Mumbai: Market regulator Securities and Exchange Board of India (SEBI) has clarified that listed debt entities taking over outstanding unlisted non-convertible debentures (NCDs) as part of a corporate restructuring or business transfer cannot avoid mandatory listing requirements merely because no fresh debentures have been issued.
The clarification came through an interpretive letter issued in response to an informal guidance request from debt-listed company Ananya Finance for Inclusive Growth Private Limited, which sought regulatory clarity after assuming liabilities of its wholly owned subsidiary, Prayas Financial Services Private Limited, under a Business Transfer Agreement.
According to the company, the agreement executed on February 28, 2026, transferred all assets and liabilities of Prayas to Ananya Finance, including outstanding unsecured and unlisted NCDs issued in July 2024.
The company told SEBI that it had only taken over the obligations attached to the existing debentures and had neither issued fresh securities nor allotted new International Securities Identification Numbers (ISINs).
Ananya Finance sought SEBI’s guidance on whether the transfer of liabilities would amount to a fresh issuance requiring mandatory listing under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, or whether the debentures could continue to remain unlisted.
It also requested clarity on the procedure to be followed if listing was required.
In its response, SEBI said the applicability of the listing regulations cannot be determined solely on the legal form of the transaction.
The regulator observed that where a listed debt entity assumes obligations relating to outstanding unlisted non-convertible debt securities issued on or after January 1, 2024, such securities come within the ambit of Regulation 62A.
SEBI noted that Regulation 62A(1) requires listed entities with listed non-convertible debt securities to list all non-convertible debt securities proposed to be issued on or after January 1, 2024.
The intent of the provision, it said, is to ensure such securities are brought within the regulatory framework and remain subject to disclosure standards and investor protection safeguards.
The regulator further explained that in a business transfer or corporate restructuring, liabilities attached to outstanding unlisted debentures effectively become obligations of the listed entity.
As a result, the listing requirement must be applied in a holistic manner, even if the transaction does not involve a fresh issuance of securities.
(IANS)
