SEBI Raises HVDLE Threshold to Rs. 5,000 Cr

1. Introduction

The Securities and Exchange Board of India (SEBI) has notified the SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2026 vide Notification No. SEBI/NRO-GN/2026/295 dated 20 January 2026. The amendments introduce targeted changes to the LODR framework with a specific focus on High Value Debt Listed Entities (HVDLEs) and further strengthen the regulatory push towards complete dematerialisation of securities. The Amendment Regulations come into force from the date of their publication in the Official Gazette.

2. Revision of Threshold for High Value Debt Listed Entities (HVDLEs)

One of the most significant changes introduced by the Amendment Regulations is the upward revision of the threshold for identifying HVDLEs. Earlier, entities with listed non-convertible debt securities of Rs. 1,000 crores or more were classified as HVDLEs.

Under the amended Regulation 15(1A) of the LODR Regulations, an entity shall now be classified as an HVDLE only where the outstanding value of listed non-convertible debt securities is Rs. 5,000 crores or more. This change follows SEBI’s consultation proposal dated 27 October 2025 and is aimed at rationalising compliance requirements by limiting enhanced governance obligations to truly large debt-listed entities. Consequential amendments have been made across the LODR framework to align references with the revised threshold.

3. Mandatory Dematerialisation for Credit of Securities

SEBI has also strengthened investor service norms by amending Regulation 39 of the LODR Regulations. As per the amendment, the credit of securities pursuant to investor service requests—such as subdivision, split, consolidation, exchange, or issuance of duplicate securities—shall be effected only in dematerialised form.

Further, such credit must be completed within thirty days from the receipt of the request, along with all requisite documents. This move seeks to eliminate risks associated with physical securities and ensure faster, safer, and more transparent processing of investor requests.

3. Restriction on Transfer of Securities in Physical Form

To further reinforce the dematerialisation framework, Regulation 40 has been amended to prohibit the processing of transfer requests unless the securities are held in dematerialised form. Additionally, transmission and transposition of securities are also required to be effected only in demat form.

However, limited exceptions have been provided for transfers executed prior to 1 April 2019, recognising legacy transactions that were lawfully completed before the mandatory dematerialisation regime came into effect.

4. Conclusion

The SEBI (LODR) Amendment Regulations, 2026 mark a significant regulatory refinement by easing compliance for mid-sized debt-listed entities while simultaneously strengthening investor protection and operational efficiency through compulsory dematerialisation. The revised HVDLE threshold of Rs. 5,000 crores narrows the scope of enhanced obligations, while the demat-only regime for credit and transfer of securities reinforces market integrity, transparency, and security. Collectively, these amendments reflect SEBI’s continued focus on proportionate regulation and a fully digital securities ecosystem.

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