SEBI has by way of its Notification dated February 2, 2023 amended the SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021 (‘ILNCS Regulations’). Some of the key changes are listed below:

i.     Revised definition of ‘green debt security’:

The definition of the term ‘green debt securities’ has been extended to include debt securities, the proceeds from which are to be utilized for projects and/or assets categorised as, inter alia, (i) climate change adaptation; (ii) energy efficiency; (iii) sustainable waste management; (iv) pollution prevention and control; (v) circular economy adapted products, production technologies and processes; (vi) blue bonds raised for sustainable water management; (vii) yellow bonds raised for solar energy generation and industries associated with it; and (viii) transition bonds raised for transitioning to a more sustainable form of operations in line with India’s intended climate targets under the Paris Agreement at Conference of Parties 21 in 2015 and Conference of Parties 26 in 2021.

ii.    Appointment of nominee directors:

All trust deeds must contain a provision mandating the issuer to appoint a nominee director, nominated by the debenture trustee, to its board, in the event of: (i) two consecutive defaults in payment of interest to debenture holders; (ii) default in creation of security for debentures; or (iii) default in redemption of debentures, at the earliest and not later than one month from the date of receipt of the nomination from the debenture trustee. For issuers whose debt securities are already listed as on February 2, 2023, the existing trust deeds must be amended on or before September 30, 2023, to incorporate the above provision.

Additionally, an issuer which is a company is also required to amend its articles of association to provide that its board of directors appoint such a nominee as a director. Issuers whose debt securities are already listed as on February 2, 2023, must amend their articles of association on or before September 30, 2023, to incorporate the above provision. However, if the issuer has defaulted on payment of interest or repayment of principal amount in respect of listed debt securities, such appointment is to be made within one month from the date of receipt of nomination from the debenture trustee or February 2, 2023, whichever is later.

SEBI, by way of its Circular dated February 9, 2023 relaxed this requirement for first time issuers, which are now required to amend their articles of association within six months from the date of listing of the debt securities instead of the above timeline.