Introduction:
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:
- 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
- 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 01st 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
- Material Subsidiary Test
- “Income” replaced with “turnover” for determining material subsidiary thresholds.
- 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-month timeline is prescribed for filling board committee vacancies viz. audit, NRC, RMC and SRC.
- Board recommendations to shareholders must now record rationale explicitly.
- Subsidiary Transactions
- Shareholder approval is not required for intra-group sale of assets between subsidiaries of an HVDLE.
- IBC-linked Relaxations
- Additional time of 3 months to fill KMP vacancies for companies exiting CIRP, subject to minimum KMP presence.
- 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.
- 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.