TMI BlogSecurity and Covenant Monitoring’ using Distributed Ledger TechnologyX X X X Extracts X X X X X X X X Extracts X X X X ..... f security creation, monitoring of security created, monitoring of asset cover and covenants of the non-convertible securities, a working group comprising of officials from SEBI, Depositories, Stock Exchanges and Trustees Association of India (TAI) was constituted by SEBI. Based on the recommendations of the working group, a platform for Security and Covenant Monitoring System ( system ) hosted by Depositories shall be developed. 3. The system shall be used for recording and monitoring of the security created and monitoring of covenants of non-convertible securities. The system shall inter alia capture the process of creation of security (viz. due diligence, charge creation etc.), continuous monitoring of covenants by Debenture Trustees (as applicable), credit rating of the non-convertible securities by the Credit Rating Agencies (CRAs) etc. 4. Depositories shall create, host, maintain and disseminate the system for security and covenant monitoring using distributed ledger technology. Further, the depositories shall: 4.1. Provide secure login credentials to Issuers, CRAs, debenture trustees (DTs) etc. for recording and verifying requisite information on the sy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e A1 . Issuers shall fill all the requisite fields in the system at the time of creation of temporary ISIN/ ISIN. 6.2. The assets offered as security by an Issuer shall be recorded in the system pursuant to validation/ verification by DT(s) in terms of SEBI Circular dated November 03, 2020 or any other relevant circulars. 6.3. In case, the value and details of assets recorded are not in line with the terms of proposed non-convertible securities issuance, DT shall not validate and reject the same on the system while providing remarks on same. The system shall send an intimation to the Issuer to rectify any discrepancy or record additional details regarding assets offered as security before initiating issuance of temporary ISIN/ ISIN. 6.4. DTs shall also upload the reports prepared by itself or its appointed agencies viz. valuation report, ROC search report, title search report/ appraisal report, security cover certificate, due diligence certificate as per Annexure A of the SEBI Circular dated November 03, 2020 issued by the DT, any other report/ certificate as applicable etc. on the system. 7. Recording of charge creation and charge registration details ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss Debt to EBITDA, Debt to Value Ratio etc g. Covenants as to any change in nature and conduct of business h. Covenants with respect to changes in the composition of its Board of Directors i. Monitoring of Debenture Redemption Reserve, Debenture Redemption Fund, Recovery Expense Fund j. Other non-financial covenants such as credit rating, negative lien undertaking, etc. 10.2. DTs shall validate the covenants so entered by the Issuer within seven working days of signing the Debenture Trust Deed including in the cases where the same have not been entered by the Issuers. B. Periodic monitoring of Security Cover, Asset Cover and Covenants 11. Issuer shall provide the half yearly certificate by the statutory auditor specifying the security cover and asset cover and upload the same on the system within 45 days/ 60 days as specified under the provision of SEBI (LODR) Regulations, 2015 in format as specified vide SEBI Circular(s) from time to time. 12. The Issuer shall upload on a periodic basis the necessary and applicable documents, information within stipulated time so as to enable DT(s) to exercise the above functions as per terms and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctober 13, 2020. 16. Redemption of Non-convertible securities: 16.1. Issuer shall initiate the release of charges along-with the relevant documents in the system including but not limited to Statutory Certificate, No dues from the Debenture Holders (applicable only in case of private placement), ISINs Extinguishment letter, ROC Charge Satisfaction forms/certificate. 16.2. The DT shall release charges in case any debt is repaid and update/ validate the same in the platform. D. Credit Rating information 17. Issuer at the time of creation of temporary ISIN/ ISIN shall upload the credit rating information for non-convertible securities including rating action, date of press release and hyperlink for press release of credit rating. CRAs shall access the platform to validate the rating information uploaded by the Issuer. In case of any discrepancy, Issuer or CRAs shall notify the same on system and update the correct information in the system within three working days of such notification. 18. Any subsequent rating actions carried out by CRAs shall be recorded in system by the Issuer within one working day of the press release, which shall inter-al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of rights g. Guarantee viz personal corporate, corporate guarantee, government guarantee etc. 1.2. Details related to security offered The required data to be to be filled along-with supporting documents, wherever applicable: a. Asset description i. Asset name ii. Asset Details (in case of shares, it shall also include ISIN, Quantity, Pledgee Demat ID, Pledgee Instrument ID) iii. Asset Location (including address of the asset) iv. Asset ownership details b. Value of security offered: Issuer shall submit documents given as per November 03, 2021 circular and other documents given by Issuer for ascertaining the existence, veracity and value of assets. c. Documents related to existing encumbrance on assets/security offered: Issuer shall record following details on platform or submit documents: i. For unencumbered assets, an undertaking that the assets on which charge is proposed to be created are free from any encumbrances. ii. For encumbered assets, on which charge is proposed to be created, the Issuer shall submit documents in system as per para 4.3 of SEBI Circular dated November 03,2020 and any other documen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether on: Lot Basis Pro-rata basis Reason for redemption Redemption due to PUT option (if any) Redemption due to CALL option (if any) Quantity and Amount Redeemed Due date for Redemption/ Maturity Date of early Redemption (if any) 2. Issuers shall fill all the following requisite fields to update the status of payment within one working day of payment/ redemption date or a change in the due date of interest payment/ redemption payment as under: Updation by Issue on continuous basis Payment of Interest Actual Date for Interest Payment Amount of interest paid Date of last Interest Payment Reason for non-payment/ delay in payment Change in Frequency of payment (if any) Date of Change Details of such change Change in Record Date Updation by Issue on continuous basis Redemption payment Actual Date for Redemption Amount Redeemed Outstanding Amount (Rs.) Reason for non-payment/ dela ..... X X X X Extracts X X X X X X X X Extracts X X X X
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