Debt With Duty: The Rise Of Governance Standard For HVDLEs
- IJLLR Journal
- Jul 26
- 1 min read
Himanshu, School of Law, Bennett University
ABSTRACT
High-value debt-listed entities have emerged as a distinct regulatory division under SEBI’s framework to govern and enhance corporate governance and investor protection. The recent amendments by the SEBI have made multiple corporate governance regulations mandatory for HVDLE therefore aligning debt market norms and regulations with that of equity market. This article examines and analyses the evolution of the HVDLE regime and the key amendments such as the sunset clause, increasing threshold, appointment of independent directors, and constitution of various committees, made by SEBI and assesses its implication on the debt issuer and debt investors.
This article also explores how these amendments aim to strengthen the debt market in India by improving its corporate governance norms, providing flexibility to board directors by providing them with certain rights, and mitigating the risk of insolvency. It also highlights the transitional changes that arise with the amendment which include compliance costs of the entity, the assumption by the regulatory body SEBI that debt entities function in the same way as equity entities and much more.
In conclusion, this article argues that while the regulatory changes brought in by SEBI may increase the burden for short-term entities in short term, these reforms are necessary to build an investor-friendly and sustainable debt market. A thoughtful implementation, consistent exchange of dialogues between issuers, and investors and periodic review of this regulation will be key to ensuring that handle reforms achieve their intended objective and not restrict legitimate debt-raising activities.
