India's market regulator, the Securities and Exchange Board of India (SEBI), has taken a progressive step toward reducing compliance burden and encouraging paperless communication. In a draft circular released for public consultation, SEBI has proposed a limited relaxation under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR), specifically regarding Regulation 58(1)(b). This regulation currently requires issuers of listed non-convertible debt securities to send hard copies of financial statements and related documents to holders who haven’t provided email addresses.

Proposal for Regulatory Relief

The new draft suggests extending the exemption that was earlier granted in 2023, relieving companies from sending physical copies to investors. This previous relaxation, issued via SEBI circular dated October 6, 2023, was valid until September 30, 2024. The latest proposal seeks to continue the exemption starting October 1, 2024, and running through a two-phase relaxation period, ultimately extending until September 30, 2025.

The extended relaxation would be applicable to entities that have listed non-convertible debt securities and have not received email addresses from their investors.

Alignment with MCA’s Circular

This move is aligned with the Ministry of Corporate Affairs (MCA), which had earlier issued General Circular No. 09/2024 on September 19, 2024, granting similar exemptions under the Companies Act, 2013. The MCA's decision to extend the exemption period until September 30, 2025, has prompted SEBI to ensure consistency in compliance frameworks across regulatory bodies.

Conditions for Availing the Exemption

SEBI’s exemption is not unconditional. It is proposed that entities availing the exemption must comply with an alternative disclosure mechanism. Specifically, they are required to:

• Publish an advertisement under Regulation 52(8) of the LODR.

• The advertisement must include a web link to a statement that contains salient features of the financial documents.

• These documents are mandated under Section 136 of the Companies Act, 2013 and must be made available for digital access by investors.

This initiative ensures that investors still have access to crucial information, albeit through digital means instead of print.

Rationale Behind the Move

The rationale is twofold:

1. Reduce paper usage and promote eco-friendly, sustainable practices.

2. Ease the burden of compliance for issuers at a time when digital communication channels are increasingly prevalent.

By transitioning toward electronic dissemination of financial documents, SEBI aims to modernize investor communication, making it faster and more efficient, especially for large-scale debt issuances.

Public Consultation and Feedback Timeline

SEBI has invited public comments on the proposed circular. The consultation window is open until May 12, 2025. Feedback can be submitted via SEBI’s online public comment portal, which offers a web-based form with detailed instructions.

SEBI has requested stakeholders to provide feedback on each of the specific proposals outlined in the consultation document. This includes opinions on:

• The timeline of the exemption.

• The requirement of advertisement-based disclosures.

• The format and accessibility of digital financial documents.

Importance of Regulation 58(1)(b)

Under Regulation 58(1)(b) of the LODR, issuers of non-convertible securities are required to send a hard copy of the financial statements and related documents to investors who haven’t registered their email addresses. This is primarily to ensure that every investor, regardless of digital literacy, gets access to important financial disclosures.

However, with the widespread digital adoption in recent years, the physical dispatch of documents has become less relevant, leading to logistical inefficiencies and increased costs. The exemption attempts to strike a balance between investor protection and practical feasibility.

Previous Relaxation: A Brief Recap

SEBI had earlier issued a temporary exemption in October 2023, effective until September 30, 2024, allowing issuers to skip sending hard copies. That move was seen as a COVID-19 pandemic-era relief, addressing challenges of remote operations and restricted postal logistics.

Now, with digital-first norms becoming standard practice, this latest draft circular seeks to institutionalize the exemption while providing advertisement-based alternatives to maintain transparency.

What Issuers Should Prepare For

Entities intending to benefit from the relaxation must take certain preparatory actions:

• Ensure compliance with Regulation 52(8) through timely advertisements.

• Maintain updated websites with links to key financial documents.

• Make provisions for investor queries and accessibility tools for digital content.

• Monitor the feedback process for any adjustments to the proposed circular.

Impact on the Debt Market

This move is likely to benefit:

• Large corporate issuers who frequently raise funds through non-convertible debentures (NCDs).

• Retail and institutional investors, who can now access key documents digitally instead of relying on delayed postal deliveries.

• Market intermediaries, who deal with bulk document handling, printing, and mailing operations.

The cost savings, coupled with enhanced investor communication via web-based disclosures, will likely increase operational efficiency across the ecosystem.

Call to Action for Stakeholders

SEBI encourages:

• Issuers, investment bankers, registrars, and investors to review the proposals carefully.

• All parties to submit their comments by May 12, 2025, via the specified online channels.

• Stakeholders to provide constructive feedback on feasibility, investor inclusivity, and compliance preparedness.

Conclusion

SEBI’s draft proposal is a forward-looking step toward digitizing the regulatory framework around non-convertible debt securities. By extending the relaxation on physical document dispatch, and requiring web-based disclosures instead, the regulator is aligning with global best practices while maintaining investor access to critical information.

As digital communication becomes the norm in Indian markets, such steps are vital for future-ready governance and investor relations. The consultation process is key, and stakeholders must engage proactively to shape the final regulation.

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