A call and put on a public issue of debt securities cannot be exercised before the expiry of 24 months from the date of issue of such debt securities, Securities and Exchange Board of India (Sebi) notified on Wednesday.
A call allows the redemption of debt securities prior to its maturity date at the issuer’s discretion while a put provides such right to the investors.
“The issuer or investor may exercise such right with respect to all the debt securities issued or held by them respectively or with respect to a part of the securities so issued or held,” it said, adding that in case of partial exercise of such right in accordance with the terms of the issue by the issuer, it shall be done on proportionate basis only.
The notification said the issuer will have to send notice to all the eligible holders at least 21 days before the date from which such right is exercisable.
The issuer shall also provide a copy of such notice to the stock exchange where the such debt securities are listed for wider dissemination and shall make an advertisement in the national daily having wide circulation indicating the details of such right and eligibility of the holders who are entitled to avail such right.
“Issuer shall pay the redemption proceeds to the investors along with the interest due to the investors within 15 days from the last day within which such right can be exercised,” the notification said adding that the issuer will have to pay interest at the rate of 15% per annum for the period of delay, if any.
Post completion of the exercise, a detailed report will have to be sent to the stock exchange for public dissemination regarding the debt securities redeemed during the exercise period and details of redemption.
In regard to consolidation and re-issuance of debt securities, the notification said the issue should be through private placement and the issuer will have to obtain and disclose fresh credit rating for each re-issuance from at least one credit rating agency registered with the board.
“Such ratings shall be re-validated on a periodic basis and the change, if any, shall be disclosed,” the notification added.