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Municipal bond issuers need to disclose borrowings, revenue grant details in offer docs: Sebi


New Delhi: Issuers of municipal financial debt securities will have to disclose all borrowings and revenue grants details of the final three years in the offer document, markets regulator Sebi said in a advice note. The directions came up after Sebi received specific queries from market members seeking guidance on interpretation involving some of the provisions of changed Municipal Regulations.

Sebi mentioned issuers will have to disclose details of all borrowings in addition to outstanding amount of borrowings through the three years for which the audited financial information is being incorporated in the offer doc.

Further, revenue grant acquired and spent during the last four years along with separate disclosures involving refundable grants will have to be disclosed in this document, it added.

With regard to due diligence, Sebi said merchant banker(s) may well rely on the summarised The english language translations of the various non-financial documents, legal papers which can be in the regional dialect of the respective issuers although carrying out due diligence.

The Stock options and Exchange Board involving India (Sebi) said advice note is being provided for benefit for issuers and market members.

The regulator, in Late 2019, came out with a detailed disclosure framework for entities looking for listing of municipal debt stock options issued on private position basis.

In respect involving disclosure regarding litigation concerning the issuer, or its company directors or promoters or subsidiaries, Sebi said those which should have adverse impact on the company need to be unveiled.

“Merchant banker, issuer as well as the bond Issue committee (wherever applicable), may determine this materiality thresholds… after looking at litigations which may have a product adverse impact on the company or the projects to end up being funded from the proceeds in the issue of municipal a genuine.

“The thresholds so identified shall be disclosed in this offer document,” Sebi said in a advice note issued on Wed.

Under the norms, the eligible issuer or it has the promoters or directors should never have restrained from being able to access the securities market; should never have been named in checklist of the willful defaulters; and even any of its promoter or even director has not been declared to be a fugitive economic offender.

In the case of non-corporate issuers, Sebi said the membership and enrollment conditions will apply in the members of the bond concern committee, which comprise of mature executive officers of the company and headed by the consistorial commissioner or an police officer of equivalent.

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