SEBI issues Revision to Operational Circular

SEBI issues Revision to Operational Circular for issue and listing of Non-Convertible Securities, Securitised Debt Instruments, Security Receipts, Municipal Debt Securities and Commercial Paper

In exercise of the powers granted by Section 11(1) of the Securities and Exchange Board of India Act, 1992 read with Regulation 55 (1) of the SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021 a circular was issued to shield the interest of investors in securities and to encourage the development of, and to administer the securities market. The circular shall be applicable to public issues of debt securities that open on or after May 1, 2022

HIGHLIGHTS

·??????Operational Circular no. SEBI/HO/DDHS/P/CIR/2021/613 dated August 10, 2021, was issued by SEBI. Chapter I and II of the said circular provides the mechanism concerning the issue and listing of Non-Convertible Securities, Securitised Debt Instruments, Security Receipts, Municipal Debt Securities, and Commercial Paper. The circular also allows the investors to apply in public issues of debt securities with the provision to block funds through the Unified Payments Interface (UPI) method for application value up to Rs.2 lakhs.?

·??????The transaction limit in the UPI was increased from Rs.2 Lakhs to Rs.5 Lakhs for UPI-based Application Supported by Blocked Amount (ASBA) Initial Public Offer (IPO). This provision was added by circular reference no. NPCI/UPI/OC No. 127/ 2021-22 dated December 09, 2021.

·??????Considering the uniformity in the requirements and for ease of investment for investors, the limit for investment through UPI mechanism has been increased to Rs.5 Lakhs.

·??????Few amendments are being made to Chapters I & II of the said Circular, considering the limits of UPI transactions.

·??????Paragraph 1.2 of chapter I (Application process in case of public issues of securities and timelines for listing) shall be amended as “mentioning UPI ID in order to block the funds. The investor may utilize the UPI mechanism to block the funds for application value up to Rs.5 lakhs per application.”

·??????Paragraph 2.1 c of chapter I (Application process in case of public issues of securities and timelines for listing) shall be amended as “An investor may submit the bid-cum-application form with an SCSB or the intermediaries mentioned above and use his/ her bank account linked UPI ID for the purpose of blocking of funds if the application value is Rs.5 lakhs or less. The intermediary shall upload the bid on the stock exchange bidding platform. The application amount would be blocked through the UPI mechanism in this case.”

·??????Paragraph 5.3 of chapter I (Application process in case of public issues of securities and timelines for listing) shall be modified as “Sponsor Bank means a Banker to the Issue registered with SEBI which is appointed by the Issuer to act as a conduit between the stock exchanges and the NPCI in order to push the mandate collect requests and/ or payment instructions of the investors into the UPI.”

·??????Paragraph 11.3 (a) (ii) of chapter I (Application process in case of public issues of securities and timelines for listing) shall be modified as “App-based/ web interface applications from investors with UPI mode for blocking the mode for application value up to Rs.5 lakhs.”

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·??????Paragraph 3.1 of Chapter II – (Application form and Abridged Prospectus) shall be amended as “UPI mechanism for blocking funds would be available for application value up to Rs.5 lakhs.”

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[i] Accessed at SEBI | Change in UPI limits - Revision to Operational Circular for issue and listing of Non-convertible Securities, Securitised Debt Instruments, Security Receipts, Municipal Debt Securities and Commercial Paper