1. Introduction:

The Securities and Exchange Board of India (SEBI) has notified the SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2026, published in the Official Gazette on January 20^th, 2026. The amendments have come into force with immediate effect from the date of publication.

The notified changes span:

• investor service mechanisms for listed securities;
• treatment of unclaimed interest and redemption amounts;
• a comprehensive restructuring of the High Value Debt Listed Entity (HVDLE) regime under Chapter V of the LODR Regulations.

This note summarises the notification and highlights the practical compliance impact.

2. Amendments Relating to Investor Services:

• Direct Credit of Securities – Substitution of Regulation 39(2) Regulatory change: Regulation 39(2) has been substituted to mandate that listed entities shall effect credit of securities in dematerialised form pursuant to investor service requests relating to:
  • subdivision, split or consolidation;
  • renewal or exchange of securities; and
  • issuance of duplicate securities due to loss, destruction or old/worn certificates,

within 30 days of receipt of the request along with relevant documents

Effect: The regulation now directly recognises dematerialised credit as the end-point of investor service requests. SEBI has approved removal of the Letter of Confirmation (LOC) mechanism.

Compliance Impact:

• Significant reduction in timelines for receipt of securities by eligible investors.
• Lower operational risk for RTAs and listed entities as direct credit to demat account would also help update KYC of investors.

• Registration of Transfer of Physical Securities – Amendment to Regulation 40 Regulatory change: Regulation 40(1) has been amended to provide that, notwithstanding the general requirement for dematerialisation, registration of transfer of securities executed before 1 April 2019 and held in physical form shall be permitted, subject to conditions specified by SEBI.

Effect: This amendment creates a statutory exception to the otherwise mandatory dematerialisation regime, limited to:

• transfers executed prior to 1 April 2019; and
• cases where securities continue to be held in physical form
• SEBI has notified a circular dated January 30^th, 2026 providing that special window for this purpose shall start from February 05^th 2026 to February 04^th, 2027.  A detailed newsletter shall follow.

For clarity with regard to applicability of this proposal, below matrix may be referred to:

Execution Date of Transfer Deed	Lodged before 01-04-2019?	Original Share Certificate Available?	Allowed in the proposed window?
Before 01-04-2019	No (it is fresh lodgement)	Yes
Before 01-04-2019	Yes (it was rejected/ returned earlier)	Yes
Before 01-04-2019	Yes	No	✘
Before 01-04-2019	No	No	✘

3. Transfer of Unclaimed Amounts Relating to Listed Debt Securities:

• Amendment to Regulation 61A(3): Regulatory change – Regulation 61A(3) has been substituted to provide a unified framework for the transfer of unclaimed and unpaid amounts lying in escrow accounts:
  • Companies: Transfer to IEPF under section 125 of the Companies Act, 2013.
  • Non-companies: Transfer to SEBI’s IPEF after seven years from the maturity date of the non-convertible securities.
• Amounts transferred to SEBI’s IPEF shall not carry interest.

Compliance impact

• Aligning timeline for transfer of unclaimed interest/ dividend/ redemption payment entities having listed non-convertible securities to the IEPF/ IPEF, as the case may be with Companies Act provisions.

4. Re-structuring of the High Value Debt Listed Entity (HVDLE) Framework:

• Revised Threshold for HVDLE Classification – Regulatory change – The outstanding listed non-convertible debt threshold for classification as an HVDLE has been increased from ₹1,000 crore to ₹5,000 crore, reflected across:
  • Regulation 15(1A); and
  • Regulation 62C(1).

Compliance impact

• Mid-sized bond issuers exit the HVDLE compliance net.
• Encouragement to raise capital through listed debt without governance over-burden.

• Governance and Board-Related Amendments for HVDLEs: The notified amendments substantially align HVDLE governance with equity-listed entities, with necessary adaptations for the debt context.

Key changes include:

• Shareholder approval by special resolution required in respect of a non-executive director attaining the age of 75 years.
• Exclusion of time taken for regulatory or statutory approvals while computing timelines for director appointment or approval.
• Exemptions from shareholder approval for directors nominated by:
  • financial sector regulators,
  • courts or tribunals, or
  • debenture trustees under subscription agreements.

Additionally, vacancies in board committees are required to be filled within three months, and board recommendations to shareholders must now explicitly record the rationale.

• Subsidiary-Related Rationalisation
  • The test for determining a material subsidiary has been amended by replacing “income” with “turnover”.
  • Transactions involving sale, disposal or lease of assets between wholly-owned subsidiaries of an HVDLE have been exempted from shareholder approval requirements.
• Insolvency-Linked Relaxations For HVDLEs where a resolution plan has been approved under the Insolvency and Bankruptcy Code, 2016:
  • Vacancies in key managerial personnel must be filled within three months of such approval.
  • Pending such filling, the entity must have at least one full-time KMP managing day-to-day affairs.
• Secretarial Audit Framework: Regulation 62M has been aligned with Regulation 24A, mandating secretarial audit for HVDLEs in the manner specified by SEBI. The amendment introduces a formal and structured appointment framework for secretarial auditors of exclusively debt-listed entities, while entities already subject to Regulation 24A remain unaffected. The requirement to submit secretarial compliance report henceforth as per regulation 62M(2) has been omitted.

• Related Party Transactions – Harmonisation with Regulation 23: Regulation 62K has been substituted to require HVDLEs to comply with Regulation 23 (except sub-regulations (8) and (9)) in respect of related party transactions. Additional statutory carve-outs have been notified for:
  • payment of statutory dues, fees or charges to Central or State Governments; and
  • transactions between public sector companies and Government entities.

The requirement for debenture trustee oversight and debenture holder approval continues to apply.

Compliance impact:

• Clear movement towards equity-style governance discipline in debt markets.
• Reduced interpretational gaps between Chapters IV and V of LODR.

5. Language-Based Changes and Omissions:

• Substituted “year” with “financial year” regarding the meeting frequency of the Board and all mandatory committees.
• Substituted “government companies” with “public sector companies” in the context of RPT exemptions.
• Substituted “listed entity” with “HVDLE” in Regulation 62D(5) regarding filling director vacancies.
• Inserted “consecutive” between “two meetings” in Reg 62D(6).
• Inserted “shall” and “the” in Reg 15(1AA) to clarify that regulations “shall continue to apply”.

6. Provisions of LODR Not Applicable to HVDLEs:

According to the amended Regulation 62K and other specific omissions, the following provisions are explicitly not applicable to HVDLEs:

• Regulation 23(8): Requirement to place existing material related party contracts or arrangements for shareholder approval in the first General Meeting.
• Regulation 23(9): Requirement to submit half-yearly disclosures of related party transactions (RPTs) to stock exchanges and publish them on the entity’s website.
• Regulation 62M(2): The requirement for HVDLEs to submit an annual Secretarial Compliance Report to stock exchanges has been omitted.
• Regulation 62N(7): The mandatory requirement to replace a resigned or removed independent director within three months of the vacancy has been omitted.
• Regulation 62Q(2)(b): The obligation to disclose details of all material RPTs as part of the periodic corporate governance compliance report has been omitted.
• Certain RPT Approvals (Reg 62K(7)): Requirements for audit committee and shareholder approval for RPTs are not applicable to:
  • Transactions between two public sector companies.
  • Transactions involving the payment of statutory dues, fees, or charges to the Central or State Governments.
  • Transactions between a public sector company and the Central or State Governments.
• Insolvency Period Governance: Corporate governance provisions in Regulation 62D and committee requirements (62F, 62G, 62H, 62I) are not applicable while an HVDLE is undergoing a corporate insolvency resolution process.

[1] https://egazette.gov.in/(S(aikxq4eqe4c4twzio5cgirft))/ViewPDF.aspx

The Securities and Exchange Board of India (SEBI) has eased the regulatory framework for issuance of debt securities at a reduced face value on a private placement basis. The circular dated December 18^th, 2025, has expressly permitted zero-coupon debt securities to be issued at a face value of Rs. 10,000/-, subject to prescribed conditions.

B. Brief History:

1. Circular dated July 03^rd, 2024[i]:
   • The Change: SEBI permitted the issuance of debt securities and non-convertible redeemable preference shares (NCRPS) on a private placement basis at a reduced face value of Rs. 10,000/–, down from Rs. 1 lakh, but subject to certain conditions.
   • Restriction: At this stage, the reduced denomination was only permitted for securities that were interest or dividend-bearing and paid at regular intervals.
   • Practical impact: Issuers using discounted, bullet-redemption structures could not access the Rs. 10,000/- denomination route.
2. Consultation Paper dated August 01^st, 2025[ii]:
   • The Change: Following feedback that Zero Coupon debt securities (which are issued at a discount and redeemed at par) are attractive to non-institutional investors, SEBI proposed modifying the “interest-bearing” requirement.
   • Practical impact: Facilitating the inclusion of zero-interest instruments under the Rs. 10,000/- denomination umbrella to further enhance market liquidity and retail participation.
3. Circular dated December 18^th, 2025[iii]:
   • SEBI has now formally implemented the consultation proposal through its circular dated December 18^th, 2025, by modifying Clause 1.3 of Chapter V of the Master Circular.
   • The Change: This latest circular officially amends Chapter V of the October Master Circular to reflect the proposals from the August consultation paper.
   • Impact: Issuers are now eligible to issue debt securities at a reduced face value (Rs. 10,000/-) that may be either interest-bearing or zero-interest-bearing.
   • Applicability: These provisions apply to all private placement issues proposed to be listed from December 18^th, 2025, onwards.
     
     
     

C. Important to note:

While the consultation paper dated August 01^st, 2025 had proposed extending the reduced denomination framework to non-convertible redeemable preference shares carrying zero dividend, this proposal was not carried through into the final SEBI circular dated December 18^th, 2025.

The narrowing of scope appears consistent with the Companies Act, 2013 framework governing preference share capital. Under Section 43 read with Section 55 of the Companies Act, preference shares are, by design, capital instruments carrying a preferential right to dividend, whether fixed or contingent.

SEBI’s final decision to confine the reduced denomination relaxation only to zero-coupon debt securities, while excluding zero-dividend preference shares, reflects a conscious alignment with the capital character of preference shares under the Companies Act, 2013, and cannot be read as an approval of the consultation proposal insofar as preference shares are concerned.

Conclusion:

SEBI’s circular dated December 18^th, 2025, provides issuers with greater flexibility by allowing zero-coupon debt securities to be issued at a reduced face value of Rs. 10,000/-, thereby widening access to non-institutional investors and improving market participation. At the same time, SEBI has clearly drawn the line by not extending this benefit to zero-dividend preference shares, in line with the Companies Act, 2013.

Issuers planning private placements should therefore carefully structure their instruments to ensure that only eligible debt securities avail of the reduced denomination framework.

[i] https://www.sebi.gov.in/legal/circulars/jul-2024/reduction-in-denomination-of-debt-securities-and-non-convertible-redeemable-preference-shares_84573.html

[ii] https://www.sebi.gov.in/reports-and-statistics/reports/aug-2025/modification-in-the-conditions-specified-for-reduction-in-denomination-of-debt-securities-and-non-convertible-redeemable-preference-shares-ncrps-_95769.html

[iii] https://www.sebi.gov.in/legal/circulars/dec-2025/modification-in-the-conditions-specified-for-reduction-in-denomination-of-debt-securities_98463.html

At its 212ᵗʰ Board Meeting held on 17 December 2025, the Securities and Exchange Board of India (SEBI) approved a series of regulatory changes aimed at easing compliance, addressing legacy issues, and improving market participation in the listed debt space.

The approved measures primarily relate to:

• SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR),
• High Value Debt Listed Entities (HVDLEs), and
• SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021 (NCS Regulations).

This note summarises the key changes approved by SEBI and outlines their likely impact on issuers, investors, and market intermediaries.

1. Amendments to LODR Regulations, 2015 – Investor Services & Unclaimed Amounts:

(A) Regulation 39 – Dispensing with Letter of Confirmation (LOC):

What has been approved:

1. SEBI has approved the removal of the Letter of Confirmation (LOC) mechanism for investor service requests, such as:
   • issuance of duplicate certificates
   • transmission / transposition
   • dematerialisation from unclaimed suspense accounts
2. Direct credit of securities to the investor’s demat account will now be permitted after due diligence, without routing through LOCs.

Prospective impact on the market:

• Significant reduction in timelines for receipt of securities by eligible investors.
• Lower operational risk for RTAs and listed entities as direct credit to demat account would also help update KYC of investors.
• Companies will not be required to have a separate suspense escrow demat account.

(B) Regulation 40 – Special Window for Transfer of Physical Securities:

What has been approved:

• An amendment has been approved to the Regulation 40 to permit a specified window for lodging transfer deeds with original physical certificates for investors who purchased physical securities before April 01^st 2019 but never lodged transfer deeds to register transfers.
• Lodgement will be allowed subject to the availability of original certificates and transfer deeds, during a window notified by SEBI. Cases involving excluding disputes/ frauds are excluded.

Prospective impact:

• Restitution of property rights for long-standing investors.
• Reduced litigation and investor complaints against issuers and RTAs.

For clarity with regard to the applicability of this proposal, matrix below may be referred to:

Execution Date of Transfer Deed	Lodged before 01-04-2019?	Original Share Certificate Available?	Allowed in the proposed window?
Before 01-04-2019	No (it is fresh lodgement)	Yes
Before 01-04-2019	Yes (it was rejected/ returned earlier)	Yes
Before 01-04-2019	Yes	No	✘
Before 01-04-2019	No	No	✘

(C) Alignment of Timelines for Transfer of Unclaimed Amounts:

What has been approved:

• Issuers of non-convertible securities (both companies and bodies corproates), having unclaimed interest/ dividend/ redemption amounts will now transfer such amount to Investor Education and Protection Fund (IEPF)/ Investor Protection and Education Fund (IPEF), after completion of 7 years from date of maturity, instead of multiple interim transfers post completion of seven years of the amount becoming due.

Prospective impact:

• Aligning the timeline for transfer of unclaimed interest/ dividend/ redemption payment entities having listed non-convertible securities to the IEPF/ IPEF, as the case may be, with the Companies Act provisions

2. SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021

A) Incentives in Public Issues of Debt Securities

What has been approved

• Debt issuers will now be permitted to offer incentives in public issues of NCS, in the form of:
  • additional interest, or
  • discount to issue price
• Incentives may be offered to specified categories such as:
  • retail individual investors
  • senior citizens
  • women investors
  • defence personnel (serving / retired) and their widows/widowers
• Incentives apply only to the initial allottee and do not travel on secondary transfers.

Prospective impact on the debt market:

• Enhanced retail participation in corporate bond issuances
• Improved pricing flexibility for issuers
• Shift from purely institutional debt placements to broader investor base
• Increased attractiveness of listed bonds vis-à-vis bank deposits and small savings instruments

3. High Value Debt Listed Entities (HVDLEs) – Structural Overhaul

(A) Relaxation of HVDLE Threshold

What has changed:

• Threshold for identification as HVDLE increased from:
  • ₹1,000 crore → ₹5,000 crore outstanding non-convertible debt

Prospective impact:

• Significant compliance relief for NBFCs, HFCs, ARCs, REITs and insurance companies
• Mid-sized bond issuers exit the HVDLE compliance net
• Encouragement to raise capital through listed debt without governance over-burden

(B) Alignment of Corporate Governance Norms with Equity-Listed Entities:

SEBI has approved extensive harmonisation of HVDLE governance norms with equity-listed companies under LODR.

Key approved changes

1. Material Subsidiary Test
   • “Income” replaced with “turnover” for determining material subsidiary thresholds.
2. Board & Director-related reforms
   • Prior shareholder approval (special resolution) now required before a non-executive director crosses 75 years of age.
   • Time taken for regulatory / statutory approvals would now be excluded from director appointment timelines.
   • Appointment of nominee directors by regulators, debenture trustees, courts or tribunals is now exempted from shareholder approval.
3. 3-month timeline is prescribed for filling board committee vacancies viz. audit, NRC, RMC and SRC.
   • Board recommendations to shareholders must now record rationale explicitly.
4. Subsidiary Transactions
   • Shareholder approval is not required for intra-group sale of assets between subsidiaries of an HVDLE.
5. IBC-linked Relaxations
   • Additional time of 3 months to fill KMP vacancies for companies exiting CIRP, subject to minimum KMP presence.
6. Secretarial Audit & Compliance Report
   • Formal framework introduced for appointment, reappointment, removal and disqualification of Secretarial Auditors of HVDLEs.
   • This will bring secretarial audit framework in line with equity listed and exclusively HVDLEs will now have to appoint secretarial auditors for five years. No impact seen on HVDLEs who also have their equity listed.
7. Related Party Transactions (RPTs)
   • RPT framework for HVDLEs (Regulation 62K) harmonised with Regulation 23 applicable to equity-listed entities, while retaining mandatory NOC from debenture trustees and debenture holders.

Prospective impact:

• Clear movement towards equity-style governance discipline in debt markets
• Reduced interpretational gaps between Chapters IV and V of LODR
• Enhanced role of Audit Committees and Secretarial Auditors in debt-listed entities
• Improved comfort for institutional and retail bond investors

Conclusion:

The changes approved by SEBI relating to investor services, incentives in public debt issues, and rationalisation of the High Value Debt Listed Entity framework are expected to improve operational efficiency for issuers and intermediaries, while enhancing investor convenience and confidence.

These amendments will be implemented through notifications amending the respective regulations and shall come into force from the date(s) specified in such notifications, once issued by SEBI. Accordingly, listed entities and market participants should closely track the final regulatory notifications to assess applicability and ensure timely compliance.

HVDLE will have to ensure compliance with provisions of Chapter IV and Chapter VA of SEBI LODR immediately. HVLDE will have to frame policies, change composition of board of directors, committees of board, compliances relating to subsidiary etc. immediately.

Below is the list of policies that need to be framed and compliances that needs to be done by HVDLE on immediate basis:

A. Policies that need to be framed with approval of board of directors

B. Immediate Compliances that need to be done by HVDLE.

Compliance with respect to no. of directorships

Conclusion

High-value debt listed entities must prioritize timely compliance. Some of these compliances need to be addressed at the upcoming board meeting in order to ensure adherence to regulatory obligations

This article is published on Taxguru https://taxguru.in/company-law/sebi-lodr-compliance-high-debt-entities.html

The Securities and Exchange Board of India (Listing Obligation and Disclosure Requirements) regulations, 2015 (‘SEBI LODR’) were amended with effect from 27^th March 2025, vide SEBI LODR amendment regulations 2025 [‘LODR amendment’]. LODR amendment revamped provisions relating to High Value Debt Listed Entities (‘HVDLE’). HVDLE is an entity which has principal value of listed non-convertible debt securities exceeding 1000 crore.

LODR amendment made changes to clause (a) to sub-regulation (1) of regulation 26 of SEBI LODR. Clause (a) to sub-regulation (1) of regulation 26 provides for number of committees positions a director may occupy as a chairman or member. It also provides types of companies that must be taken into consideration where a director can occupy committee positions.

LODR amendment has notified change to the types of companies where a director may occupy position as chairman or committee member.

Prior to LODR amendment (i.e. till March 26, 2025) director occupying committee positions in HVDLE either as a chairman or committee member was excluded while ascertaining number of committees and chairmanships a director may occupy. Vide LODR amendment now the HVDLE have been excluded from this list of companies whose committee chairmanship and membership are to be excluded while calculating maximum limits[1].

Impact of amendment.

Since the name of HVDLE is removed from exclusion list, now the chairmanship and membership of committees in HVDLE shall also be included while counting the number of committee chairmanships and memberships held by a director in listed entities.

Although this is a simple change on face of it, there is one critical question in this regard that needs to be answered, and that is, clause (a), sub-regulation (1) of regulation 26 of SEBI LODR excludes committee chairmanship and memberships of private company but does not exclude committee memberships of HVDLEs.

Therefore, there arises a question that, if a private company is a HVDLE, then should we count the committee memberships held in such private company for calculating chairmanship held by directors?

Solution.

The answer to this question can be found in the consultation paper released by Department of Debt and Hybrid Securities, SEBI on October 31, 2024. In this consultation paper, the rationale for bringing this change is mentioned in following words:

“12.3.2. Directors play a crucial role in providing oversight and guidance on various committees (incl. ACs and SRCs) of these listed entities. Placing a cap on the total number of committees a director can serve on, irrespective of whether the entity is equity or debt listed (as both involves public money), helps prevent over commitment. This will ensure that directors can fulfil their responsibilities effectively without spreading themselves too thin by not providing adequate time across numerous committees. 

12.3.3. Accordingly, to ensure that directors devote adequate time to listed entities including HVDLEs and in the interest of investor protection, it is proposed that HVDLEs (along with equity listed companies) should be considered for the purpose of computing the maximum limit of committees, a director can act as a member or chairperson.[2]”

This purpose stated in the consultation paper clarifies that, the purpose of bringing this amendment does not relate to type of company, but it relates to involvement of public money in the company and therefore requirement of director’s involvement in the company.

Going by this purpose, it becomes irrelevant whether the HVDLE is a public company or a private company. The only point of consideration is that, whether public money is involved in the company or not? Even if a HVDLE is private company, but since public money is involved in the form of listed debt securities and attention from directors is expected in such private companies, such private HVDLEs should also be counted while counting committee memberships and chairmanships held by a director.

Conclusion.

Considering the purpose of bringing the amendment, it is most appropriate to include the committee chairmanships and memberships of private HVDLEs while counting the committee memberships held by directors in listed entities. As a result of this amendments the HVDLEs will be subject to some additional compliances

[1] (1) A director shall not be a member in more than ten committees or act as chairperson of more than five committees across all listed entities in which he 240[/she] is a director which shall be determined as follows:

(a) The limit of the committees on which a director may serve in all public limited companies, whether listed or not, shall be included and all other companies including private limited companies, foreign companies, high value debt listed entities and companies under Section 8 of the Companies Act, 2013 shall be excluded.

[2] https://www.sebi.gov.in/reports-and-statistics/reports/oct-2024/consultation-paper-on-review-of-provisions-of-lodr-regulations-pertaining-to-corporate-governance-norms-for-high-value-debt-listed-entities-hvdles-updated-_88171.html

Reasonable time period for compliance with provisions by HVDLE

As provisions relating to HVDLE are made effective immediately the question that arises is whether any reasonable time period is there with HVDLE for compliance with provisions of law. Hon’able High Court of Kerala in case of KK Balakrishna Pisharody V. Kerala State Electricity Board and Others, dt: November 6, 1987, held that, “When no time limit is fixed, provisions has to complied with reasonable time. Reasonable time depends upon the facts and circumstances of each case”. Further as per Law Lexicon the term ‘Reasonable Time” is defined to be so much time as is necessary, under the circumstances, to do conveniently what the contract or duty requires should be done in a particular case.

What is reasonable time of compliance would depend on compliance requirement for each provision of LODR amendment. It may also differ for each regulation. Listed entities hence need to ensure compliance with LODR amendment provisions within a reasonable timeframe as may be applicable.

Analysis of LODR amendment

Below is the analysis on the applicability of revised provisions:

• Increase in threshold of non-convertible debt securities for identification of HVDLE: Till now entities having their outstanding principal value of non-convertible debt securities listed worth Rs 500 crore or more were considered as HVDLE irrespective of whether its specified securities (viz. equity shares or anything convertible into equity) have been listed or not. Entities having their outstanding principal value of non-convertible debt securities listed worth Rs 500 crore or more were required to comply with corporate governance provisions (viz. regulation 15 to 27 and relevant provisions of schedule V of LODR) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulation, 2015 [‘LODR’] on ‘comply’ or ‘explain’ basis till March 31, 2025.

SEBI has now vide its LODR amendment, notified that an entity would be considered as HVDLE, irrespective of the fact whether its specified securities are listed or not, if it has outstanding principal value of non-convertible debt securities listed worth Rs 1000 crore or more as on March 31[1]. So, if as on March 31, 2025, an entity has non-convertible debt securities listed worth Rs 1000 crore or more then it will be considered as HVDLE for FY 25-26. SEBI has further stated that entities having their specified securities listed and their outstanding principal value of non-convertible debt securities of Rs 1000 crore or more listed, shall also be considered as HVDLE.

• Provisions applicable for HVDLE: Once an entity is categorized as HVDLE it will have to comply with corporate governance provisions. If a HVDLE already has its specified securities (viz. equity shares or any security convertible into equity shares) listed on recognized stock exchange then it needs to comply with regulation 15 to regulation 27 of LODR[2]. If an entity does not have its specified securities listed on a recognized stock exchange then it will have to comply with newly added chapter VA of LODR. This demarcation has created ease and prevented overlap for entities that have their equity and their non-convertible debt securities listed[3].

Entities need to monitor their non-convertible debt securities issued and listed on stock exchanges. SEBI has now specified that once an entity crosses the limit of 1000 crores in value of its principal outstanding non-convertible debt securities listed then it will have to ensure compliance within six months from the date of provisions becoming applicable[4].

• Sunset clause: SEBI has provided ease by bringing in sunset clause of applicability of corporate governance provisions to HVDLE.

SEBI has stated that once the provisions of chapter VA of LODR become applicable to a HVDLE, will continue to remain applicable till the value of principal outstanding non-convertible debt securities is 1000 crore or more. An HVDLE whose value of principal outstanding listed non-convertible debt securities reduces and remains below 1000 crores for three consecutive financial years may cease compliance with provisions of chapter VA. SEBI has specified that the computation of three consecutive financial years would start from April 1, 2025 (i.e. end of FY 25-26)[5]

For entities who have their specified securities listed will not be able to cease compliance with provisions of regulation 15 to 27 of LODR even if its principal outstanding non-convertible debt securities reduces and remains below 1000 crores for three consecutive financial years, if corporate governance provisions under regulation 15 to 27 of LODR continue to remain applicable to it due to its paid up equity share capital exceeding rupees 10 crore and net worth exceeding rupees twenty five crore as on the last of date of previous financial year.

• Time limit for ensuring compliance with LODR: No time limit is provided by SEBI for compliance with provisions of chapter VA or regulation 15 to 27 as the case may be by HVDLE. HVDLE need to ensure compliance with effect from March 27, 2025 (i.e. date of notification of LODR amendment) or as soon as reasonably possible. SEBI in its board of directors note discussing amendment to LODR dt: March 27, 2025, has stated that corporate governance provisions were applicable on ‘comply or explain basis’ till March 31, 2025 for entities having their principal high value debt of Rs 500 crore or more. Hence sufficient time is already given to entities having their principal outstanding of non-convertible debt securities exceeding 1000 crore also to ensure compliance with the provisions of LODR[6].

So, if an entity has principal outstanding of non-convertible debt securities listed as on March 31 worth Rs 1000 crore or more then it will have to ensure compliance as on March 27, 2025 or as soon as reasonably possible.

E.g. If an entity crosses threshold of 1000 crore in value of principal outstanding non-convertible debt in the month of September 2025, then it will have to ensure compliance with applicable provisions within a period of six months (i.e. by March 2026). To ensure compliance would mean revisiting managerial remuneration, related party transactions prior approval, board composition etc. as per LODR or chapter VA of LODR norms.

• Transition of compliance: Entities having their principal outstanding non-convertible debt securities worth Rs 500 crore or more was required to ensure compliance with provisions of regulation 15 to 27 of LODR till March 31, 2025. Entities having their non-convertible debt securities listed of outstanding value (Principal value) of Rs 500 crore or more as on March 31, 2025, will not be considered as high value debt listed entities. Hence these entities shall cease to ensure compliance with corporate governance provisions with effect from March 27, 2025 (i.e. date of notification of amendment to LODR).

Conclusion

Applicability of corporate governance provisions with clarity is now the reality. With this applicability clarity it would be definitely easy for HVDLE to ensure compliance with applicable provisions.

Amendment to LODR can be accessed at following link:

https://www.sebi.gov.in/legal/regulations/mar-2025/securities-and-exchange-board-of-india-listing-obligations-and-disclosure-requirements-amendment-regulations-2025_93156.html

[1] Reg. 15(1A) of LODR

[2] Explanation 5 to reg 15(1A) of LODR

[3] Reg 62C(1) of LODR

[4] 1^st proviso to reg. 62C(1) of LODR

[5] Explanation to reg 62C(2) of LODR

[6] https://www.sebi.gov.in/sebi_data/meetingfiles/dec-2024/1735215423736_1.pdf