(1) In these regulations, unless the context otherwise requires, the terms defined shall bear the meanings assigned to them below, and their cognate expressions shall be construed accordingly,–
(a) “Act” means the Securities and Exchange Board of India Act, 1992 (15 of 1992);
(b) “advertisement” includes all forms of communication including notices, brochures, pamphlets, show cards, catalogues, hoardings, placards, posters, insertions in newspaper, cover pages of offer documents, pictures, films, etc., Page - 2 - of 29 in any print media or electronic media or social media, radio, television programme;
(c) "Board" means the Securities and Exchange Board of India established under section 3 of the Act;
(d) “corporate municipal entity” means a company as defined under Companies Act, 2013, which is a subsidiary of a municipality and which is set up for the purpose of raising funds for a specific municipality or group of municipalities;
(e) “debt securities” means a non-convertible debt securities which create or acknowledge indebtedness, and include debenture, bonds and such other securities of a municipality, or a corporate municipal entity, whether constituting a charge on the assets of such body or not;
(f) “designated stock exchange” means a recognised stock exchange in which securities of an issuer are listed or proposed to be listed and which is chosen by the issuer as a designated stock exchange for the purpose of a particular issue of debt securities under these regulations;
(g) "general obligation bonds" means debt securities where principal and interest are serviced through tax proceeds of the municipality.
(h) "issuer” means any municipality or a corporate municipal entity, which makes or proposes to make an issue of debt securities in accordance with these regulations or which has its securities listed on a recognised stock exchange or which seeks to list its debt securities on a recognised stock exchange;
(i) "municipality" means an institution of self-government constituted under Article 243Q of the Constitution of India;
(j) "national municipal accounts manual" means the municipal accounting manual formulated by the Ministry of Urban Development;
(k) "offer document” means prospectus or shelf prospectus and includes any such document or advertisement whereby the subscription to debt securities are invited by the issuer from public;
(l) "private placement" means any offer of debt securities or invitation to subscribe to debt securities to a select group of persons by a municipality through issue of a private placement offer letter to not more than two hundred persons, which shall not intend to result in, directly or indirectly, the debt securities becoming available for subscription or purchase by persons other than those receiving the offer or invitation:
Provided that for a corporate municipal entity, it shall mean an offer or invitation made in terms of section 42 of the Companies Act, 2013 and the rules made thereunder, through issue of a private placement offer letter;
(m) “public issue” means an offer or invitation by an issuer to public to subscribe to the debt securities, which is not in the nature of a private placement;
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(n) "revenue bonds" means debt securities which are serviced by revenues from one or more projects;
(o) “schedule" means a schedule annexed to these regulations;
(p) "shelf prospectus" means a prospectus in respect of which the securities or class of securities included therein are issued for subscription in one or more issues over a certain period without the issue of a further prospectus:
Provided that for a corporate municipal entity, it shall have the same meaning as assigned to it in section 31 of Companies Act, 2013;
(q) “specified” means specified by a general or special order or circular issued under the Act or these regulations.
(2) All other words and expressions used but not defined in these regulations, shall have the same meanings respectively assigned to them in the Act or the Companies Act, 2013 or Securities Contracts (Regulation) Act, 1956 or the Depositories Act, 1996 or the Rules and the Regulations made thereunder or any statutory modification or re-enactment thereto.
Applicability.
3. These regulations shall apply to -
(a) public issue of debt securities; and
(b) listing of debt securities issued through public issue or on private placement basis on a recognised stock exchange.
CHAPTER II ELIGIBILITY Eligible municipalities.
4. No issuer shall be eligible to issue debt securities to public under these regulations, unless the following criteria are complied with:
(a) municipality, whether proposing to issue debt securities itself or through corporate municipal entity, should be eligible to raise funds under its constitution;
(b) accounts of municipality shall be prepared in accordance with National Municipal Accounts Manual or in accordance with similar Municipal Accounts Manual adopted by the respective State Government for at least three immediately preceding financial years;
1[(c) municipality shall have surplus income as per its Income and Expenditure Statement, in any of the immediately preceding three financial years or any other financial criteria as may be specified by the Board from time to time.
1 Substituted by Securities and Exchange Board of India (Issue and Listing of Debt Securities by Municipalities) (Amendment) Regulations, 2017 w.e.f 15.02.2017. prior to its substitution clause (c) read as under:
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Provided that a corporate municipal entity shall not have negative net worth in any of immediately preceding three financial years;
2[(d) municipality shall not have defaulted in repayment of debt securities or loans obtained from banks or financial institutions, during the last three hundred and sixty five days:
Provided that where the issuer is a corporate municipal entity, the requirements at clauses (b) and (d) shall be complied by the municipality which is being financed;]
(e) no order or direction of restraint, prohibition or debarment by Board against the corporate municipal entity or its directors is in force;
(f) the corporate municipal entity, its promoter, group company or director(s), should not have been named in the list of the wilful defaulters published by the Reserve Bank of India or should not have defaulted of payment of interest or repayment of principal amount in respect of debt instruments issued by it to the public, if any.
CHAPTER III REQUIREMENTS FOR PUBLIC ISSUE General conditions.