Issuers of municipal debt securities will have to disclose all borrowings and revenue grants details of the last three years in the offer document, markets regulator SEBI said in a guidance note.
The directions came after SEBI received certain queries from market participants seeking guidance on interpretation of some of the provisions of amended Municipal Regulations.
SEBI said issuers will have to disclose details of all borrowings along with outstanding amount of borrowings during the three years for which the audited financial information is being included in the offer document.
Further, revenue grant received and spent during the last three years along with separate disclosures of refundable grants will have to be disclosed in the document, it added.
With regard to due diligence, SEBI said merchant banker(s) may rely on the summarised English translations of the various non-financial documents, legal papers which are in the regional language of the respective issuers while carrying out due diligence.
The Securities and Exchange Board of India (SEBI) said guidance note is being provided for benefit of issuers and market participants.
The regulator, in November 2019, came out with a detailed disclosure framework for entities seeking listing of municipal debt securities issued on private placement basis.
In respect of disclosure regarding litigation involving the issuer, or its directors or promoters or subsidiaries, SEBI said those which will have adverse impact on the issuer need to be disclosed.
"Merchant banker, issuer and the bond Issue committee (wherever applicable), may determine the materiality thresholds... after taking into account litigations which may have a material adverse impact on the issuer or the projects to be funded from the proceeds of the issue of municipal bonds.
"The thresholds so determined shall be disclosed in the offer document," SEBI said in a guidance note issued on Wednesday.
Under the norms, an eligible issuer or its promoters or directors should not have restrained from accessing the securities market; should not have been named in the list of the wilful defaulters; and any of its promoter or director has not been declared as a fugitive economic offender.
In the case of non-corporate issuers, SEBI said the eligibility conditions will apply on the members of the bond issue committee, which comprise of senior executive officers of the issuer and headed by the municipal commissioner or an officer of equivalent.