SEBI Makes E-Book Mechanism Mandatory

• 22 May 2025
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The Securities and Exchange Board of India (SEBI) has mandated the use of the electronic book mechanism for all private placements of debt securities amounting to Rs. 20 crore or more. Also, the regulator has broadened the platform’s applicability to include Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs). This decision, influenced by the suggestions of a working group and public input, is intended to improve the functioning of the Electronic Book Provider (EBP) platform.

According to a circular issued by SEBI, the revised framework now requires the EBP platform to be used for private placements of debt instruments, non-convertible redeemable preference shares (NCRPS) and municipal bonds when the issue size is Rs. 20 crore or above. This includes standalone, shelf and follow-on issues made during the same financial year. Previously, only private placements of debt securities of Rs. 50 crore or more were subject to this requirement.

SEBI has now also permitted InvITs and REITs to use the EBP platform, which previously lacked any specific regulatory guidance for these instruments.

Issuers can also voluntarily use the EBP platform to privately place securitised debt instruments, security receipts, commercial papers (CPs) and certificates of deposit (CDs). Furthermore, issuers formed as REITs, SM REITs and InvITs can access the platform to privately place units of their respective structures.

The regulator also laid down requirements for issuers to submit the placement memorandum and a term sheet, outlining the primary terms and conditions, at least two working days before the offering opens. For issuers using the platform for the first time, the documents must be filed at least three working days in advance.

These submissions must clearly mention the base issue size and any green shoe option that is limited to five times the base amount. Additionally, issuers are required to disclose any prior green shoe allocations.

Based on credit ratings, issuers may reserve a portion of the issue for anchor investors. The allocation caps are 30% for instruments rated AAA to AA-, 40% for A+/A- and 50% for lower-rated instruments. These anchor investors must confirm their participation electronically a day prior to the opening of the issue. Any amounts left unconfirmed will be added back to the base issue size.

SEBI, for promotion of fairness and transparency, has specified that if multiple bids are received at the same cut-off price, the allocation must be done on a proportionate basis.

The EBP platform must also publish detailed bidding and issuance data on its website by the end of the bidding day or by 1 PM on the following day, depending on the timing of issue closure.

Revised deadlines have also been introduced. Issuers must now secure in-principle approvals from stock exchanges by either T-2 or T-3 days for EBP-based issues and before the issue opens for those not using the EBP platform.

While most of these changes are effective immediately, certain provisions such as those relating to anchor investors, disclosures and reporting, will be enforced within three to six months from the date of the circular.

Source: Economic Times