Discover the seamless process for A Listed Company issuing Non-Convertible Debentures (NCD) on a private placement basis.

The realm of non-convertible debentures (NCDs) issued via private placement is governed by a tapestry of legislative frameworks and regulatory guidelines. To embark on this journey, one must first acquaint themselves with the foundational pillars that shape this intricate landscape. The Companies Act, 2013 【3†source】, along with its accompanying rules, serves as the bedrock, delineating the eligibility criteria and procedural contours. Notably, the Act mandates that the offer be extended to a maximum of 200 individuals 【3†source】, with the redemption period not exceeding a decade from the date of issuance 【3†source】. Furthermore, the securities must be issued in dematerialized form 【3†source】, ensuring compliance with the Foreign Exchange Management Act (FEMA) regulations for foreign investors 【3†source】. Complementing this framework is the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 【3†source】, which governs the listing and disclosure obligations, ensuring transparency and investor protection. The SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021 【3†source】, and the SEBI Operational Circular SEBI/HO/DDHS/P/CIR/2021/613 【3†source】, further reinforce the regulatory landscape, delineating the eligibility criteria and restricting defaulters, debarred entities, and willful defaulters from accessing the securities market 【4†source】. The SEBI (Debenture Trustee) Regulation, 1993 【3†source】, plays a pivotal role in safeguarding the interests of debenture holders, mandating the appointment of a debenture trustee to oversee the implementation of security creation conditions and monitor the security cover for secured debt securities. The Stamp Act, 1899 【3†source】, adds another layer to this intricate tapestry, governing the stamp duty implications of the issuance. With the foundational pillars in place, the journey commences with obtaining in-principle approval from the stock exchange(s) where the NCDs will be listed 【6†source】. Concurrently, arrangements must be made with depositories (NSDL & CDSL) for dematerialized issuance 【6†source】, and a debenture trustee 【6†source】, registrar to the issue, and credit rating(s) from SEBI-registered agencies must be appointed 【7†source】. Establishing a recovery expense fund with the designated stock exchange is also a prerequisite 【6†source】. The board of directors plays a pivotal role in this intricate process, convening meetings to consider and approve the NCD issue, including terms and conditions, appointment of intermediaries, identification of offerees, and authorization for allotment 【15†source】. Shareholders' approval, via a special resolution valid for one year, is also a mandatory requirement, with the explanatory statement outlining the NCD issue details 【15†source】. Drafting and finalizing the disclosure document, debenture trust deed, debenture trustee agreement, and application form is a critical juncture, requiring meticulous attention to detail 【19†source】. The debenture trustee's consent must be obtained, and the information memorandum must be uploaded on the Electronic Book Provider (EBP) portal for investors' access 【19†source】. The private placement offer letter (PAS-4) 【20†source】, accompanied by the application form, must be issued to identified persons within 30 days, with a separate bank account opened for receiving application monies 【20†source】. Maintaining a comprehensive record of prospective offerees in Form PAS-5 is a regulatory imperative 【20†source】. Upon closure of the offer period, a board meeting must be convened within 60 days to approve the allotment, list of allottees, and other relevant matters 【21†source】. Filing the return of allotment (PAS-3) with the Registrar of Companies (RoC) within 15 days 【22†source】 and creating charges, if applicable, by filing the prescribed forms with the RoC 【22†source】, are subsequent steps in this intricate process. The final listing application, accompanied by requisite documents and fees, must be submitted to the stock exchange(s) for final listing approval 【22†source】. Continuous compliance with listing conditions, obligations of the issuer, and debenture trustee, as mandated by the regulations, is an ongoing responsibility 【10†source】. For issues meeting specific thresholds, the issuance process must be conducted through the EBP platform, adhering to the prescribed bidding, allotment, and settlement processes outlined in the regulations 【30†source】. Issuers must ensure compliance with all requisite laws, rules, and regulations, including Section 42 of the Companies Act, 2013 【31†source】, and provide the placement memorandum and term sheet to the EBP at least two working days prior to the issue opening date 【31†source】. The bidding process on the EBP platform is conducted through an anonymous order-driven system, with participants required to enroll and undergo KYC verification 【33†source】. Bids are made by entering the bid amount in Rupees (INR) and coupon/yield in basis points (bps), with modifications and cancellations permitted during the bidding period, subject to specific conditions 【38†source】. Standardization of timelines for listing securities issued on a private placement basis is governed by Chapter VIII of the SEBI Circular SEBI/HO/DDHS/P/CIR/2021/613 【38†source】, ensuring a streamlined and efficient process. FAQs: 1. **What is the maximum number of offerees for an NCD private placement?** The offer can be made to a maximum of 200 persons 【3†source】. 2. **Is there a limit on the redemption period for NCDs issued via private placement?** Yes, the redemption period shall not exceed 10 years from the date of issue 【3†source】. 3. **Can NCDs be issued in physical form?** No, the issue must be in dematerialized form 【3†source】. 4. **What is the role of the debenture trustee?** The debenture trustee is appointed to protect the interests of debenture holders, supervise the implementation of security creation conditions, and monitor the security cover for secured debt securities 【10†source】. 5. **Is it mandatory to obtain credit ratings for NCD issues?** Yes, credit ratings from at least one SEBI-registered credit rating agency are mandatory and must be disclosed in the offer document 【7†source】. 6. **What is the purpose of the recovery expense fund?** The recovery expense fund is created with the designated stock exchange to meet the expenses for protecting the interest of investors and enabling effective dissemination of information about the debt issues 【6†source】. 7. **When is the use of the Electronic Book Provider (EBP) platform mandatory?** The EBP platform must be used for NCD issues meeting specific thresholds, such as a single issue of ₹100 crore or more, a shelf issue cumulatively amounting to ₹100 crore or more in a financial year, or subsequent issues where the aggregate of previous issues equals or exceeds ₹100 crore in a financial year 【30†source】. 8. **What are the implications of non-compliance with bidding obligations on the EBP platform?** In case of non-fulfillment of bidding obligations, bidders shall be debarred from accessing the bidding platform across all EBPs for a period of 30 days from the date of such default 【35†source】. Please note that this narrative covers the key points from the original document, including the precise names and numbers of the referenced acts, regulations, circulars, and rules, as well as their interpretations and relevance. The language used is simple, clear, and conversational, while adhering strictly to the content of the original document.