SEBI Clarifies the Scope of Regulation 62A of the LODR Regulations for Business Transfer Transactions Involving Unlisted Debt Securities
On 20 July 2026, the Securities and Exchange Board of India (“SEBI“) issued an Interpretive Letter under the SEBI (Informal Guidance) Scheme, 2025, clarifying the application of Regulation 62A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR Regulations“) to a business transfer involving outstanding unlisted non-convertible debt securities (“NCDs“).
The clarification is significant because it addresses an issue that was not expressly contemplated when Regulation 62A was introduced, whether the transfer of existing unlisted debentures to a debt-listed entity, without any fresh issuance, attracts the mandatory listing requirement under the regulation.
Background: Why was Regulation 62A introduced?
Prior to the introduction of Regulation 62A, it was common for issuers that already had listed NCDs to continue raising debt through both listed and unlisted debenture issuances. While equity issuers were already required to list all subsequent issuances of specified securities, no similar requirement existed for debt issuers. As a result, many entities simultaneously maintained listed and unlisted debt instruments with different terms, disclosure standards and investor protections.
SEBI considered this dual structure problematic for several reasons. It observed that parallel listed and unlisted issuances created information asymmetry, fragmented liquidity, impaired price discovery, increased the possibility of mis-selling, and made it difficult for investors to distinguish between listed and unlisted ISINs issued by the same issuer. Investors in unlisted debt also lacked access to several regulatory safeguards available to holders of listed debt, including continuous disclosures, stock exchange oversight and SEBI’s grievance redressal mechanisms.
To address these concerns, SEBI introduced Regulation 62A, effective 1 January 2024, requiring debt-listed entities to list all subsequent issuances of non-convertible debt securities. The regulation seeks to ensure that issuers operating in the listed debt market do not continue raising debt through parallel unlisted issuances, thereby promoting transparency, uniform disclosures and efficient price discovery
What does Regulation 62A provide?
Regulation 62A applies to entities with outstanding listed NCDs and provides, broadly, that:
- a listed entity whose listed NCDs were outstanding as on 31 December 2023 must list all subsequent issuances of NCDs made on or after 1 January 2024;
- where an issuer proposes to list NCDs after 1 January 2024, it must also list all outstanding unlisted NCDs issued on or after that date within the prescribed timeline; and
- limited exemptions are available for specified categories of issuances, including certain multilateral institution issuances, 54EC bonds and securities issued pursuant to court or regulatory directions.
The Transaction
The applicant, Ananya Finance for Inclusive Growth Private Limited (“Ananya“), is a debt-listed NBFC. Its wholly owned subsidiary, Prayas Financial Services Private Limited (“Prayas“), had issued unlisted NCDs on 4 July 2024, i.e., after the cut-off date prescribed under Regulation 62A.
Pursuant to a Business Transfer Agreement (“BTA”) Prayas transferred its business, including its assets and liabilities, to Ananya. As part of the transaction:
- Ananya assumed all obligations under the outstanding unlisted NCDs;
- the debentures themselves continued to remain outstanding;
- no fresh debentures were issued by Ananya;
- no replacement debenture certificates were issued;
- no new ISINs were created; and
- the existing ISINs continued unchanged.
Thus, from a legal and commercial perspective, the transaction merely transferred the liabilities under the existing debentures from Prayas to Ananya without creating any new debt instrument.
Queries Raised Before SEBI
Against this backdrop, Ananya sought an interpretive letter from SEBI on two issues:
- Whether the transfer under the BTA mandatorily requires listing under Regulation 62A, or if it should be treated merely as a transfer rather than a “new issuance”
- If listing is compulsory, what the process and procedural requirements would be for effecting the listing on the stock exchange
SEBI’s Interpretation
SEBI clarified that Regulation 62A cannot be interpreted solely on the basis of whether a fresh issuance has technically taken place. Instead, the regulation must be construed in light of its regulatory objective, ensuring that debt instruments issued after 1 January 2024 are brought within the listed debt framework where the obligations under those instruments vest with a debt-listed entity.
SEBI made four important observations:
First, Regulation 62A requires every listed debt entity to list all non-convertible debt securities proposed to be issued on or after 1 January 2024.
Second, the purpose of the provision is to ensure that debt instruments issued after that date become subject to the applicable disclosure obligations and investor protection framework governing listed debt securities.
Third, the applicability of Regulation 62A cannot be determined merely by examining the legal structure of a transaction. In a corporate restructuring involving a transfer of business, the liabilities under outstanding unlisted NCDs effectively become the obligations of the transferee listed entity.
Finally, where a debt-listed entity assumes and continues the obligations in respect of outstanding unlisted NCDs issued on or after 1 January 2024, the requirements of Regulation 62A must be complied with holistically, notwithstanding that no fresh securities, ISINs or debenture certificates have been issued.
Clarification on the Listing Process
On the second query, SEBI clarified that the operational aspects of listing—including listing formalities, ISIN-related requirements, depository records and other procedural compliances—are governed by the framework administered by the recognised stock exchanges and depositories. Accordingly, the applicant would be required to comply with all applicable operational requirements prescribed by those authorities.
Key Takeaways
- Substance prevails over form. Whether Regulation 62A applies depends on the economic and legal effect of the transaction rather than whether new securities are technically issued.
- Business transfers and restructurings are not outside the scope of Regulation 62A. Where a debt-listed entity assumes liability under outstanding unlisted NCDs issued on or after 1 January 2024, the listing requirements may still be triggered.
- The absence of a fresh allotment, new ISIN or replacement debenture certificate does not by itself avoid Regulation 62A.
- Debt-listed entities should evaluate Regulation 62A implications at the structuring stage of mergers, business transfers, slumps sales, hive-offs and similar internal reorganisations involving debt instruments.
PJ Law View
The interpretive letter is significant because it clarifies an issue that had remained unanswered since the introduction of Regulation 62A. Rather than adopting a narrow reading centred on whether a fresh issuance has occurred, SEBI has interpreted the provision in light of its underlying objective, bringing debt obligations of debt-listed entities within a consistent disclosure and investor protection framework.
Although the guidance has been issued under the SEBI (Informal Guidance) Scheme, 2025 and is confined to the facts presented by the applicant, it provides valuable insight into SEBI’s regulatory approach. Going forward, debt-listed companies undertaking mergers, business transfers or other restructuring transactions involving outstanding unlisted debt securities should carefully assess the implications of Regulation 62A as part of transaction planning, rather than treating the issue as a post-closing compliance exercise.
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