{"id":60934,"date":"2022-11-04T15:00:53","date_gmt":"2022-11-04T09:30:53","guid":{"rendered":"https:\/\/enterslice.com\/learning\/?p=60934"},"modified":"2022-11-04T15:04:31","modified_gmt":"2022-11-04T09:34:31","slug":"reduction-in-denomination-of-face-value-sebi","status":"publish","type":"post","link":"https:\/\/enterslice.com\/learning\/reduction-in-denomination-of-face-value-sebi\/","title":{"rendered":"Reduction in Denomination of Face Value: SEBI"},"content":{"rendered":"

The SEBI in pursuance of powers granted under Section 11(1) of SEBI Act 1992 and Regulation 55 (1) of the SEBI (Issue & Listing of Non-Convertible Securities) has issued a circular on the “Reduction in the denomination for Debt Securities and Non-convertible Redeemable Preference shares<\/em><\/strong>” dated 28th<\/sup> October 2022<\/em><\/strong>. The circular on reduction in denomination issued by SEBI is in the interest of investors for the promotion, development and regulation of securities in the market<\/a>. The SEBI, through this circular, bring changes in Chapter V of Circular no. SEBI\/HO\/DDHS\/P\/CIR\/2021\/613 dated 10th August 2021, which is discussed below in this article.<\/p>\n\n\n\n

What was the previous limit on the face value of debt securities?<\/strong><\/h2>\n\n\n\n

The SEBI, through a circular “SEBI\/HO\/DDHS\/P\/CIR\/2021\/613” dated 10th<\/sup> August 2021, has issued an operational circular for the issue & listing of Non-convertible Securities. It is stated by the circular that the face value of each of the debt security or non-convertible redeemable preference shares shall be Rs 10 lakh<\/strong>, and the lot for that trading shall be equal to the face value.<\/p>\n\n\n\n

What are the changes brought up by the Current circular?<\/strong><\/h2>\n\n\n\n

The recommendations received from various market participants, including issuers has prompted the SEBI to issue a circular on reduction in denomination of the face value. It is contended by the participants, especially the non-institutional investors that the high ticket size of the securities is a deterrent for them as it restricts their ability to access the market for corporate bonds.<\/p>\n\n\n\n

Henceforth, it is recommended that by reducing the face value and trade lot, more investors will participate, which will, in turn, improve or enhance the liquidity in the corporate bond market.<\/p>\n\n\n\n

Therefore, keeping in view of the above recommendations, the SEBI has brought up the following changes, which will inter alia amend the Chapter V (Denomination of issuance and Trading of Non- Convertible Securities) of the operational circular.<\/p>\n\n\n\n