SEBI Proposes Raising High Value Debt Listed Entity Identification Threshold to ₹5,000 Cr: Read Consultation Paper

The Securities and Exchange Board of India (SEBI) has released a consultation paper proposing to raise the identification threshold for High Value Debt Listed Entities (HVDLEs) from ₹1,000 crore to ₹5,000 crore among other changes.

The consultation paper, which has been issued by the Department of Debt and Hybrid Securities has floated the proposal with the aim to ease the compliance burden on debt-listed companies and to better align corporate governance (CG) norms under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR).

The objective of the paper is to review and simplify the corporate governance framework applicable to HVDLEs while promoting ease of doing business. The consultation has been undertaken following industry feedback that the current ₹1,000 crore threshold was too low and disproportionately burdensome for non-banking financial companies (NBFCs) and housing finance companies (HFCs), which frequently issue debt in smaller tranches to manage liquidity.

Under the proposed change, the threshold for identifying an HVDLE would be increased to ₹5,000 crore in outstanding listed non-convertible debt securities. This move would reduce the number of entities falling under HVDLE classification from 137 to 48, effectively cutting the regulated group by about 64 percent.

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SEBI noted that this would significantly ease compliance costs, particularly those related to additional board structures, secretarial audits and governance reporting, while retaining sufficient investor safeguards through debenture trustees.

The consultation paper also proposes to substitute the term “income” with “turnover” for defining material subsidiary thresholds and to replace the word “year” with “financial year” in various provisions for ensuring consistency with amendments made for equity-listed entities.

The proposals include removing redundant provisions that mandate immediate replacement of independent directors upon resignation, providing stakeholders with greater flexibility in composing boards and their committees. The proposal further pushes for shareholder approval for the continuation of non-executive directors aged above 75 years to be obtained before they reach such age.

Further, SEBI proposes relaxations for companies emerging from insolvency resolution under the Insolvency and Bankruptcy Code, 2016 by granting three months’ time to fill key managerial personnel (KMP) vacancies, provided that at least one full-time KMP remains in place.

Other changes include replacing the 21-day periodic compliance period with reporting timelines with SEBI’s discretion, introducing detailed provisions for appointment and reappointment of secretarial auditors and harmonising related party transaction (RPT) provisions by cross-referencing Regulation 23 of the LODR.

The consultation paper comprehensively covers amendments affecting material subsidiary definitions, corporate governance requirements, board and committee obligations, and RPT approvals.

SEBI is seeking public comments on the proposed threshold increase, the alignment of terminologies, and the various governance relaxations outlined in the document.

Public comments can be submitted online through SEBI’s consultation portal by November 17, 2025.

In case of any technical issues while submitting comments, stakeholders may contact

Rohit Dubey, General Manager (rohitd@sebi.gov.in)

Appin Gothwal, Assistant General Manager (apping@sebi.gov.in)

Rinki Goswami (rinkig@sebi.gov.in)

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