Source: Mint
Context:
Here’s a comprehensive, structured, and exam-oriented summary of SEBI’s latest consultation paper (October 2025) on High Value Debt Listed Entities (HVDLEs), with key highlights and statement-based MCQs — formatted for current affairs and financial governance coverage.
What are HVDLEs?
High Value Debt-Listed Entities (HVDLEs) are companies that have listed outstanding non-convertible debt securities (NCDs) exceeding a specified value and are therefore subject to enhanced corporate governance requirements under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
- Introduced: September 2021
- Regulation: 3(1)(ca), SEBI (LODR) Regulations, 2015
- Objective: Strengthen transparency and investor protection in India’s corporate bond market
Current Norms (Before Proposal)
- Threshold: ₹1,000 crore or more in outstanding listed NCDs
- Governance Norms: Mandatory from April 1, 2025
- Applies to: 137 entities (as of FY25)
- Comply-or-explain basis: Till March 31, 2025
These entities are required to follow corporate governance standards similar to equity-listed companies, including:
- Board and committee composition norms
- Quarterly and annual governance reports
- Secretarial compliance reports
- Appointment of independent directors
- Whistle-blower mechanisms
Proposed Changes (October 2025 Consultation Paper)
1. Higher Threshold for HVDLE Classification
- Proposal: Increase the threshold from ₹1,000 crore to ₹5,000 crore.
- Impact: Reduce HVDLEs from 137 to 48 entities, lowering the count by around 64%.
- Objective: Ease compliance for smaller issuers and frequent debt-raising NBFCs.
2. Alignment with Equity-Listed Entity Norms
SEBI proposed to harmonize governance norms of HVDLEs with those applicable to equity-listed companies, ensuring consistency across regulations.
Key Governance and Disclosure Proposals
| Area | Proposed Change |
|---|---|
| Definition of Material Subsidiary | Replace the term “income” with “turnover” for uniformity with equity-listed rules. |
| Age Limit for Directors | Require special shareholder approval if a director is aged above 75 years. |
| Nominee Directors | Exempt directors appointed by courts, tribunals, or regulators from needing shareholder approval. |
| Board Recommendations | Boards must provide a rationale for all recommendations made to shareholders. |
| Vacancies in Key Committees | Allow 3 months to fill vacancies in Audit, NRC, Stakeholders, and Risk Committees. |
| Independent Director Vacancy | Remove the 3-month mandatory filling requirement if minimum board composition is maintained. |
| Intra-Group Transfers | Exempt shareholder approval for intra-group asset transfers between subsidiaries. |
| CIRP-Related Companies | Give 3 months post-resolution to fill Key Managerial Positions (KMPs). |
| Compliance Reports | Replace fixed 21-day filing deadline with a flexible, SEBI-prescribed timeline. |
| Related Party Transactions (RPTs) | Exclude RPT disclosures from periodic reports (already covered in half-yearly filings). |
| Secretarial Auditors | Introduce clear provisions on appointment, reappointment, and removal of secretarial auditors. |
| Debenture Trustees’ Role | Retain the requirement for NOCs from debenture trustees and debenture holders for RPTs. |
Expected Benefits
- Reduced compliance cost and ease of doing business
- Encouragement of private placements and debt market participation
- Improved regulatory alignment across corporate governance frameworks
- Rationalization of reporting timelines for better efficiency
