Consultation paper on Delisting of Non-Convertible Debt Securities

SEBI on May 12, 2023 has issued a Consultation paper on Delisting of Non-Convertible Debt Securities. The objective of this consultation paper is to seek comments/views/ suggestions from the public on the proposal for a mechanism for delisting of non-convertible debt securities.

The paper suggests that a listed entity may choose to voluntarily delist non-convertible debt securities for various reasons. Some of the reasons could be:

  1. Some of the entities in their representations have submitted that some non-convertible debt securities may have very few holders and majorly with the intention of holding it to maturity. Thus, continuous listing may not provide them with any additional benefits. Thus, they may choose to delist such non-convertible debt securities.
  2. The entity may intend to re-structure non-convertible debt securities due to financial distress or otherwise, and delist such re-structured non-convertible debt securities.
  3. Delisting may be contemplated consequent to a merger where one entity acquires and/or merges with another entity. If the acquiring entity is also a listed entity, the non-convertible debt securities of the combined entity continue to be traded. If the acquiring entity is not listed, the combined/ merged entity may not desire listing of the non-convertible debt securities.