Sebi weighs higher threshold for cos with high-value debt

Synopsis

The Securities and Exchange Board of India (Sebi) is proposing to increase the threshold for identifying high value debt listed entities (HVDLEs) from ₹1,000 crore to ₹5,000 crore. This adjustment aims to significantly reduce the compliance burden for companies, as current extensive requirements are proving costly and disproportionate, especially for non-banking finance companies.

Mumbai: The Securities and Exchange Board of India (Sebi) plans to raise the threshold for identifying high value debt listed entities (HVDLEs) to ₹5,000 crore from the existing ₹1,000 crore. The move is aimed at reducing the compliance burden for such companies.

Sebi said the move would reduce the number of HVDLEs from 137 to 48 entities, effectively bringing down around 64 entities from the current threshold.

Corporate governance norms were introduced for HVDLEs in September 2021. These norms were applicable on a comply or explain basis till March 31, 2025 and became compulsory from April for all entities that has listed outstanding amount of non- convertible debt securities of ₹1,000 crore and above.

Subsequently, market participants approached Sebi saying, once an entity is classified as HVDLE, it is subject to extensive compliance requirements similar to an equity-listed company such as preparation and filing of quarterly corporate governance reports and annual secretarial compliance reports.

Appointment of additional independent directors and committee specific expert members to meet Sebi requirements along with legal, secretarial and audit expenses escalate the costs significantly, especially for entities with frequent issuances, they told Sebi.

Further, non- banking finance companies which raise debt substantially through private placements, the threshold of ₹1,000 crore is dis-proportionately low.

...moreless

...moreless