Description

SEBI settlement order against Tata Motors Finance Limited for violations related to private placement of Tier II perpetual NCDs that were deemed public issues due to down-selling to more than 200 investors within six months.

Summary

SEBI issued a settlement order (SO/AS/PSD/2025-26/8429) against Tata Motors Finance Limited for violations related to five issuances of Tier II perpetual non-convertible debentures (NCDs) on private placement basis during 2019-2022. The NCDs were down-sold to more than 200 investors within six months from allotment, making them deemed public issues and resulting in violations of multiple provisions of the Companies Act 2013 and SEBI regulations. The company settled the matter without admitting or denying guilt by paying Rs 32,00,000.

Key Points

  • Tata Motors Finance Limited filed a suo-motu settlement application under SEBI (Settlement Proceedings) Regulations, 2018
  • Five issuances of Tier II perpetual NCDs conducted between November 2019 and July 2022 violated regulations
  • Two NCDs were listed (INE601U08093 and INE601U08150) and three remained unlisted (INE477S08126, INE477S08134, INE477S08142)
  • Total outstanding amount across five issuances: Rs 885 crores (220+479+60+85+100+160 crores)
  • NCDs were down-sold to 263, 311, 1065, 628, and other investors respectively, exceeding the 200-investor threshold for private placement
  • Settlement amount: Rs 32,00,000 (Rupees Thirty-Two Lakhs only)
  • High Powered Advisory Committee recommended settlement on July 24, 2025
  • Panel of Whole Time Members approved settlement on October 7, 2025
  • Payment confirmed received on November 11, 2025

Regulatory Changes

No new regulatory changes introduced. This order enforces existing provisions regarding the distinction between private placement and public issues of debt securities.

Compliance Requirements

  • Issuers must ensure that NCDs issued on private placement basis are not down-sold to more than 200 investors within six months from allotment
  • Violation of the 200-investor threshold deems the issuance as a public issue, requiring compliance with public issue norms under:
    • Sections 23(1), 26(4) r/w 2(70), 26(6) r/w 26(1), 33(1) and 40 of the Companies Act, 2013
    • Regulations 6, 11, 25(1), 27, 28, 29(1), 30, 32, 34 and 37 of the SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021
    • Regulations 4(3), 5(2)(b), 6, 7, 8, 9, 12 and 26 of the SEBI (Issue and Listing of Debt Securities) Regulations, 2008
  • Settlement concluded on “neither admitting nor denying” basis

Important Dates

  • NCD Issuances: November 1, 2019; November 12, 2020; March 22, 2022; June 3, 2022; July 12, 2022
  • Internal Committee meeting: June 11, 2025
  • Revised settlement terms filed: June 23, 2025
  • HPAC meeting and recommendation: July 24, 2025
  • Panel of Whole Time Members approval: October 7, 2025
  • Notice of Demand issued: November 4, 2025
  • Settlement amount payment confirmed: November 11, 2025

Impact Assessment

Market Impact: Limited direct market impact as the violations relate to procedural non-compliance in private placement issuances conducted between 2019-2022. The settlement mechanism resolved the matter without major enforcement action.

Operational Impact: The order serves as a reminder to NBFCs and other issuers about strict compliance requirements for private placement of debt securities. The case highlights the importance of monitoring secondary transfers to ensure the 200-investor threshold is not breached within six months of allotment.

Precedent Value: Establishes settlement benchmark for similar private placement violations involving Tier II bonds. The Rs 32 lakh settlement amount for violations involving Rs 885 crores of NCDs provides reference for future similar cases.

Entity Impact: Tata Motors Finance Limited resolved regulatory proceedings through settlement, avoiding prolonged adjudication. The company can continue operations without restrictions from this matter.

Impact Justification

Settlement order for procedural violations in NCD issuances by Tata Motors Finance subsidiary. Settlement amount of Rs 32 lakhs indicates regulatory breach resolved through settlement mechanism without major market disruption.