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


New Delhi: Issuers of municipal personal debt securities will have to disclose all borrowings and revenue grants details of the previous three years in the offer document, markets regulator Sebi said in a advice note. The directions got after Sebi received particular queries from market people seeking guidance on interpretation associated with some of the provisions of corrected Municipal Regulations.

Sebi claimed issuers will have to disclose details of all borrowings together with outstanding amount of borrowings through the three years for which the audited financial information is being bundled in the offer record.

Further, revenue grant acquired and spent during the last 3 years along with separate disclosures associated with refundable grants will have to be disclosed in the particular document, it added.

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

The Stock options and Exchange Board associated with India (Sebi) said advice note is being provided for good thing about issuers and market people.

The regulator, in Nov 2019, came out with a detailed disclosure framework for entities looking for listing of municipal debt investments issued on private positioning basis.

In respect associated with disclosure regarding litigation relating to the issuer, or its owners or promoters or subsidiaries, Sebi said those which should have adverse impact on the company need to be revealed.

“Merchant banker, issuer as well as the bond Issue committee (wherever applicable), may determine the particular materiality thresholds… after taking into consideration litigations which may have a substance adverse impact on the company or the projects to end up being funded from the proceeds from the issue of municipal provides.

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

Under the norms, the eligible issuer or their promoters or directors probably should not have restrained from interacting with the securities market; probably should not have been named in checklist of the willful defaulters; together with any of its promoter or perhaps director has not been declared being a fugitive economic offender.

In the case of non-corporate issuers, Sebi said the qualifications conditions will apply in the members of the bond challenge committee, which comprise of senior citizen executive officers of the company and headed by the comunitario commissioner or an policeman of equivalent.

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