BORROWING FROM PROMOTER DIRECTOR OF LISTED COMPANY

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A LISTED COMPANY HAS ISSUED NON CONVERTIBLE DEBENTURES AND LISTED THE SAME IN THE STOCK EXCHANGES WHERE THE COMPANY SHARES ARE LISTED.

THE PROMOTERS OF THE COMPANY INTEND TO BUY THE NCD FROM THE  MARKETS.

ARE THEY PERMITTED TO DO SO AND IF YES, WHAT WILL BE THE GOVERNING PROVISIONS UNDER THE COMPANIES ACT, 2013

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Borrowings 6 months 1 Answer 1681 views 0

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    Promoters can buy NCDs issued by their Company from Stock Exchanges subject to compliance with the provisions of SEBI (Prohibition of Insider Trading) Regulation 2015. A basic check they can do is to confirm that they don’t have any price sensitive information that is not publicly available, and the trade is done when the trading window is open. Further all the required disclosures under this regulation are also made.

    The relevant provision under the Companies Act, 2013 is Section 71 read with Companies (Share Capital and Debenture) Rules, 2014. At the time of debenture issue, Rule 13 (2) (d) (vii) requires the promoter to disclose their intent to subscribe to the issue. For purchase of debentures from the open market, we have not come across any provision relating to it.

    Disclaimer:The responses/ answers posted on this forum by CimplyFive does not intend to act as a professional advice for any specific company or event. It is intended to be an opinion for consideration of other professionals in furthering the debate. CimplyFive is not responsible for any loss or damage arising for anyone using or following the response/ answers given in this forum.

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