in

SECP Tightens Regulations for Debt Securities Trustees

The Securities and Exchange Commission of Pakistan (SECP) has tightened regulations for the debt securities trustees (DSTs) for the protection of investors and promoting the debt market in Pakistan by providing a comprehensive regulatory framework for licensing and regulation of DSTs.

The SECP has issued S.R.O.1384(I)/2020 to notify the amended Debt Securities Trustees Regulations, 2017.

When contacted, the SECP officials explained that the revised DST framework is the right step towards increasing the number of debt market products and their trading on the stock market. The SECP plans to streamline various procedures that will help promote the debt market in the country. In this regard, the functions and duties of the DSTs have been increased under the revised Debt Securities Trustees Regulations, 2017.

Under the revised regulations, the “debt securities trustee” means a person licensed by the Commission and appointed as Debt securities trustee by an Issuer through execution of the Trust deed. However, the “debt security” included any instrument creating or acknowledging indebtedness which is issued or proposed to be issued by a company including in particular, debentures stock, loan stock, bonds, notes, commercial paper, term finance certificates, Sukuk, or any other conventional or Islamic debt security of a company, whether constituting a charge on the assets of the issuing company or not.

The “debt security” also included loan stock, bonds, and other instruments creating or acknowledging indebtedness by or on behalf of a government, central bank, a local authority or a public authority and issued through the capital market.

Under the revised regulations, the DSTs should maintain a high standard of integrity and fairness in performing their functions and discharging all their obligations under the Act and these Regulations in a fair, efficient, transparent and ethical manner.

The debt securities trustees would ensure that NOC is obtained by the Issuer from the Commission before the creation of trust relating to debt securities and the said trust is registered with relevant provisional authorities and ensure that issuer submits the following information to the Commission in relation to obtaining NOC for creation/registration of trust: Author of the Trust; the name of trustee; the purpose of the trust; issue size; trust assets; main features of the Issue; the beneficiary of the trust and any other information required by the Commission.

They would enforce security, in the interest of the debt securities holders according to the terms of the Trust Deed and initiate a legal proceeding, in case an event of default occurs, in terms of the relevant Trust Deed and the Trust Act and efficiently take steps as per Trust Deed in the event the security becomes enforceable. The trustee will regularly monitor compliance of the issuer with all the covenants of the Trust Deed.

The debt securities trustees would report to the debt security holders and the securities exchange, in case of listed debt securities, on a semi-annual basis, the status of compliance with the covenants of the Trust Deed. He/she would monitor the status of the redemption reserve, if any, established by the issuer for the redemption of debt securities and in case of listed debt securities furnish the same to the securities exchange, on a semiannual basis and regularly monitor payment of profits to the debt security holders and redemption of the debt security and report the same to the Commission and the securities exchange on a semi-annual basis, highlighting default, if any.

They shall take all reasonable steps to ensure that no conflict of interest arises while undertaking any transaction and performing its duties. In this context, it shall before entering into an agreement with the issuer, disclose to the issuer all possible conflicts of interest including that of its sponsors and directors which could impair its ability to render a fair, objective, and unbiased service; immediately inform the issuer and the debt security holders, in case any conflict of interest arises and not gain any direct or indirect advantage from the situation and shall act in the best interest of the debt security holders.

The debt securities trustee would provide the issuer and debt securities holders with adequate and appropriate information about its trusteeship business, including contact details, services available to issuers, and the identity and status of employees and other persons acting on its behalf with whom the issuer or the debt security holders may have to interact, SECP’s revised regulations concluded.

Source from :

Leave a Reply

Your email address will not be published. Required fields are marked *

GIPHY App Key not set. Please check settings

    4 things Dr. Fauci says you shouldn’t do during the coronavirus pandemic

    FBR Set to Begin Refund Processing For Tax Year 2020