of the pooled investment vehicle, and whatever remains after paying the lenders shall be remitted to the unit holders.
These amendments will take effect from 1st April, 2021.
