The weekly messenger | Edition 02.22

Regulatory news

Schemes of Arrangement by Listed Entities - Clarification w.r.t. timing of submission of NOC from the lending scheduled commercial banks/ financial institutions/ debenture trustee ‒ 3 January 2022

The Securities and Exchange Board of India (SEBI) vide its Circulars dated 16 November 2021 and 18 November 2021 had made certain changes in its Master Circular dated 22 December 2020 which lays down the framework for Schemes of Arrangement by listed entities, wherein the listed entities were asked to submit ‘No Objection Certificate (NOC) from the lending scheduled commercial banks/financial institutions/debenture trustees’ in addition to the existing documents which they are required to submit to the Stock exchange.

Now, the SEBI has clarified that such NOC shall be submitted before the receipt of the No-objection letter from stock exchange in terms of Regulation 37(1) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR Regulations).

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Disclosure obligations of high value debt listed entities in relation to RPTs − 7 January 2022

 The SEBI vide its notification dated 7 September 2021, introduced a new sub-Regulation 15(1A) in its LODR Regulations, specifying that Regulations 15 to 27 of LODR Regulations shall be applicable to high value debt listed entities on a ‘comply or explain’ basis.

Subsequently, the SEBI vide its amendment dated 9 November 2021, had amended the Regulation 23 of the LODR Regulations, wherein it was made mandatory for the listed entities that have listed specified securities to submit to the stock exchanges disclosure of Related Party Transactions (RPTs) in the format specified by the Board from time to time.

Post that SEBI vide its Circular dated 22 November 2021, had prescribed the information to be placed before the audit committee and shareholders for consideration of RPTs together with the format for reporting of RPTs to the Stock Exchange.

Now, SEBI has issued a Circular, wherein it has clarified that since the provisions of Regulation 23 of the LODR Regulations would also be applicable to high value debt listed companies, therefore the provisions of the aforesaid Circular dated 22 November 2021 would be equally applicable to high value debt listed entities as well.

This Circular shall come into force w.e.f 7 January 2022.

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Master Circular - Bank Finance to NBFCs ‒ 5 January 2022

The Reserve Bank of India (RBI) has issued a ‘Master Circular - Bank Finance to Non-Banking Financial Companies (NBFCs)’ thereby consolidating all instructions on the aforesaid matter issued up to 4 January 2022.

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RBI releases “Eligibility criteria for entities to be categorised as Specified User under clause (j) of Regulation 3 of the Credit Information Companies (Amendment) Regulations, 2021” − 5 January 2022

The RBI vide its Notification dated 29 November 2021 issued the ‘Credit Information Companies (Amendment) Regulations, 2021’, wherein a new clause (j) was inserted in the principal Regulations.

Now, the RBI has released, “Eligibility criteria for entities to be categorised as Specified User under clause (j) of Regulation 3 of the Credit Information Companies (Amendment) Regulations, 2021” which sets out the requirement for the entities to become eligible as Specified User of the Credit Information Companies under the aforesaid clause.

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Basel III Framework on Liquidity Standards – LCR, Liquidity Risk Monitoring Tools and LCR Disclosure Standards and Net Stable Funding ratio – Small Business Customer − 6 January 2022

In order to enable the banks to manage liquidity risk more effectively, the RBI has decided to increase the threshold limit for deposits and other extensions of funds received from non-financial small business customers from ₹ 5 crore to ₹ 7.5 crore for the purpose of maintenance of Liquidity Coverage Ratio (LCR).

This Circular is applicable to all Commercial Banks other than Regional Rural Banks, Local Area Banks and Payments Banks.

These instructions shall come into force w.e.f. 6 January 2022

For more information, click here.