SEBI’s Draft Circular 2025 on HVDLE Disclosures: Aligning Chapter VII of the Master Circular with Amended LODR Regulations

In a move to enhance transparency and accountability within the corporate debt market, SEBI released a Draft Circular dated May 9, 2025 (Circular No. SEBI/HO/DDHS/DDHS-PoD-1/P/CIR/2025/) proposing key amendments to the disclosure framework for High Value Debt Listed Entities (HVDLEs). This draft proposes modifications to Chapter VII of the Master Circular governing listing obligations and disclosure requirements for Non-Convertible Securities, Securitized Debt Instruments, and Commercial Paper. The initiative aims to align existing disclosure formats and compliance procedures for HVDLE with the recent amendments to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. 

The primary objective of this Draft Circular is to update and streamline the disclosure framework for HVDLEs. This revision is necessitated by the introduction of Chapter VA in the LODR Regulations, effective from March 27, 2025, which now explicitly outlines the governance norms for these entities. Consequently, the existing Chapter VII of the Master Circular, which previously covered similar aspects, requires modification to eliminate redundancy and ensure regulatory coherence.

Key Changes Introduced in the Circular

The Draft Circular proposes several key changes concerning the reporting and disclosure obligations of HVDLEs:

• Secretarial Compliance Report: Aligning with the new Regulation 62M(2), HVDLEs will be required to submit an annual secretarial compliance report in a SEBI-specified format within 60 days from the end of each financial year. This formalizes the reporting timeline and format.
  
• Corporate Governance Report: As per Regulation 62Q, HVDLEs must submit a periodic compliance report on corporate governance within 21 days from the end of the relevant period. This report will now explicitly include comprehensive disclosures on all material RPTs, emphasizing greater transparency in such dealings.
  
• Related Party Transactions (RPTs): The circular details the specific information that must be placed before the Audit Committee and the Debenture Trustee for the approval and no-objection of RPTs, respectively. This includes the type, terms, value, justification, and potential impact of the proposed transaction. Furthermore, the information to be provided to shareholders for their consideration of RPTs is also specified, ensuring they have adequate details to make informed decisions. Notably, for omnibus approvals of material RPTs obtained in general meetings other than Annual General Meetings (AGMs), the validity period is capped at one year, while those approved in an AGM can be valid until the next AGM, with a maximum period of fifteen months to align with Companies Act stipulations.

Conclusion

This Draft Circular underscores SEBI’s proactive approach to refining regulations in critical areas like corporate debt. By seeking public consultation, SEBI aims to create a robust and inclusive regulatory framework. The proposed amendments are geared towards enhancing transparency, strengthening oversight, and ultimately safeguarding the interests of investors in HVDLEs. Stakeholders are encouraged to provide their valuable input to ensure these regulatory updates are comprehensive and effectively address the evolving dynamics of the Indian securities market. Public comments are invited on the draft circular annexed to this consultation paper.

Citations
1. Securities and Exchange Board of India
2. Related-Party Transactions

Expositor(s): Adv. Archana Shukla