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Summary of SEBI Circular: SEBI/HO/DDHS/DDHS-PoD-1/P/CIR/2024/128
This circular, issued by SEBI on September 24, 2024, focuses on aligning the application process for public issues of debt securities, non-convertible redeemable preference shares, municipal debt securities, and securitized debt instruments with that of equity shares and convertibles. The circular mandates the use of UPI (Unified Payments Interface) by individual investors for applications up to ₹5 lakh through intermediaries. It will be applicable from November 01, 2024.
Key Points:
Alignment with Equity Shares Process:
- SEBI aims to streamline the application process for public issues of debt securities, municipal debt securities, and securitized debt instruments with the public issue process for equity shares and convertibles.
UPI Mandatory for Applications via Intermediaries:
- Individual investors applying through intermediaries such as syndicate members, registered stock brokers, registrar to an issue and transfer agents, and depository participants for amounts up to ₹5 lakh must use UPI for blocking funds.
- Investors are required to provide their UPI ID linked to a bank account in the bid-cum-application form.
Alternative Modes of Application:
- While UPI is mandatory for certain intermediaries, individual investors still have the option to use other modes, such as applications through Self-Certified Syndicate Banks (SCSBs) or the Stock Exchange Platform.
Effective Date:
- These provisions will apply to public issues opening on or after November 01, 2024, giving intermediaries and investors time to adapt to the new process.
Regulatory Framework:
- The circular is issued under SEBI’s regulatory framework, specifically:
- SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021
- SEBI (Issue and Listing of Municipal Debt Securities) Regulations, 2015
- SEBI (Issue and Listing of Securitised Debt Instruments and Security Receipts) Regulations, 2008
- The circular emphasizes the protection of investors’ interests and the development and regulation of securities markets.
SEBI’s circular reinforces its commitment to simplifying and securing the public issue process for individual investors. By mandating UPI for intermediaries, SEBI aligns the application process with modern digital payment methods while providing flexibility for those who prefer other modes. This update is crucial for anyone preparing for compliance exams, as it reflects SEBI's ongoing efforts to protect investors and regulate the securities market effectively.
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Quick Recap MCQs for NISM Exam Preparation:
From which date will SEBI's new UPI mandate for public issues of debt securities come into effect?
- A) September 30, 2024
- B) October 15, 2024
- C) November 01, 2024
- D) December 31, 2024Answer: C) November 01, 2024
What is the maximum application amount allowed using UPI for public issues of debt securities?
- A) ₹1 lakh
- B) ₹5 lakh
- C) ₹10 lakh
- D) ₹50,000Answer: B) ₹5 lakh
Who are the intermediaries mentioned in SEBI's circular that will require UPI usage for applications in public issues?
- A) Bank Branches
- B) Self-Certified Syndicate Banks (SCSBs)
- C) Stock Exchange Platforms
- D) Registered stock brokers, syndicate members, depository participantsAnswer: D) Registered stock brokers, syndicate members, depository participants
Which type of securities does this SEBI circular NOT directly apply to?
- A) Equity Shares
- B) Municipal Debt Securities
- C) Non-convertible Redeemable Preference Shares
- D) Securitised Debt InstrumentsAnswer: A) Equity Shares
Under which section of the SEBI Act, 1992, is this circular issued?
- A) Section 55(1)
- B) Section 29
- C) Section 11(1)
- D) Section 48Answer: C) Section 11(1)
