SEBI proposes higher thresholds, ease in compliance for high-value debt listed firms

In a recently issued consultation paper, the Securities and Exchange Board of India (SEBI) has proposed a series of relaxations to ease the compliance burden for companies that have only listed their debt securities.

The securities market regulator has suggested revising the definition of corporate high-value debt listed entities (HVDLEs) and exempting smaller issuers from stringent corporate governance and related party transaction (RPT) requirements.

Currently, companies that have listed non-convertible debt securities worth Rs 1,000 crore or more are categorized as high value debt listed entities (HVDLEs). These entities must adhere to several corporate governance rules similar to those required for listed stocks.

SEBI has now proposed to significantly raise this threshold to Rs 5,000 crore. This adjustment aims to align the compliance requirement with the issuer's actual scale and risk. The move is intended to encourage more entities to enter the bond market by reducing the deterrence caused by high compliance costs.

According to SEBI, with these new proposed regulations, the number of HVDLEs will reduce from 137 to 48 entities (effectively reducing around 64% entities from the current threshold) leading to Ease of Doing Business (EODB).

The other key proposal includes replacing the term ?income? with ?turnover? in defining material subsidiaries to ensure consistency in financial terminology.

With respect to director appointments and vacancies, SEBI clarified that shareholder approval, via a special resolution, will be mandatory before a non-executive director exceeds 75 years of age.

The time spent obtaining statutory or regulatory clearances will be excluded when calculating the deadline for securing shareholder approval for a director's appointment or reappointment.

The nominee directors appointed by financial regulators, courts, or tribunals will be exempt from this approval process.

Significantly, SEBI suggests omitting the current rule that mandates filling a vacancy caused by the resignation or removal of an independent director within three months.

Under the revised framework, if a high value debt listed entity (HVDLE) still meets the minimum requirement for independent directors after a vacancy occurs, it will not be required to appoint a replacement.

This change is intended to give debt-listed entities more flexibility and align their obligations with the proportional compliance standards already granted to equity-listed firms.

SEBI's remaining key proposals focus on reducing duplication and streamlining compliance for debt-listed entities.

For related party transactions (RPTs), SEBI plans to align rules with those for equity-listed companies while retaining safeguards for debenture holders.

Specifically, the regulator proposes removing the requirement to disclose material RPTs in periodic compliance reports, as this information is already available in the half-yearly RPT reports, thus eliminating redundant reporting.

Other changes include offering more flexibility in compliance report timelines and establishing new norms for the appointment and removal of secretarial auditors.

According to SEBI, these reforms are designed to enhance the ease of doing business in the corporate bond market while ensuring sufficient protection for investors.

Stakeholder feedback on the proposals has been sought by 17 November 2025.

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