The Reserve Bank of India (RBI), through a circular dated 27 June and a clarification on 2 July, has imposed certain restrictions on the issue of debt securities by non-banking financial companies (NBFCs). The following changes have been introduced:
Definition of private placement: The term “private placement” has been defined to mean a non-public offering of non-convertible debentures by NBFCs to such number of select subscribers and in such subscription amounts as may be specified by the RBI from time to time. Private placement has been restricted to a maximum of 49 investors, which are to be identified upfront by the NBFC.
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The legislative and regulatory update is compiled by Nishith Desai Associates, a Mumbai-based law firm. The authors can be contacted at nishith@nishithdesai.com. Readers should not act on the basis of this information without seeking professional legal advice.