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Introduction
The Securities and Exchange Board of
India (SEBI) has released a comprehensive Master Circular covering the
issue and listing obligations for non-convertible securities (NCS), securitised
debt instruments (SDIs), security receipts (SRs), municipal debt securities
(MDS) and commercial paper (CP). The latest version, issued in May 2024 (and
further updated in July 2025), consolidates multiple prior circulars into a
single document. This move seeks to enhance regulatory clarity, reduce
fragmentation and improve compliance for issuers, intermediaries and stock
exchanges.
Background
/ Context
Non-convertible securities (NCS)
refer to debt instruments or preference shares that cannot be converted into
equity. Over the past decade, India’s corporate bond market and debt-listing
activity have grown significantly, and the regulatory framework has evolved
accordingly.
Regulatory
evolution
- Earlier, the issue and listing of debt securities were
governed by the SEBI (Issue and Listing of Debt Securities) Regulations,
2008 (ILDS 2008) and the SEBI (Issue and Listing of Nonconvertible
Redeemable Preference Shares) Regulations, 2013 (NCRPS 2013).
- On 9 August 2021, the SEBI (Issue and Listing of Non‑Convertible
Securities) Regulations, 2021 (“NCS Regulations 2021”) were notified,
merging and replacing earlier frameworks.
- Since then, SEBI has issued multiple circulars
addressing operational, disclosure, format-related and system issues for
issuers of NCS, SDIs, SRs, MDS and CP.
Why
the Master Circular?
Given the accumulation of circulars
over years, many stakeholders—issuers, stock exchanges, depositories, trustees,
credit rating agencies, merchant bankers—faced challenges in tracking and
complying with scattered guidance. The May 2024 Master Circular therefore
serves as a “one-stop” consolidation of all applicable SEBI circulars (up to 21
May 2024) relating to issue and listing of those instruments. A further update
in July 2025 incorporated circulars issued up to June 30 2025.
Significance
- The Master Circular improves regulatory transparency
and simplifies compliance.
- It reduces the risk of non-compliance due to oversight
of legacy circulars while consolidating formats, disclosures and system
requirements under one document.
- For auditors, chartered accountants, and tax
professionals, it provides a clear framework and check-list for
debt-issuers of NCS and related securities.
- Investors in corporate debt and bond markets benefit
from improved disclosure, standardisation and governance practices.
In short, the Master Circular marks
a milestone in India’s debt-securities regulatory architecture, aligning
regulation with the growing importance of non-equity instruments in the capital
markets.
Detailed
Explanation of the News
What
the Master Circular covers
The new document labelled as the
“Master Circular for issue and listing of Non-convertible Securities,
Securitised Debt Instruments, Security Receipts, Municipal Debt Securities and
Commercial Paper” was issued by SEBI via Circular No.
SEBI/HO/DDHS/PoD1/P/CIR/2024/54 dated 22 May 2024. It consolidates all the
circulars/regulatory guidance issued to date in respect of such instruments.
Key features:
- All previous circulars listed in Annexure 1 of the
Master Circular stand superseded insofar as they relate to issue
and listing of those instruments.
- The Master Circular comes into immediate force from its
date of issuance.
- Crucially, any actions, applications pending, or
rights/obligations accruing under the earlier circulars are treated as
having been taken or incurred under the corresponding provisions of the
Master Circular.
Key
regulatory bases and powers
The circular is issued in exercise
of powers under:
- Section 11(1) of the Securities and Exchange Board of
India Act, 1992 (SEBI Act) – regulation of securities markets and investor
protection.
- Regulation 55 of the NCS Regulations, 2021; Regulation
29 of the LODR Regulations, 2015; Regulation 48 of SDI Regulations, 2008
(as applicable) and other enabling provisions.
Structure
and content highlights
The Master Circular is organised
into multiple chapters each specifying formats, obligations, procedural rules,
disclosure templates, and transitional provisions. Some of the salient chapters
and features:
- Chapter I:
Formats for filing financial information by issuers of NCS, SDIs etc.
- Chapter II:
Formats for limited review / auditor’s reporting for issuers of NCS.
- Chapter IV:
Formats for statements indicating utilisation of issue proceeds,
deviation/variation in use of proceeds (for listed NCS).
- Chapter V:
Disclosures by listed entities of defaults on payment of
interest/repayment of principal amount (loans from banks/financial
institutions/unlisted debt securities).
- Chapter VII:
Formats specifying disclosure of corporate governance by “high value debt
listed entities” (HVDLEs). This reflects the growing regulatory focus on
governance for large debt-issuers.
- Chapter X:
Formats relating to statements/reports to be submitted to Stock Exchanges
(by entities that have listed SDIs).
- Procedural framework for dealing with unclaimed
amounts lying with entities having listed NCS & manner of claims
by investors.
Transitional
and compliance directions
- Recognised Stock Exchanges, Depositories, other
SEBI-registered intermediaries, issuers and other stakeholders are
required to:
- Disseminate the provisions of the circular on their
website.
- Comply with the conditions laid down in the Circular.
- Put in place necessary systems and infrastructure for
implementation of this Circular.
- Make consequential changes (if any) to bye-laws, rules
and bidding portals.
- Monitor compliance by issuer companies.
Example
of specific regulatory change
One noteworthy item is the focus on
Chapter VII for HVDLEs. With an amendment to the LODR Regulations (March 2025)
introducing governance norms for HVDLEs (via Regulation 62M and 62Q), the draft
revision of the Master Circular sought to align Chapter VII accordingly.
Impact
Analysis
Who
benefits and who faces adjustment?
Beneficiaries:
- Issuers of non-convertible securities (NCS),
securitised debt instruments (SDIs), commercial paper (CP) and municipal
debt securities (MDS): They now have a single consolidated reference
document instead of multiple circulars scattered across dates. This
reduces regulatory friction.
- Stock exchanges, depositories, trustees and
intermediaries: Standardised formats and disclosures simplify operational
compliance and monitoring.
- Auditors, Chartered Accountants and tax professionals:
The Master Circular provides clearly organised templates and frameworks
for review, audit and reporting.
- Investors in debt securities: Enhanced disclosure and
governance requirements, especially for high-value debt issuers,
strengthen transparency and investor protection.
Adjustments and challenges:
- Issuers with legacy obligations must verify compliance
not only with former circulars but also ensure that applications/pending
filings are appropriately transitioned under the new Master Circular.
- Smaller issuers who may have relied on older
format-templates will need to update their systems, disclosure controls and
ensure alignment with the new formats in the Master Circular.
- Auditors and advisors must update their check-lists,
audit programmes and compliance documentation to reflect the Master
Circular rather than older circulars.
- Stock exchanges and intermediaries may need to revise
bye-laws, portals, filing systems and internal monitoring
frameworks—entailing implementation cost and time.
Practical
implications
For businesses / issuers:
- When planning a new issuance of NCS or listing
SDIs/CPs, the issuer must refer to the Master Circular to ensure proper
issue structure, disclosures, default-reporting clauses, governance
formats and investor claim frameworks.
- Use-of-proceeds statements, variation/deviation
disclosures and audit formats are explicitly specified in the circular —
failure to adopt the new templates may trigger regulatory scrutiny.
- For existing issuers of listed NCS, compliance
calendars must be reviewed: e.g., default-reporting, unclaimed amounts
processes, HVDLE governance disclosures (where applicable) must now align
with the Master Circular.
For taxpayers / investors:
- Investors in debt instruments have greater clarity on
issuer obligations — especially around default/disclosure matters and
unclaimed amounts.
- Tax-treatment may not change directly because the
circular is regulatory (not a tax statute) but improved governance may
indirectly support stronger creditworthiness and market-pricing of debt
instruments.
- For tax practitioners advising clients who invest in
such instruments, the circular provides assurance that regulatory
frameworks are standardised and transparent.
For auditors / Chartered
Accountants:
- The Master Circular offers standardised formats
(financial information, limited review reports, default disclosures) —
auditors must incorporate these into their audit programmes for issuers of
NCS, SDIs etc.
- When verifying compliance of issuers, auditors must
confirm that systems, internal controls, disclosure frameworks and by-law
changes (to stock exchanges/intermediaries) are in place per the circular’s
requirements.
- For review engagements, documentation must reflect
alignment with the circular—ensuring compliance with the correct templates
and revealing any deviation or non-compliance to the audit
committee/board.
Common
Misunderstandings
- Assuming old circulars still fully apply – In reality, all circulars listed in the Annexure of
the Master Circular are superseded for the relevant instruments; reliance
on outdated formats may lead to non-compliance.
- Believing the circular changes tax treatment – This is a regulatory compliance document; it does not
directly alter tax law, although better governance may impact credit/risk
profiles indirectly.
- Thinking the circular applies only to NCDs – It covers a broader set: NCS (non-convertible
securities), SDIs, SRs, MDS and CP.
- Assuming only large issuers are affected – While HVDLE governance focus is higher, even smaller
issuers must comply with the disclosure formats and procedural
requirements.
- Misreading transitional provisions – Some may think applications under older circulars
need to be re-filed; instead the Master Circular deems them valid under
the corresponding new provisions.
Expert
Commentary
Having practised as a finance and
tax journalist for over 20 years, the issuance of this Master Circular is a
significant regulatory development for India’s debt-markets. Consolidation of
protocols does not only streamline issuer compliance, it signals SEBI’s intent
to reinforce governance and transparency in the non-equity segment of the
securities market. From a practical perspective, the templates and formats
standardised in the circular will reduce ambiguity for issuers and
intermediaries. The key, however, will be enforcement and monitoring—especially
around defaults and unclaimed amounts, which have been areas of recurring
investor concern.
Conclusion
/ Action Steps
In summary, the SEBI Master Circular
consolidates all relevant regulatory guidance on issuance and listing of
non-convertible securities, securitised debt instruments, security receipts,
municipal debt securities and commercial paper into a unified framework. For
issuers, stock exchanges and intermediaries, this means revisiting compliance
systems, disclosure calendars, bye-laws and operational protocols in light of
the circular’s provisions.
Action steps for stakeholders:
- Issuers
should map their existing listing and disclosure obligations against the
Master Circular, migrate legacy applications, update templates and ensure
systems are aligned.
- Auditors and CAs
should update their audit programmes, documentation check-lists and
reporting templates consistent with the circular.
- Investors and advisors should monitor whether issuers are adopting the
standard disclosures (default–reporting, use of proceeds deviation,
unclaimed amount framework) as specified.
- Stock exchanges, depositories and intermediaries must review bye-law changes, portal upgrades,
stakeholder dissemination and compliance monitoring mechanisms.
Looking ahead, the Master Circular
paves the way for further refinement of governance norms—particularly for
high-value debt issuers—and may reduce fragmentation in India’s bond markets.
As the corporate debt market expands and investor participation increases,
consistent regulation and documentation will be critical to market confidence
and stability.
FAQs
Q1: What instruments does the Master
Circular cover?
It covers non-convertible securities (NCS), securitised debt instruments
(SDIs), security receipts (SRs), municipal debt securities (MDS) and commercial
paper (CP).
Q2: Does this circular replace all
earlier circulars?
Yes—for the subject-instruments, the Master Circular supersedes previous
circulars listed in Annexure 1 of the document. However, any actions taken or
applications made under the earlier circulars remain valid (they are “deemed”
under the new circular).
Q3: Does this change tax-treatment
of securities?
No. The circular is regulatory (SEBI compliance) in nature. It does not
directly amend tax laws. That said, improved disclosure and governance may
influence investor perceptions and valuations.
Q4: What must issuers do upon its
issuance?
Issuers need to update their internal systems and controls, adopt the required
formats for disclosures, ensure adherence to default-reporting and unclaimed
amounts frameworks, revise any old templates and ensure dissemination of the
circular and awareness among stakeholders.
Q5: How does the circular treat
legacy applications or pending approvals?
Any application made or action taken under the previous circulars, which are
now superseded, is deemed to have been made or taken under the aligned
provisions of the Master Circular.
References
/ Source Links
- SEBI Master Circular – Issue and Listing of
Non-convertible Securities, Securitised Debt Instruments, Security
Receipts, Municipal Debt Securities and Commercial Paper, dated 22 May
2024.
- SEBI Master Circular – Listing Obligations and
Disclosure Requirements for Non-convertible Securities, Securitised Debt
Instruments and/or Commercial Paper, dated 11 July 2025.
- TaxGuru commentary on SEBI Master Circular for
Non-convertible Securities.
- LegalitySimplified commentary on draft revision for
High Value Debt Listed Entities.