The Economic Times
English EditionEnglish Editionहिन्दी
| E-Paper
Search
+

    Sebi issues new rules for recovery expense fund

    Synopsis

    “In order to enable the debenture trustees to take prompt action for enforcement of security in case of default in listed debt securities, a ‘Recovery Expense Fund’ (REF) shall be created which shall be used in the manner as decided in the meeting of the holders of debt securities,” Sebi said in a circular.

    ET Bureau
    The regulator said issuers should deposit cash or cash equivalent including bank guarantees towards contribution to this fund at the time of making the application for listing of debt securities.
    Mumbai: The Securities and Exchange Board of India (Sebi) on Thursday said issuers of listed or
    proposed to be listed debt securities would have to deposit 0.01% of the issue size or maximum of Rs 25 lakh towards creation of recovery expense fund.

    “In order to enable the debenture trustees to take prompt action for enforcement of security in case of default in listed debt securities, a ‘Recovery Expense Fund’ (REF) shall be created which shall be used in the manner as decided in the meeting of the holders of debt securities,” Sebi said in a circular.

    In the event of default, the debenture trustee would have to obtain consent of holders of debt securities for enforcement of security from the stock exchange.

    The regulator said issuers should deposit cash or cash equivalent including bank guarantees towards contribution to this fund at the time of making the application for listing of debt securities.

    The balance in the recovery expense fund should be refunded to the issuer on repayment to holders of debt securities on their maturity or at the time of the exercise of call or put option, for which a No Objection Certificate (NOC) should be issued by the debenture trustee to the stock exchange, sebi said.
    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds.)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Also Read

    The Economic Times