India: In bid to boost convertibles, Sebi proposes new listing norms

Sebi,Photo: Mint

The Securities and Exchange Board of India, or Sebi, on Tuesday proposed to allow unlisted companies to list their convertible securities on exchanges in an effort to boost the market for such instruments.

Convertible securities offer a combination of both debt and equity features. Such a security can either be converted into equity if the issuer of the security performs well or can be redeemed at a pre-determined maturity date if the performance of the issuer is not up to par.

The market regulator proposed that an unlisted company can make a public issue of compulsorily convertible securities and list them on the institutional trading platform of stock exchanges.

“Currently, while the existing shareholders are permitted to sell their shares to public, the same is not specifically mentioned for convertible securities. It is suggested to explicitly permit the existing holders of convertible securities as well to sell their securities to public,” Sebi said in a discussion paper.

Sebi proposed that optionally convertible debentures (OCDs) and optionally convertible preference shares (OCPs) may be treated as debt and companies can list them on exchanges by complying with the existing norms on sale and listing of debt securities.

Also, Sebi proposed to stipulate a maximum tenure of five years for convertible securities issued by a listed firm. At present, the tenure of convertible securities issued to the public is not specified, except for financing of a group company where the maximum tenure can be 18 months.

Between 1990 and 2001, Sebi said, the Indian market saw 284 issues of convertible debentures by small, medium and large companies with a total fund raising of around Rs.14,000 crore, with 57 issues being larger than Rs.50 crore. “However, since 2000 the market for public issue of convertible securities has dwindled,” the discussion paper said.

Sebi has sought public comments on the proposals by 23 December, 2015.

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This article was first published on Livemint.com

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Following vacancies can be applied for (only in Singapore).   

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.