SEBI board announces higher threshold for High Value Debt Listed Entities

In a consultation paper released on October 27, the regulator suggested revising the definition of Corporate High-Value Debt Listed Entities (HVDLEs), and exempting smaller issuers from stringent corporate governance and related party transaction (RPT) requirements.

The SEBI board approved an increase in the threshold for classification as a High Value Debt Listed Entity (HVDLE) from Rs 1,000 crore to Rs 5,000 crore of outstanding non-convertible debt.

The move is expected to significantly reduce compliance burden for issuers while maintaining governance standards for larger debt-listed entities. SEBI also announced rationalisation of related-party transaction and subsidiary compliance norms.

"HVDs are currently defined as entities with outstanding non-convertible debt of Rs 1,000 crore or more. This threshold is quite low compared to the debt raised by many entities, such as NBFCs, and creates a constraint. The threshold is therefore being raised to Rs 5,000 crore as an ease-of-doing-business measure," said SEBI chairman Tuhin Kanta Pandey at a press conference.

In a consultation paper released on October 27, the regulator suggested revising the definition of Corporate High-Value Debt Listed Entities (HVDLEs), and exempting smaller issuers from stringent corporate governance and related party transaction (RPT) requirements. Currently, entities with listed non-convertible debt securities outstanding of Rs 1,000 crore or more are classified as HVDLEs and must comply with several corporate governance norms similar to listed equities. Sebi has now proposed to raise this threshold to Rs 5,000 crore, aligning the norm with the scale and risk of the issuer in a move to encourage more entities to tap the bond market without being deterred by compliance costs.

Sebi's consultation paper added that the number of HVDLEs will reduce from 137 to 48 entities (effectively reducing around 64 percent entities from the current threshold) leading to Ease of Doing Business (EODB).

The regulator in its consultation paper added that the changes are aimed at “enhancing ease of doing business” while ensuring adequate investor protection in the corporate bond market.

(This is a developing story)