SEBI Aims to Ease Compliance for High Value Debt Listed Entities by Raising Threshold to ₹1,000 Crore

The Securities and Exchange Board of India (Sebi) has suggested increasing the threshold for identifying High Value Debt Listed Entities (HVDLEs) from ₹500 crore to ₹1,000 crore to help reduce compliance requirements for companies. Currently, HVDLEs are defined as those with listed non-convertible debt securities valued at ₹500 crore or more.

In a recent consultation paper, Sebi proposed a sunset clause that would allow governance obligations to be lifted if an HVDLE’s outstanding debt drops below the new threshold for a specified time. This change aims to provide companies with more flexibility.

Additionally, Sebi suggested creating a dedicated section in the Listing Obligations and Disclosure Requirements (LODR) regulations specifically for corporate governance norms that apply to HVDLEs, distinguishing them from those applicable to equity-listed entities.

Other proposals include requiring governance reports to be filed in XBRL format, allowing voluntary Business Responsibility and Sustainability Reporting (BRSR), and aligning HVDLE reporting with that of equity-listed companies.

Sebi also proposed some relaxations for HVDLEs that are not classified as companies under the Companies Act, 2013, particularly concerning the composition of the Nomination and Remuneration Committee (NRC), Risk Management Committee (RMC), and Stakeholders Relationship Committee (SRC).

To streamline operations, Sebi suggested that the board of directors of an HVDLE can either form these committees or assign their functions to the audit committee, preventing the need for multiple committees.

Moreover, Sebi plans to set a limit on the total number of committees a director can sit on across both equity and debt-listed entities to avoid over-commitment and ensure directors can effectively manage their responsibilities.

These proposals are part of Sebi’s broader efforts to enhance corporate governance norms for HVDLEs, promoting a more efficient business environment while protecting investors’ interests. Public feedback on these proposals is invited until November 15.