Market regulator Securities and Exchange Board of India said on Tuesday the companies coming out with debt instruments to be converted into listed equities, will have to provide price sensitive information to stock exchanges.
"Issue of debt securities that are convertible, either partially, fully or optionally, to listed or unlisted equities shall be guided by disclosure norms applicable to equity or other instruments offered on conversion in terms of Sebi (Disclosure and Investor Protection) Guidelines, 2000," the market regulator said in a circular.
Commenting on the Sebi's direction, Taurus Mutual Fund managing director R K Gupta said the companies coming out with these instruments will have to meet disclosure norms as per the listing agreement with Sebi like coming out with quarterly results and other price-sensitive information.
The Sebi comes in the wake of number of queries it has been receiving on the application of disclosure norms for issue and listing of convertible debt securities.
"This is a move to develop the debt market in the country. This will make the debt market more vibrant and energetic," SMC Capitals equity head Jagannadham Thunuguntla said.
Debt securities include corporate bonds, government bonds, certificate of deposits, municipal bonds and other instruments.
