SEBI has issued an operational framework for transactions in defaulted debt securities (where redemption amount has not been paid on the maturity / redemption date) under provisions of SEBI (Issue and Listing of Debt Securities) Regulations, 2008.

The framework proposes to lift the restrictions on the existing practice of  Stock Exchanges to suspend the trading/reporting of trades on debt securities before the redemption date. It also lifts the restrictions that Depositories impose on off-market transfers on the redemption date that restricts transfers on and after the redemption date.  It also provides for the obligations of Issuers, Debenture Trustee(s), Depositories and Stock Exchange(s) while permitting such transactions .

The operational framework will take effect from 1 July 2020. Issuers, Debenture Trustee(s), Stock Exchanges and Depositories have been advised to comply with the obligations under the framework, including inter-depository and exchange coordination wherever required, and put in place necessary systems and infrastructure for implementation of the circular by 29 June 2020.

To refer to the SEBI circular dated 23 June 2020, click here.