SEBI Eases the ISIN Limit for Listing Grandfathered Securities

To encourage the listing of unlisted debt securities, the Securities and Exchange Board of India (SEBI) has granted issuers a reprieve regarding International Securities Identification Numbers (ISINs) that are outstanding as of December 31, 2023. A circular issued on December 13, 2024, clarifies that unlisted ISINs outstanding as of December 31, 2023, converted to listed status, will no longer be subject to the maximum ISIN limit that applies to maturities within a fiscal year.

In October 2022, SEBI had modified its Operational Circular for issue and listing of Non -Convertible Securities (NCS) to allow a maximum of 14 ISINs to mature in a fiscal year for private placements of debt instruments. Furthermore, under the Income Tax Act of 1961, authorized issuers could issue capital gains tax debt securities using an additional six ISINs. In May 2024, SEBI issued a Master Circular addressing the issuance and listing of Non-Convertible Securities, Securitised Debt Instruments, Security Receipts, Municipal Debt Securities, and Commercial Paper (NCS Master Circular) which further mandated the limit with respect to the debt securities issued on or after April 01, 2023.

A listed entity whose nonconvertible debt securities are listed is required by Regulation 62A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, also known as the LODR Regulations, to list all nonconvertible debt securities that are proposed to be issued on or after January 1, 2024, on the stock exchange(s). In compliance with this regulation, Clause IVA has now been introduced in the NCS Master Circular to exclude unlisted ISINs converted to listed ISINs, pursuant to the regulation, from the maximum limit of ISINs to mature in a financial year.

This change is expected to enhance market visibility and provide investors with more investment choices by encouraging issuers to list unlisted debt securities. Additionally, it will increase liquidity in the corporate bond market, benefiting both issuers and investors. This reform will also simplify compliance, as issuers will no longer need to manage ISIN limits when converting unlisted securities to listed ones.