Sebi Sets New Guidelines for Debenture Trustees' Non-Regulated Activities

Sebi outlined new guidelines for Debenture Trustees (DTs) conducting non-Sebi regulated activities, requiring separate business entities and compliance with relevant financial regulators. DTs must handle complaints independently and use shared IT infrastructure cautiously. The circular also modifies the Recovery Expense Fund (REF) framework for swift enforcement actions.

The Securities and Exchange Board of India (Sebi) has issued comprehensive guidelines for Debenture Trustees (DTs) engaging in non-Sebi regulated activities. According to the new directives, DTs must form separate business entities for such functions, ensuring a clear distinction from their Sebi-regulated tasks.

DTs may also undertake activities overseen by other financial-sector regulators like RBI and IRDAI, provided they adhere to those regulators' standards. In handling complaints, DTs are required to maintain distinct records for non-Sebi functions and ensure personnel assignments respect the guidelines, with exceptions regulated by board-approved procedures.

Additionally, the guidelines necessitate DTs to disclose all non-regulated activities on their websites, asserting that Sebi's protection frameworks do not cover these tasks. The recovery expense fund (REF) framework has also been amended to hasten enforcement actions in cases of issuer defaults, allowing DTs to utilize funds without prior debenture-holder approvals for specified activities.

(With inputs from agencies.)