SEBI Mandates Extra Disclosures for Transition Bond Issuers in Offer Document

Circular No. SEBI/HO/DDHS/DDHS_Div1/P/CIR/2023/66; dated: 04.05.2023

SEBI has introduced additional disclosure requirements for the issuance and listing of transition bonds to ensure transparency and informed decision-making amongst investors. The move aimed to ensure that funds raised through transition bonds are not being misallocated.

‘Transition bonds’ are a type of ‘green debt security’. These bonds are generally used for raising funds for transitioning to a more sustainable form of operations in line with India’s Intended Nationally Determined Contributions.

Now, an issuer wishing to issue transition bonds is required to make additional disclosures in the offer document for public issues or private placements of such bonds.

Further, to differentiate transition bonds from other categories of green debt security, the issuer of transition bonds must use a denotation ‘GB-T’. Such denotation shall be disclosed in the offer documents on the cover page and in the type of instrument field in the term sheet.

The transition plan must include the details of interim targets, along with an indicative timeline for achieving the targets. The interim targets must also reflect the indicative figure regarding how much emissions the issuer is envisaging to reduce.

Additionally, the transition plan should have information about the brief of the project implementation strategy, details regarding the usage of technology for the project implementation and a mechanism to oversee the utilisation of the funds raised through transition bonds and the implementation of the transition plan.

In case of disclosure to Stock Exchanges, in case of a revision in the transition plan, an issuer of transition bonds, during the year is required to disclose the revised transition plan along with an explanation for any revision to the already disclosed plan, if applicable.

Also, an issuer is required to disclose the transition plan along with a brief on the progress of the implementation of the transition plan in the annual report. The provisions of the circular shall be effective immediately.

Click Here To Read The Full Circular