(1) The issuer shall disclose all the material facts in the offer documents issued or distributed to the public and shall ensure that all the disclosures made in the offer document are true, fair and adequate and there is no mis-leading or untrue statements or mis-statement in the offer document.
(2) The merchant banker(s) shall verify and confirm that the disclosures made in the offer documents are true, fair and adequate and ensure that the issuer is in compliance with these regulations.
(3) The merchant banker(s) shall ensure that all transaction specific disclosures required in Schedule I of these regulations are complied with:
Provided where the issuer is a corporate municipal entity, merchant banker(s) shall also ensure that the disclosures under Companies Act, 2013 and rules made thereunder are complied with.
(4) The issuer shall treat the applicants in a public issue of debt securities in a fair and equitable manner as per the procedures as may be specified by the Board.
(5) The issuer and merchant bankers shall be responsible for the due diligence in respect of assignments undertaken by them in respect of issue, offer and distribution of securities to the public.
(6) No person shall employ any device, scheme or artifice to defraud in connection with issue or subscription or distribution of debt securities which are listed or proposed to be listed on a recognised stock exchange.
(7) The issuer and the merchant bankers shall ensure that the security created to secure the debt securities is adequate to ensure hundred per cent. asset cover for the debt securities.
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CHAPTER VIII MISCELLANEOUS Sanction for violations.
28. Any contravention of these regulations shall be dealt with by the Board in accordance with the Act.
Power to remove difficulties.
29. In order to remove any difficulties in the interpretation or application of the provisions of these regulations, the Board shall have the power to issue directions through guidance notes or circulars:
Provided that where any direction is issued by the Board in a specific case relating to interpretation or application of any provision of these regulations, it shall be done only after affording a reasonable opportunity of being heard to the concerned persons and after recording reasons for the direction.
SCHEDULE I [See Regulation 6(2)] Disclosures
1. Where the issuer is a Corporate Municipal Entity, it shall make disclosures in accordance with Schedule I to SEBI (Issue and Listing of Debt Securities) Regulations, 2008 and shall also make below mentioned disclosures, whichever is relevant, pertaining the municipalities proposed to be financed by the issue;
2. Where the issuer is a municipality, it shall make below mentioned disclosures:
A. General Information
1. The relevant Act under which the issuer of such securities is incorporated and governed
2. Copy of the Committee Resolution/Municipal Corporation authorizing the borrowing and list of authorized signatories.
3. Copy of the necessary Resolution(s) for the allotment of debt securities
4. Copy of budget documents for last 3 years containing actual financial performance and/or revised estimates along with the details of related party transactions
5. An undertaking from the issuer stating that the necessary documents for the creation of the charge, where applicable, including the Trust Deed would be executed within the time frame prescribed in the relevant regulations/act/rules etc and the same would be uploaded on the website of the recognised Stock exchange where the debt securities have been listed, within five working days of execution of the same.
6. Any other particulars or documents that the recognised stock exchange, where the debt security have been listed, may call for as it deems fit.
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7. An undertaking that permission / consent from the prior creditor for a second or paripassu charge being created, where applicable, in favor of the trustees to the proposed issue has been obtained.
8. Name and contact details of the monitoring agency.
9. Details of the separate escrow account opened for servicing of debt securities with earmarked revenue, wherever applicable.
Issuer shall submit the following disclosures to the Debenture Trustee in electronic form (soft copy) at the time of allotment of the debt securities:
1. The relevant Act under which the issuer of such securities is incorporated and governed.
2. Copy of the Resolution authorizing the borrowing and list of authorized signatories.
3. Copy of the necessary Resolution(s) for the allotment of debt securities
4. Copy of budget documents for last 3 years containing actual financial performance and/ or revised estimates.
B. An undertaking to the effect that the Issuer would, till the redemption of the debt securities, submit the details relating to the financials of the issuer to the Trustee within the timelines prescribed by SEBI for furnishing /publishing its half yearly/ annual result.
Further, the Issuer shall, forthwith, submit a copy of the latest annual report to the Trustee and the Trustee shall be obliged to share the details submitted under this clause to debenture-holders within two working days of their specific request. The following disclosures shall be made in the offer document where relevant:
I. Name and address of the following:- a. Head office/quarters of the Issuer b. Compliance officer of the Issuer c. Complete Details of the Official In-charge of dealing with investor Grievances related to the Municipal Bonds, his/her address, phone number, email ID, etc.
d. Chief Accounts and Finance Officer or equivalent of the Issuer e. Arrangers, if any, of the instrument f. Trustee of the issue g. Registrar to an issue h. Credit Rating Agency (-ies) of the issue and i. Auditors of the Issuer j. The relevant Act under which the issuer is incorporated and governed II. Comprehensive Disclosure regarding the Risk Factors, including project risks, operational risks, credit risks, liquidity risks, etc.
C. Organization details:
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1. Details of Mayor / Deputy Mayor including date of appointment, etc.
2. Details of Commissioner/ Deputy Commissioner including date of appointment, etc
3. Details of any Reorganization or Reconstruction in the last 1 year:- Type of Event Date of Date of Details Announcement Completion
4. Details of the members of the Committee approving the project/ various Standing Committees relating to Taxation / Finance /Accounts/ Audit/ Infrastructure Name and Designation Date of Appointment/ Resignation Member of the Committee since (in case of resignation) Remarks
5. Details of the Auditors Name Address Auditor since
6. Details of trustee D. A brief summary of the business/ activities of the Issuer and its project for which funds are to be raised containing atleast following information
1. Overview of the issuer
2. Management Structure of the issuer and the relevant department issuing the bond
3. Details of all the project undertaken or proposed in terms of cost and means of financing
4. Complete details of the project/s for which finance is raised i. An investment plan for the project components indicating phasing as well as financing approved by the local authority or the agency as the case may be Name Address Contact person Page - 18 - of 29 ii. Schedule of implementation of the project iii. Capital structure relating to projects for which funds are proposed to be mobilized iv. Capital grant for the proposed project and the amount received in this regard v. Details of State Finance Commission Grant on annual basis vi. Benchmarks for commencement and completion of the project including milestone dates for all components of the project vii. Details and status of the regulatory approval (if required) viii. Financial viability of the project showing the stage wise cost and revenue flows for the project.
ix. Revenue generation/resources and sufficiency for timely servicing and redemption x. Details of the independent trustee of the escrow account xi. Latest Audit report of the escrow and project account by a firm of chartered accountants appointed by the concerned State Urban Development Departments from a panel CA’s approved by the C& AG.
5. Performance with respect to key financial and operational parameters for the last 3 years I. Abridged Balance Sheet, Income and Expenditure and Receipts and Payments Accounts for the last three years with major heads;
II. Link to the web page where the entire financials of the Municipal Body can be accessed should be given.
III. Financial Parameters:
Key Financial Figures FY FY FY Revenue Income Revenue expenditure (Excl. Interest) Operating revenue Surplus Interest expense Principal repayment (outside sinking Fund) Contribution to Sinking fund Revenue Surplus Capital Income Capital Expense Capital Surplus Page - 19 - of 29 Overall Surplus Deposits and Advances (net) Initial Cash / Bank balance Change in Cash / Bank balance Final Cash / Bank balance Loan repayment from sinking fund Initial Sinking fund balance Change in sinking fund Final sinking fund balance Total Debt Ratio of Total Expenditure /Total Revenue Cash Surplus / Total Revenue Ratio of Debt Service / Total Revenue IV. Operational Parameters:
Details of top 5 revenue sources for last 3 years Revenue Receipt type Actual Actual Actual FY FY FY XYZ 1 XYZ 2 XYZ 3 XYZ 4 XYZ 5 V. Details of property tax collection Particulars Demand Raised Collections Overall Collection ratio Current Collection ratio Arrears Current Total Current Arrear Total FY Page - 20 - of 29 FY FY VI. Status of reforms with respect to e-governance, cost recovery on water supply & Solid Waste Management (SWM), property tax, double entry accounting and others, as specified by MoUD and authorities concerned E. Details of Issuer’s outstanding borrowing I. Details of borrowings of the Issuer, as on the latest quarter end:- II. Details of Secured Loan Facilities:- Lender’s Type of Amt Principal Repayment Security Name Facility Sanctioned Amt Date / outstanding Schedule III. Details of Unsecured Loan Facilities:- Lender’s Type of Amt Principal Repayment Name Facility Sanctioned Amt Date / outstanding Schedule IV. Details of NCDs/Bonds: - Debenture/B ond Series Tenor / Period of Maturity Coupon Amount Date of Allotment Redemption Date/ Schedule Credit Rating Secured / Unsecured Security Page - 21 - of 29 V. List of Top 10 Debenture Holders (as on ……) Sr. No. Name of Debenture Holders Amount Note: Top 10 holders’ (in value terms, on cumulative basis for all outstanding debentures issues) details should be provided.
VI. The amount of charge created along with name of the counterparty (like name of the project etc.)
VII. Details of Commercial Paper:- The total Face Value of Commercial Papers Outstanding as on the latest quarter end to be provided and its breakup in following table:- Maturity Date Amount Outstanding VIII. Details of Rest of Borrowings IX. Estimated Scenarios of Asset Liability Mis-matches, efforts intended to resolve the same X. Details of all default/s and/or delay in payments of interest and principal of any kind of term loans, debt securities and other financial instrument issued by the Issuer, in the past 3 years .
XI. Details of change in terms and conditions of debt securities issued in past 5 years ( i.e. change in coupon, maturity, call/put option etc.)
XII. An undertaking should be disclosed in the offer document that the issue has obtained Lenders consent for creating charge on assets (if the issue is of secured Bonds) XIII. Details of any outstanding borrowings taken/ debt securities issued for consideration other than cash, whether in whole or part, at a premium or discount, or in pursuance of an option;
XIV. Any material event/ development or change having implications on the financials/credit quality (e.g. any material regulatory proceedings against the Issuer, resulting in material liabilities, restructuring event etc) at the time of the issue which may affect the issue or the investor’s decision to invest/ continue to invest in the debt securities.
Page - 22 - of 29 XV. The detailed rating rationale (s) adopted (not older than one year on the date of opening of the issue)/ credit rating letter issued (not older than one month on the date of opening of the issue) by the rating agencies shall be disclosed.
XVI. Credit Enhancement Mechanisms if any, with complete details, if any.
XVII. The security is backed by a guarantee or letter of comfort or any other document / letter with similar intent, a copy of the same shall be disclosed. In case such document does not contain detailed payment structure (procedure of invocation of guarantee and receipt of payment by the investor along with timelines), the same shall be disclosed in the offer document.
XVIII. In case there is an escrow mechanism for the repayment of the interest/principal, details of the same should be given.
XIX. The names of the debenture trustee(s) shall be mentioned with statement to the effect that debenture trustee(s) has given his consent to the Issuer for his appointment. This also needs to be mentioned in all subsequent communications sent to the holders of debt securities.
XX. Names of all the recognised stock exchanges where the debt securities are proposed to be listed clearly indicating the designated stock exchange.
XXI. Penal interest payable by the Municipal Corporation in case of delay in execution of Trust Deed and Charge documents XXII. Additional interest to be paid, above the Coupon Rate, in case of default in payment of Interest and/or principal redemption on the due dates XXIII. Penal interest payable by the Municipal Corporation in case of delay in listing of debt securities from the deemed date of allotment XXIV. Other details XXV. DRR/such other reserve creation - relevant regulations and applicability.
XXVI. Issue/instrument specific regulations - relevant details (Relevant Act, RBI guidelines, etc).
XXVII. Application process XXVIII. Procedure for deciding and adjusting payment dates (in response to days when payment can’t be made due to any reason like sudden bank holiday.
XXIX. List of documents which have been executed/ will be executed in relation to the issue XXX. Investor grievances mechanisms XXXI. Such other details necessary for the investors to make a well informed decision making regarding their investment in the proposed issue XXXII. Declaration signed by the Mayor and Commissioner of the concerned Municipal Body stating that offer document contains true, fair and adequate information to enable investors to make a well informed decision making regarding their investment in the proposed issue.
XXXIII. Declaration signed by the Director(s) of the Corporate Municipal Entity stating that offer document contains true, fair and adequate information to enable investors to make a well informed decision making regarding their investment in the proposed issue.
Page - 23 - of 29 F. Issue details Summary term sheet shall be provided which shall include at least following information (where relevant) pertaining to the Secured / Unsecured Non Convertible debt securities (or a series thereof):- Security Name Name of the bond which includes (Issuer Name, Coupon and maturity year) e.g. 8.70% XXX 2015.
Issuer Type of Instrument Secured or Unsecured Seniority Senior or Subordinated.
Mode of Issue Private placement/Public issue Eligible Investors Listing ( including name of stock Exchange(s) where it will be listed and timeline for listing) Rating of the Instrument _______ by _____ Ltd.
Issue Size Option to retain oversubscription (Amount) Objects of the Issue The proceeds of the proposed issue shall be clearly earmarked for a defined project or a set of projects;
The project(s) shall be financially viable project(s), i.e., should be able to generate a stream of revenue which should be sufficient to finance Operational & Maintenance cost Details of the utilization of the Proceeds Coupon Rate Taxable/Tax free Step Up/Step Down Coupon Rate Coupon Payment Frequency Coupon payment dates Dates on which coupon will be paid Coupon Type Fixed, floating or other coupon structure Page - 24 - of 29 Coupon Reset Process (including rates, spread, effective date, interest rate cap and floor etc).
Day Count Basis Actual/ Actual Interest on Application Money Tenor __ Months from the Deemed from the date of Allotment Redemption Date Dates on which Principal will be paid Redemption Amount Redemption Premium /Discount Issue Price The price at which bond is issued Discount at which security is issued and the effective yield as a result of such discount.
Put option Date Put option Price Call Option Date Call Option Price Put Notification Time Timelines by which the investor need to intimate Issuer before exercising the put option.
Call Notification Time Timelines by which the Issuer need to intimate investor before exercising the call option.
Face Value Minimum Application and in multiples of _Debt Securities thereafter Issue Timing
1. Issue Opening Date
2. Issue Closing date
3. Pay-in Date
4. Deemed Date of Allotment Issuance mode of the Instrument Rs. 10 lakh per instrument for Demat only (for private placement) Page - 25 - of 29 Trading mode of the Instrument Demat only (for private placement) Settlement mode of the Instrument Depository Business Day Convention Record Date 15 days prior to each Coupon Payment date / Redemption date.
Security (where applicable) (Including description, type of security, type of charge, likely date of creation of security, minimum security cover, revaluation, replacement of security).
Transaction Documents Conditions Precedent to Disbursement Condition Subsequent to Disbursement Events of Default Provisions related to Cross Default Clause Role and Responsibilities of Debenture Trustee Governing Law and Jurisdiction Page - 26 - of 29 Notes:
Any change in Coupon Rate, along with events which lead to the change if there is any change in Coupon Rate pursuant to any event including elapse of certain time period or downgrade in rating, then such new Coupon Rate and events which lead to such change should be disclosed.
SCHEDULE II [See Regulation 7 (10)] FORMAT FOR DUE DILIGENCE CERTIFICATE AT THE TIME OF FILING THE OFFER DOCUMENT BY AN ISSUER OR A CORPORATE MUNICIPAL ENTITY WITH REGISTRAR OF COMPANIES AND PRIOR TO THE OPENING OF THE ISSUE To, SECURITIES AND EXCHANGE BOARD OF INDIA Dear Sir / Madam, SUB.: ISSUE OF ____________________ BY _______________
1.We confirm that neither the issuer nor its promoters or directors (in case of corporate municipal entity), have been prohibited from accessing the capital market under any order or direction passed by the Board. We also confirm that none of the intermediaries named in the offer document have been debarred from functioning by any regulatory authority.
2. We confirm that all the material disclosures in respect of the issuer have been made in the offer document and certify that any material development in the issue or relating to the issue up to the commencement of listing and trading of the shares offered through this issue shall be informed through public notices/ advertisements in all those newspapers in which preissue advertisement and advertisement for opening or closure of the issue have been given.
3. We confirm that the offer document contains all disclosures as specified in the Securities and Exchange Board of India (Issue and Listing of Debt Securities by Municipalities) Regulations, 2015.
4. We also confirm that all relevant provisions of the Companies Act, 2013, if applicable, Securities Contracts, (Regulation) Act, 1956, Securities and Exchange Board of India Act, 1992 and the Rules, Regulations, Guidelines, Circulars issued thereunder are complied with.
We confirm that all comments/ complaints received on the draft offer document filed on the website of ________ (designated stock exchange) have been suitably addressed.
Page - 27 - of 29 PLACE DATE: LEAD MERCHANT BANKER (S)
SCHEDULE III [See Regulation 7 (11)] FORMAT OF DUE DILIGENCE CERTIFICATE TO BE GIVEN BY THE DEBENTURE TRUSTEE BEFORE OPENING OF THE ISSUE To, SECURITIES AND EXCHANGE BOARD OF INDIA Dear Sir / Madam, SUB.: ISSUE OF ____________________ BY _______________________Ltd (Corporate Municipal Entity) We, the Debenture Trustee (s) to the above mentioned forthcoming issue state as follows:
(1) We have examined documents pertaining to the said issue and other such relevant documents.
(2) On the basis of such examination and of the discussions with the issuer, its Mayor/Deputy Mayor /Directors and other officers, other agencies and of independent verification of the various relevant documents, WE CONFIRM that:
(a) The issuer has made adequate provisions for and/or has taken steps to provide for adequate security for the debt securities to be issued.
(b) The issuer has obtained the permissions / consents necessary for creating security on the said property (ies) / receivables.
(c) The issuer has made all the relevant disclosures about the security and also its continued obligations towards the holders of debt securities.
We have satisfied ourselves about the ability of the issuer to service the debt securities.
PLACE DATE: DEBENTURE TRUSTEE TO THE ISSUE WITH HIS SEAL
SCHEDULE IV [See Regulation 9 (1)] FORMAT OF ISSUE ADVERTISEMENTS FOR PUBLIC ISSUES This is an advertisement for information purposes Page - 28 - of 29 _________ _________ Municipal Corporation or ______________ Ltd (or Corporate Municipal Entity) (Incorporated on ____________________ under the Relevant State Act or the Companies Act as __________________ and subsequently renamed ______________ on __________) Registered Office: _____________________ Tel: _______________ Fax ______________ Corporate Office: _____________________ Tel: _______________ Fax ______________ e-mail: _____________ Website: _____________________________ THE ISSUE Public issue of ___________ debt securities of Rs. ____ each at a price of Rs._____ (Summary Details of Coupon, Redemption, etc shall be disclosed) MAYOR/ DEPUTY MAYOR /COMMISSIONER/PROMOTERS XXXX PROPOSED LISTING Names of Stock Exchanges MERCHANT BANKERS (Names) COMPLIANCE OFFICER OF THE ISSUER Name, address, telephone and fax numbers, email ID, website address CREDIT RATING (The Rating Obtained shall be disclosed prominently along with the meaning of the same) DEBENTURE TRUSTEES ( Names) AVAILABILITY OF APPLICATION FORMS Names of Issuer, Lead Managers, etc. (Addresses optional) AVAILABILITY OF OFFER DOCUMENT Investors are advised to refer to the offer document, and the risk factors contained therein, before applying in the issue. Full copy of the offer document is available on websites of issuer / lead manager(s) / Stock Exchange(s) on www.__________ ISSUE OPENS ON:
ISSUE CLOSES ON:
Issued by Directors of Issuer Page - 29 - of 29
SCHEDULE V [See Regulation 23 (1)] Periodic Disclosures to be made by Issuers:
1. The issuer shall file its Annual Audited financial results, forthwith, with the stock exchange and debenture trustee, wherever applicable.
2. Further, following periodic disclosures shall be made by the Issuer on half yearly basis to the stock exchange and debenture trustee, wherever applicable.:
i. Utilization of funds for the projects – Half yearly certification of Chartered Accountant on Utilizations of the issue proceeds for execution of the projects stated in the offer document.
ii. A report containing status of implementation of project(s), which is being financed alongwith reasons for delay, if any.
iii. Project development - Details with respect to the development of the Project along with certifications from the Project Engineer should be furnished to the bond trustee, Rating Agencies and stock exchanges on Half Yearly Basis and should be publicly disseminated.
iv. Material adverse changes affecting ability to service bonds.
v. Proposal for pre-payment, valuation of bond in case of sale/purchase before maturity etc.
vi. Important ratios like Debt Equity Ratio, Debt Service Coverage Ratio, Interest Service Coverage Ratio etc.
vii. Half Yearly return on servicing of bonds, maintenance of Asset Cover, Credit enhancement facilities and Investors Grievances &Redressal viii. A CA/Bank certificate for timely servicing of bonds.
U. K. SINHA CHAIRMAN SECURITIES AND EXCHANGE BOARD OF INDIA