The Securities and Exchange Board of India (SEBI) has proposed a major relaxation in compliance norms for companies with large outstanding debts by raising the threshold for identifying High Value Debt Listed Entities (HVDLEs) from the current ₹1,000 crore to ₹5,000 crore.
According to SEBI’s consultation paper released on Monday, this move would reduce the number of HVDLEs from 137 to just 48, effectively cutting down nearly 64% of companies currently falling under the category. The objective, SEBI said, is to reduce compliance costs and enhance the ease of doing business.
📘 Background
The corporate governance framework for HVDLEs was first introduced in September 2021—initially on a “comply or explain” basis until March 31, 2025, and made mandatory from April 2025. The rules apply to entities with listed non-convertible debt securities worth ₹1,000 crore or more.
After the rollout, several market participants sought a higher threshold, arguing that the existing limit placed an undue compliance burden, especially on NBFCs and frequent debt issuers who primarily raise funds through private placements. These firms pointed out that compliance requirements—such as appointing additional independent directors, committee experts, and higher legal, secretarial, and audit costs—were financially demanding for debt-listed entities.
⚖️ Key Proposals in SEBI’s Consultation Paper
- Threshold Increase: HVDLE identification limit to be raised from ₹1,000 crore to ₹5,000 crore.
- Governance Alignment: Corporate governance norms for HVDLEs to be aligned with those for equity-listed companies.
- Terminology Update: Replace “income” with “turnover” in defining material subsidiaries for consistency.
- Age Norm for Directors: Require special shareholder approval for directors aged over 75 years.
- Vacancy Timeline Flexibility: Allow three months to fill vacancies in key board committees such as the audit, nomination and remuneration, stakeholders’ relationship, and risk management committees.
- Exemptions Proposed:
- No shareholder approval required for nominee directors appointed by regulators, courts, or tribunals.
- Intra-group asset transfers between subsidiaries to be exempt from shareholder consent.
- Companies emerging from CIRP (Corporate Insolvency Resolution Process) to get three months to appoint key managerial personnel.
- Reporting Flexibility: Replace the fixed 21-day compliance reporting deadline with a flexible timeline determined by SEBI.
- Simplified RPT Disclosure: Remove the need for HVDLEs to include related party transaction (RPT) details in periodic compliance reports, as they are already covered in half-yearly disclosures.
- Secretarial Audit Norms: Introduce new provisions for appointment, reappointment, removal, and disqualification of secretarial auditors.
- Related Party Transactions: Retain the requirement for no-objection certificates (NOCs) from debenture trustees and debenture holders.
📅 Public Feedback
SEBI has invited public comments on the proposed changes until November 17, 2025.
The proposed revision, if implemented, is expected to significantly reduce regulatory costs, streamline governance obligations, and provide relief to large debt-listed companies operating under heavy compliance frameworks.
