Description

SEBI prescribes quarterly, half-yearly, and annual timelines for issuers to submit security cover certificates, valuation reports, and other documents to debenture trustees for periodic monitoring.

Summary

SEBI has introduced mandatory timelines for issuers of debt securities to submit various reports and certificates to Debenture Trustees (DTs). This circular establishes quarterly, half-yearly, and annual submission schedules for security cover certificates, pledged securities statements, valuation reports, and guarantor financial information. The provisions enable DTs to perform their due diligence functions efficiently and come into effect from the quarter ending December 31, 2025.

Key Points

  • Issuers must submit security cover certificates quarterly within 60 days from quarter-end (75 days for the last quarter)
  • Statements of pledged securities and Debt Service Reserve Account values required quarterly within 60 days
  • Net worth certificates of personal guarantors to be submitted half-yearly within 60 days
  • Corporate guarantor financials required annually within 60 days from financial year-end
  • Valuation and title search reports for immovable/movable assets required once every three years within 60 days from financial year-end
  • Circular references SEBI (Debenture Trustees) Regulations 1993 and Master Circular dated August 13, 2025
  • Provisions apply to all registered debenture trustees, issuers who have listed or propose to list debt securities, and stock exchanges

Regulatory Changes

This circular introduces specific timelines for submission of monitoring information under the SEBI (Debenture Trustees) Regulations 1993. While Regulations 15(1)(s) and 15(1)(t) already required DTs to carry out continuous due diligence, and Chapter VI of the DT Master Circular required periodic monitoring terms in trust deeds, this circular now prescribes exact submission deadlines for different types of reports and certificates. The standardized timelines create uniform compliance obligations across all debt security issuances.

Compliance Requirements

For Issuers of Debt Securities:

  1. Quarterly Submissions (within 60 days, except 75 days for Q4):

    • Security cover certificate in Annex-VA format of DT Master Circular
    • Statement of value of pledged securities
    • Statement of value for Debt Service Reserve Account or other security forms

  2. Half-Yearly Submissions (within 60 days):

    • Net worth certificate of guarantor (for debt securities secured by personal guarantee)

  3. Annual Submissions (within 60 days from financial year-end):

    • Financials/value of guarantor based on audited financial statements (for corporate guarantees)

  4. Once in Three Years (within 60 days from financial year-end):

    • Valuation report and title search report for immovable/movable assets, as applicable

For Debenture Trustees:

  • Ensure issuers comply with submission timelines
  • Incorporate periodical monitoring terms and conditions in debenture trust deeds

Important Dates

  • Circular Date: November 25, 2025
  • Effective Date: Quarter ending December 31, 2025
  • First Quarterly Reporting Deadline: By March 1, 2026 (60 days from December 31, 2025)

Impact Assessment

Market Impact: This circular affects all issuers of listed debt securities including non-convertible debentures, bonds, and commercial paper. It creates standardized operational timelines across the debt market, improving transparency and investor protection.

Operational Impact: Issuers must establish internal processes to ensure timely compilation and submission of multiple reports on different schedules. Companies with debt securities secured by guarantees or physical assets face additional compliance burden for preparing guarantor financials, net worth certificates, and periodic valuation reports.

For Debenture Trustees: Enhanced ability to perform continuous monitoring functions with timely information flow, enabling better risk assessment and early identification of covenant breaches or security deterioration.

Investor Protection: Standardized timelines ensure DTs receive current information for effective monitoring, strengthening the oversight mechanism for debt security holders and reducing information asymmetry in the debt market.

Impact Justification

Mandates strict timelines for critical reporting by all debt security issuers to debenture trustees, affecting operational compliance and monitoring processes across the debt market