If the issuer does not receive minimum subscription of its base issue size of 75%, then the entire application money would be refunded within 12 days from the date of the closure of the issue, SEBI says

Market regulator Securities and Exchange Board of India (SEBI) has issued new norms for public issuance of debt securities under which such offers have to be of minimum Rs100 crore, while issuers would need to make additional disclosures and attain at least 75% subscription.

SEBI said entities coming out with public issue of non-convertible debentures (NCDs) would have to provide granular disclosures in their offer document, with regards to the 'object of the issue'.

Also, an entity has to make additional disclosures in the offer document about details of money utilised from the previous issues of the issuer as well as the group companies.

The new norms would be applicable for the draft offer document for issuance of debt securities filed with the stock exchanges on or after 16th July, SEBI said.

Market watchdog said that the minimum subscription for public issue of debt securities has to be 75% of the base issue size for both non-banking finance companies (NBFCs) and non-NBFC issuers.

Further, if the issuer does not receive minimum subscription of its base issue size (75%), then the entire application money would be refunded within 12 days from the date of the closure of the issue.

In the event, there is a delay, by the issuer in making the refund, then the issuer would have to refund the subscription amount along with annual interest of 15% for the delayed period.

However, the issuers issuing tax-free bonds would be exempted from the proposed minimum subscription limit.

SEBI has fixed a base issue size of at least Rs100 crore.

Besides, SEBI said issuers would be allowed to retain the over-subscription money up to the maximum of 100%of the base issue size or any lower limit as specified in the offer document. However, for the issuers filing a shelf prospectus, they can retain over subscription up to the rated size, as specified in their shelf prospectus.

"The issuers of tax free bonds, who have not filed shelf prospectus, the limit for retaining the over subscription shall be the amount, which they are authorised by CBDT to raise in a year or any lower limit, subject to the same being specified in the offer document," SEBI said in a circular.

SEBI said, "entities coming out with public issue of NCDs shall provide granular disclosures in their offer document, with regards to the 'object of the issue' including the percentage of the issue proceeds earmarked for each of the 'object of the issue'.”

Further, the regulator said that amount earmarked for 'general corporate purposes' would not exceed 25% of the amount raised by the issuer in the proposed issue.