Guidelines on issuance of non-convertible debt instruments along with warrants (‘NCDs with Warrants’) in terms of Chapter VI – Qualified Institutions Placement of SEBI (Issue of Capital and Disclosure

Last updated: 14 August 2021

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The Securities and Exchange Board of India (SEBI) has issued new guidelines for the issuance of Non-Convertible Debt Instruments (NCDs) along with warrants, also known as 'NCDs with Warrants', through the Qualified Institutions Placement (QIP) route. These guidelines clarify the process, making the Electronic Book Provider (EBP) platform mandatory for the NCD portion of such issues. The warrant portion will continue to be governed by existing QIP regulations.

Securities and Exchange Board of India CIRCULAR SEBI/HO/CFD/DIL/CIR/P/2021/614 Aug 13, 2021 To All Recognized Stock Exchanges All Recognized Depositories Issuer Companies Merchant Bankers and Brokers registered with SEBI Dear Sir / Madam, Sub: Guidelines on issuance of non-convertible debt instruments along with warrants (NCDs with Warrants) in terms of Chapter VI Qualified Institutions Placement of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018.

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FAQ :

'NCDs with Warrants' refers to non-convertible debt instruments issued together with warrants, allowing investors to subscribe to either the combined offering or the individual securities.

The issuance of 'NCDs with Warrants' through Qualified Institutions Placement is governed by Chapter VI of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 (ICDR Regulations, 2018).

Yes, the EBP platform mechanism is mandatory for the 'NCDs portion' of the issue, regardless of whether it's a stapled or segregated offer, provided the NCDs portion size exceeds the threshold prescribed under SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021.

At least 40% of the 'total issue size' must consist of the 'Warrants portion'. The 'total issue size' includes the combined size of the NCDs and warrants, along with the conversion price of the warrants.

These circular guidelines are applicable for all issues of 'NCDs with Warrants' made under the ICDR Regulations, 2018, on or after August 13, 2021.

Notification No : SEBI/HO/CFD/DIL/CIR/P/2021/614
Source : https://www.sebi.gov.in/legal/circulars/aug-2021/guidelines-on-issuance-of-non-convertible-debt-instruments-along-with-warrants-ncds-with-warrants-in-terms-of-chapter-vi-qualified-institutions-placement-of-sebi-issue-of-capital-and-disclosure-_51827.html

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