Disclosure requirement for large entities

SEBI Circular No.
SEBI/HO/DDHS/CIR/P/2018/144 dated November 26,2018

Applicability:

For the entities following April-March as their financial year, the framework shall come into effect from April 01, 2019 and for the entities which follow calendar year as their financial year, the framework shall become applicable from January 01, 2020.
The framework will be applicable to all Listed Entities except for Scheduled Commercial Banks, which as on the last date of financial year (i.e. March 31 or December 31)

have their specified securities or debt securities or non-convertible redeemable preference share, listed on a recognized stock exchange(s) in terms of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015;
have an outstanding long-term borrowing of Rs 100 crores or above
have a credit rating of “AA and above”, where credit rating shall be of the unsupported bank borrowing or plain vanilla bonds of an entity,
which have no structuring/ support built in; and in case, where an issuer has multiple ratings from multiple rating agencies, highest of such rating shall be considered for the purpose of applicability of this framework.

Large Corporate:

A listed entity fulfilling the requirements in point 2 above is considered as a Large Corporate.
Such Large Corporate shall raise not less than 25% of its incremental borrowings during the year subsequent to the financial year in which it is identified as a LC, by way of issuance of debt securities, as defined under SEBI (Issue and Listing of Debt Securities) Regulations, 2008 (hereinafter “ILDS Regulations”).

Following is applicable for an entity identified as LC:

For FY 2020 and 2021, the requirement of meeting the incremental borrowing norms shall be applicable on an annual basis.
where a LC is unable to comply with the above requirement, it shall provide an explanation for such shortfall to the Stock Exchanges
From FY 2022, the requirement of mandatory incremental borrowing by a LC in a FY will need to be met over a contiguous block of two years.
However, if at the end of two years, there is a shortfall in the requisite borrowing, a monetary penalty/fine of 0.2% of the shortfall in the borrowed amount shall be levied and the same shall be paid to the Stock Exchange(s).

Disclosure requirements for Large Entities:

Disclose the fact that they are identified as a LC – Within 30 days from the beginning of the FY
The details of the incremental borrowings done during the FY – Within 45 days of the end of the FY

- The disclosures made shall be certified both by the Company Secretary and the Chief Financial Officer, of the LC
- The disclosures made shall also form part of audited annual financial results of the entity.

Responsibilities of Stock Exchanges:

The Stock Exchange should submit the information collected about the LC to SEBI within 14 days of the last date of submission of annual financial results
In the event of shortfall in borrowing, Stock Exchanges to collect fine.
The fine so collected shall be remitted by the stock exchanges to SEBI IPEF fund within 10 days from the end of the month in which the fine was collected.

Disclaimer: The information contained in this Article is intended solely for personal non-commercial use of the user who accepts full responsibility of its use. The information in the article is general in nature and should not be considered to be legal, tax, accounting, consulting or any other professional advice. We make no representation or warranty of any kind, express or implied regarding the accuracy, adequacy, reliability or completeness of any information on our page/article.

Explore other blog posts on the 1-Comply.

Follow Us on LinkedIn to stay updated