SEBI lets some listed issuers skip a merchant banker for private-placement debt

SEBI has relaxed a requirement that issuers appoint a merchant banker when privately placing debt securities or non-convertible redeemable preference shares. Under the earlier rule in SEBI's Master Circular for issue and listing of Non-Convertible Securities, every such private placement needed at least one merchant banker, with the same duties as in a public issue. The amended circular lets an issuer skip this if it meets all of five conditions: it is regulated by a financial sector regulator (SEBI, RBI, IRDAI or PFRDA); it has been listed on a recognised stock exchange for at least a year with no pending fines for violating the SEBI Listing Obligations and Disclosure Requirements Regulations, 2015; it has not defaulted on any debt, deposit or loan repayment in the last three financial years plus the current year, certified by its statutory auditor; the debt security is unsubordinated and secured by a first or pari passu charge on identifiable assets (Central Public Sector Enterprises, Public Sector Undertakings and Statutory Bodies may issue secured or unsecured); and the security is rated AA- or higher at the time of placement.

Stock exchanges must prescribe disclosure formats to verify compliance. The circular, issued under Section 11(1) of the SEBI Act, 1992 read with Regulation 55(1) of the SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021, takes effect immediately.