TMI BlogSecurities and Exchange Board of India (Issue and Listing of Debt Securities by Municipalities) (Amendment) Regulations, 2019.X X X X Extracts X X X X X X X X Extracts X X X X ..... icial Gazette. 3. In the Securities and Exchange Board of India (Issue and Listing of Debt Securities by Municipalities) Regulations, 2015 , (I) In the title, the words Issue and Listing of Debt Securities by Municipalities shall be substituted by the words Issue and Listing of Municipal Debt Securities . (II) In the opening para, for the words debt securities by municipalities , the words, municipal debt securities shall be substituted; (III) In regulation 1 , in sub-regulation (1), the words Issue and Listing of Debt Securities by Municipalities shall be substituted by the words Issue and Listing of Municipal Debt Securities . (IV) In regulation 2 , in sub-regulation (1), clause (d) to (q) shall be substituted by the following clauses, namely,- (d) constitution document shall mean the Central or State Act, Rules, Regulations or charter under which the issuer has been established or incorporated or notified; (e) credit enhancement shall mean any arrangement including subordination, insurance, letter of credit, over-collateralization, undertakings, guarantees, letter of comfort etc. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r; (n) municipality shall mean an institution of self-government constituted under Article 243Q of the Constitution of India; (o) national municipal accounts manual shall mean the municipal accounting manual formulated by the Central Government from time to time; (p) no lien escrow account shall mean the account created for the specific purpose of receiving and disbursing funds towards discharge of contractual obligations; (q) offer document shall mean any document including an electronic document described or issued as an offer document or prospectus or shelf offer document and include any document or advertisement, whereby the subscription to municipal debt securities are invited by the issuer from public; (r) placement memorandum shall mean any document including an electronic document which is serially numbered and copies of which are circulated only to select investors and is related to an issue made on private placement basis; (s) private placement shall mean any offer of municipal debt securities or invitation to subscribe to municipal debt securities to a select group of persons by an issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the Companies Act, 2013) or a consortium thereof, in accordance with the guidelines on wilful defaulters issued by the Reserve Bank of India. (V) In regulation 2 , in sub-regulation (2), the words, symbol and numbers or the Companies Act, 2013 , shall be omitted. (VI) In regulation (3) , clauses (a) and (b) shall be substituted by the following clauses, namely,- (a) issuance and listing of municipal debt securities by an issuer by way of public issuance; and (b) issuance and listing of municipal debt securities by an issuer on private placement basis which are intended/disclosed to be listed on a recognised stock exchange. (VII) In Chapter II, in the Chapter heading, after the word ELIGIBILITY , the words and symbol, AND CONDITIONS , shall be inserted. (VIII) In Chapter II, - (i) before regulation 4 , the following regulation shall be inserted, namely, - Reference date 3A . Unless otherwise provided in these Regulations, an issuer making an offer of municipal debt securities shall satisfy the conditions of these Regulations as on the date of filing o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zed stock exchange for listing of such securities therein: Provided that where the application is made to more than one recognised stock exchanges, the issuer shall choose one of them as the designated stock exchange: Explanation.-For any subsequent issue, the issuer may choose a different stock exchange as a designated stock exchange subject to the requirements of this regulation. Credit Rating 4B. The issuer shall obtain credit rating from at least one credit rating agency registered with the Board, which shall be disclosed in the offer document or placement memorandum, as applicable: Provided that where credit ratings are obtained from more than one credit rating agency, all the ratings, including the unaccepted ratings, shall be disclosed in the offer document or placement memorandum, as applicable. Dematerialisation 4C. The issuer shall enter into an arrangement with a depository registered with the Board for dematerialisation of the municipal debt securities that are proposed to be issued, in accordance with the Depositories Act, 1996, rules and regulations made thereunder. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts at clause (a) shall be complied by the person being financed; (b) Any other conditions as may be specified by the Board from time to time. (ii) regulation 6 , shall be substituted by the following regulation, namely, - Disclosures in the draft offer document and offer document. 6. (1) The draft offer document and offer document shall contain true, fair and material disclosures, which are necessary for the subscribers of the municipal debt securities to take an informed investment decision. (2) Without prejudice to the generality of sub-regulation (1), the issuer and the lead manager shall ensure that the draft offer document contains the following: (a) disclosures specified in Schedule I and Schedule IA of these regulations; (b) additional disclosures as may be specified by the Board: Provided that in case the issuer is a body corporate to which the Companies Act, 2013 applies, the issuer and the lead manager shall ensure that the draft offer document and the offer document also contain the disclosures as mandated by the Companies Act, 2013 and the Companies (Prospectus and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certificate confirming that a written agreement has been entered into between the issuer and the lead manger; (b) a due diligence certificate as per Form A of Schedule II. (3) The Board may specify changes or issue observations, if any, on the draft offer document within twenty one days from the later of the following dates: a) the date of receipt of the draft offer document under sub-regulation (1); or b) the date of receipt of satisfactory reply from the lead manager(s), where the Board has sought any clarification or additional information from them; or c) the date of receipt of clarification or information from any regulator or agency, where the Board has sought any clarification or information from such regulator or agency; or d) the date of receipt of a copy of in-principle approval letter issued by the stock exchange(s). (4) The draft offer document filed with the designated stock exchange shall be made public by posting the same on the website of the designated stock exchange for seeking public comments for a period of fifteen days from the date of filing the draft offer document with suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of municipal debt securities, with the recognised stock exchanges and the Board and in case the issuer is a body corporate to whom the Companies Act, 2013 applies such issuer shall also file the same with the Registrar of Companies. (12) The lead manager shall, furnish to the Board a due diligence certificate as per Schedule II of these regulations with the offer document prior to opening of the public issue: Provided that where the issuer is a body corporate to which the Companies Act, 2013 applies, the lead manager shall, prior to filing of the final offer document with the Registrar of Companies, furnish to the Board a due diligence certificate as per Schedule II of these regulations. (13) The debenture trustee, shall, prior to the opening of the public issue, furnish to the Board a due diligence certificate as per Schedule III of these regulations. (14) The issuer and the lead manager(s) shall ensure that the offer documents are hosted on the websites as required under these regulations and its contents are the same as the versions as filed with the Registrar of Companies, Board and the stock exchanges, as applicable. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) Allotment in the public issue of municipal debt securities should be made on the basis of date of upload of each application into the electronic book of the stock exchange: Provided that on and after the date of oversubscription, the allotments may be made to the applicants on a proportionate basis upto the oversubscription limit. (2) The issuer and lead manager(s) shall ensure that the municipal debt securities are allotted and/or application monies are refunded or unblocked within such period as may be specified by the Board. (3) The lead manager(s) shall ensure that the allotment, credit of dematerialised securities and refund or unblocking of application monies, as may be applicable, are done electronically. (4) Where the securities are not allotted and/or application monies are not refunded or unblocked within the period stipulated in sub-regulation (2) above, the issuer shall undertake to pay interest at the rate of fifteen per cent. per annum to the investors and within such time as disclosed in the offer document and the lead manager(s) shall ensure the same. (xv) in regulation 13 , the words revenue bonds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Form C of Schedule II. (5) The debenture trustee shall, prior to the opening of private placement, furnish to the Board a due diligence certificate as per Schedule III of these regulations. Minimum subscription. 15. The minimum subscription amount per investor shall be Rupees ten lakh. (XII) In Chapter V, - (i) regulation 16 shall be substituted by the following regulation, namely,- Electronic issuance 16. An issuer proposing to issue municipal debt securities may make the same through the on-line system and shall comply with the relevant requirements as may be specified by the Board. (ii) in regulation 17 , after the words from the investors , the words in the manner as specified by the Board from time to time shall be inserted. (iii) after regulation 17 and before regulation 18, the following regulation shall be inserted, namely,- Put or call option 17A . The issuer may recall municipal debt securities prior to maturity date at its option (call) or provide such right of redemption prior to maturity date (put) to all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... implementation of the project in the offer document or placement memorandum in a tabular form and the funds raised by the issuer shall be utilized in accordance with the said Schedule. Issuer contribution 18B. The contribution of the issuer for each issuance of municipal debt securities shall not be less than twenty per cent. of the project costs, which shall be contributed from their internal resources or grants that may be in cash or kind. (vi) regulation 19 shall be substituted by the following regulation, namely,- Creation of Escrow Accounts 19 . The issuer shall create a structured payment mechanism and maintain specific escrow accounts for the purpose of debt servicing of the municipal debt securities as specified by the Board from time to time. (vii) regulation 20 shall be substituted by the following regulation, namely,- Trust deed. 20 . (1) A trust deed for securing the issue of municipal debt securities shall be executed by the issuer in favour of the debenture trustee. (2) The trust deed shall contain such clauses as may be specified in Sch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conditions: (a) the roll-over is approved by a special resolution passed by the holders of such municipal debt securities having the consent of not less than 75% of the holders by value of such municipal debt securities: (b) at least one rating is obtained from a credit rating agency within a period of six months prior to the due date of redemption and is disclosed in the notice referred to in sub-regulation (2); (c) fresh trust deed shall be executed at the time of such roll over or the existing trust deed may be continued if the trust deed provides for such continuation; (6) The issuer shall redeem the municipal debt securities of all the holders, who have not given their positive consent to the roll-over. (ix) regulation 22 shall be substituted by the following regulations, namely,- Face value of municipal debt securities 22. The face value of municipal debt securities shall be disclosed in offer document or placement memorandum in the manner as specified by the Board. Day count convention 22A . The day count convention for calculation of interest payments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unts shall be prepared in accordance with section 129 and 134 of the Companies Act, 2013 and the rules made thereunder. (2) In case of the issuer being a municipality, the accounts of the issuer shall be audited by the persons appointed by the municipal corporations, as permissible under its constitution document: Provided that in case the issuer is a body corporate to which the Companies Act, 2013 applies, the accounts of the issuer shall be audited by an auditor, in terms of section 139 of the Companies Act, 2013 and the Rules made thereunder. (iii) Regulation 25 shall be substituted by the following regulation, namely, - Trading and reporting of municipal debt securities. 25. (1) The trades of listed municipal debt securities shall be cleared and settled through a recognised clearing corporation in the manner specified by the Board. (2) In case of trades in municipal debt securities which have been made over the counter, such trades shall be reported on a recognised stock exchange having a nationwide trading terminal or such other platform as may be specified by the Board from time to time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orate to which the Companies Act, 2013 applies, the merchant banker(s) shall also ensure that the disclosures under Companies Act, 2013 and rules made thereunder are complied with. (4) The issuer shall treat the applicants in a public issue of municipal debt securities in a fair and equitable manner as per the procedures as may be specified by the Board. (5) The merchant bankers shall be responsible for the due diligence in respect of assignments undertaken by them in respect of issue, offer and distribution of securities to the public. (6) There shall be no conflict of interest between the lead manager(s) and the issuer or its group companies in accordance with the applicable regulations. (XVI) after Chapter VII and before Chapter VIII , the following Chapter shall be inserted, namely.- CHAPTER VIIA PROCEDURE IN CASE OF VIOLATION OF REGULATIONS Directions by the Board 27A. Without prejudice to the action under section 11, 11A, 11 B, 11D, sub- section (3) of section 12, Chapter VIA and section 24 of the Act or section 439 of the Companies Act, 2013, the Board may suo- mot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest of securities market. (XIX) Schedule I shall be substituted by the following Schedule, namely- SCHEDULE I [ See regulations 6 and 27 ] DISCLOSURES IN THE OFFER DOCUMENT AND PLACEMENT MEMORANDUM All disclosures specified under this schedule shall be made in the draft offer document or the preliminary placement memorandum or offer document or placement memorandum, as applicable. 1. Instructions : (a) All information shall be relevant and updated. The source and basis of all statements and claims shall be disclosed. (b) All blank spaces in the draft offer document/ preliminary placement memorandum shall be filled up with appropriate data before registering the offer document /placement memorandum, as applicable, with the Registrar of Companies or filing the same with the recognised stock exchanges. (c) Plain English shall be used to enable easy understanding of the contents. Technical terms, if any, used in explaining the business of the issuer shall be clarified in simple terms. (d) Wherever it is mentioned that details are given elsewher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssuer (o) Names, addresses, telephone numbers, contact person, website addresses and e-mail addresses of the lead manager(s), registrars to the issue, bankers to the issue, brokers to the issue and syndicate member(s); alongwith URL of SEBI website listing out the details of self-certified syndicate banks, registrar to the issue and depository participants, etc., if applicable. (p) Names, addresses, telephone numbers and e-mail addresses of the Company Secretary, legal advisor, underwriters and bankers to the issuer. (q) Names of the debenture trustee(s) shall be mentioned with a statement to the effect that the debenture trustee(s) has given his consent to the Issuer for his appointment. This also needs to be mentioned in all subsequent communications sent to the holders of debt securities. (r) Investor grievances redressal mechanisms 4. About the issuer and Capital structure of the issuer: (a) The constitution document (b) Details of the capital structure of the issuer, if applicable. (c) Details of the management structure of the issuer. (d) Shareholding pattern of the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erage, selling commission and upload fees (c) Registrars to the issue (d) Legal Advisors (e) Advertising and marketing expenses (f) Regulators including stock exchanges (g) Printing and distribution of issue stationary (h) Others, if any (to be specified). 6. Tax Benefits: Any special tax benefits (under direct and indirect tax laws) for the issuer and its investors 7. Issue specific Information: (a) Issue/instrument specific regulations - relevant details (Relevant Act, RBI guidelines, etc.). (b) The detailed rating rationale (s) adopted (not older than one year on the date of opening of the issue)/ credit rating letter issued (not older than one month on the date of opening of the issue) by the rating agencies shall be disclosed. Names of all the credit rating agencies from which credit rating including unaccepted rating has been obtained. (c) Credit Enhancement Mechanisms if any, with complete details, if any. (d) Names of all the recognised stock exchanges where the debt securities are proposed to be listed clearly indic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Contribution to Sinking fund Revenue surplus Capital income Capital expense Capital surplus Overall surplus Deposits and Advances (net) Initial Cash / Bank balance Change in Cash / Bank balance Final Cash / Bank balance Loan repayment from sinking fund Initial Sinking fund balance Change in sinking fund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IV. Status of reforms with respect to e-governance, cost recovery on water supply, Solid Waste Management (SWM), property tax, double entry accounting and others, as specified by Central Government and authorities concerned V. Borrowings (a) Details of borrowings of the Issuer, as on the latest quarter end:- (b) Details of Secured Loan Facilities:- Lender s Name Type of Facility Amt Sanctioned Principal Amt outstanding Repayment Date / Schedule Security (c) Details of Unsecured Loan Facilities:- Lender s Name Type of Facility ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) All criminal proceedings; (ii) All actions by regulatory and statutory authorities; (iii) Disciplinary action including penalty imposed by SEBI or stock exchanges against the promoters during the previous five financial years including outstanding action; (iv) Claims related to direct and indirect taxes, in a consolidated manner, giving the number of cases and total amount; (v) Other pending litigation - As per the policy of materiality defined by the Board of Directors of the Issuer and disclosed in the offer document/placement memorandum. (b) Outstanding dues to creditors: (i) Based on the policy on materiality defined by the Board of Directors of the Issuer, details of creditors which include the consolidated number of creditors and the aggregate amount involved (ii) Consolidated information on outstanding dues to micro, small and medium enterprises, separately giving details of number of cases and amount involved; (iii) Complete details about outstanding dues to material creditors along with the name and amount involved for each such material creditor shall be disclosed, on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ended to by the issuer expeditiously and satisfactorily; (c) that all steps for completion of the necessary formalities for listing and commencement of trading at all stock exchanges where the securities are to be listed are taken within the period specified by the Board; (d) Declaration signed by the Mayor and Commissioner of the concerned Municipal Body stating that the offer document/placement memorandum contains true, fair and adequate information to enable investors to make a well informed decision regarding their investment in the proposed issue. (e) Declaration signed by the Director(s) of the Issuer, if it is a body corporate to which the Companies Act, 2013 applies, stating that offer document/placement memorandum contains true, fair and adequate information to enable investors to make a well informed decision making regarding their investment in the proposed issue. (f) a statement to be given by the Board of the Issuer or Standing Committee thereof that all monies received out of the issue shall be transferred to a separate bank account. (g) the details of all utilized and unutilised monies out of the monies coll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than 100 words each; (b) Size of the issue; (c) Objects of the issue in a tabular format; (d) Audit qualifications along with the financial statements, if any (e) Summary table of pending litigation and a cross-reference to the section titled Pending Litigation and Material Developments'' . (f) Cross-reference to the section titled 'Risk Factors' (g) Summary table of contingent liabilities and a cross-reference to contingent liabilities of the issuer as disclosed in the restated financial statements. (h) Summary of related party transactions for the previous three years and cross-reference to related party transactions as disclosed in financial statements. (i) Details of escrow payment mechanism for the repayment of the interest/principal. Summary term sheet shall be provided which shall include following information (where relevant) pertaining to the issue of municipal debt securities (or a series thereof) and any other substantial information deemed relevant:- Security name ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Call option price Put notification time Call notification time Face value Minimum application for municipal debt securities or multiples thereof Issue timing 1. Issue opening date 2. Issue closing date 3. Pay-in date 4. Deemed date of allotment Issuance mode of the instrument Trading mode of the instrument Settlement mode of the instrument Depository Business day convention Record date Transaction documents Conditions precedent to disbursement Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thority. (4) Necessary arrangements shall be made to ensure that the monies received pursuant to the issue are credited or transferred to in a separate bank account. (5) We shall comply with the provisions pertaining to advertisements in terms of the Securities and Exchange Board of India (Issue and Listing of Municipal Debt Securities) Regulations, 2015. (6) The offer document or placement memorandum registered with the Registrar of Companies and filed with the designated stock exchange on . (date) was suitably updated under intimation to the Board and that the said offer document or placement memorandum contains all the material disclosures in respect of the issuer as on the said date. (7) Agreements have been entered into with the depositories for dematerialisation of the securities of the issuer. We enclose a note explaining the process of due diligence that has been exercised by us for the period disclosed in the draft offer document/preliminary placement memorandum in accordance with applicable laws. We enclose a checklist confirming regulation-wise compliance with the applicable provisions of these r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CHANT BANKER PLACE: DATE: Form C FORMAT OF DUE DILIGENCE CERTIFICATE TO BE GIVEN IN THE EVENT OF DISCLOSURE OF MATERIAL EVENTS AFTER THE FILING OF THE OFFER DOCUMENT/PLACEMENT MEMORANDUM BY THE LEAD MANAGER(S)/MERCHANT BANKER(S) To, SECURITIES AND EXCHANGE BOARD OF INDIA Dear Sirs, SUB.: ISSUE OF _________________ BY ________________(Issuer) We CONFIRM that all material disclosures in respect of the issue as on date have been made through the offer document or placement memorandum registered with the Registrar of Companies and filed with the designated stock exchange on .. (date). (SIGNATURE WITH OFFICIAL SEAL) LEAD MANAGER/ MERCHANT BANKER PLACE: DATE: (XXII) Schedule III shall be substituted by the following Schedule, namely, - SCHEDULE III [ See regulations 7 and 14 ] FORMAT OF DUE DILIGENCE CERTIFICATE TO BE GIVEN BY THE DEBENTURE TRUSTEE BEFORE OPENING OF THE ISSUE To, SECURITIES AND EXCHANGE BOARD O ..... X X X X Extracts X X X X X X X X Extracts X X X X
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