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Loan defaults: Companies get a breather from Sebi

LiveMint logoLiveMint 30-09-2017 Jayshree P. Upadhyay

Mumbai: Just a day before listed companies would need to disclose their loan defaults, market regulator has withdrawn its circular.

Late Friday night, Securities and Exchange Board of India (Sebi), issued a skeletal press release stating that the circular mandating disclosure on loan defaults is being deferred ‘until further notice’.

On 4 August the market regulator had issued a circular stating that listed companies would need to disclose loan defaults within a day, starting 1 October.

It is unclear, why the market regulator chose to withdraw the directive.

Currently, Sebi norms mandate disclosures on delay or default in payment of interest or principal on debt securities, including listed non-convertible debentures, listed non-convertible redeemable preference shares and foreign currency convertible bonds.

Similar disclosures are not stipulated with regard to loans from banks and financial institutions.

In order to bridge this gap in the availability of information to investors, Sebi had asked listed entities to inform exchanges in case it defaulted on payment of interest, instalment obligations on debt securities and loans from banks and financial institutions and external commercial borrowings (ECBs).

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