[To be published in the Gazette of India, Extraordinary, Part-II, Section 3, Sub- ection (ii)]
Government of India
Ministry of Finance
Department of Revenue
(CENTRAL BOARD OF DIRECT TAXES)
Notification No. 59/ 2015
New Delhi, the 6th J ly, 2015.
SO.1827 (E): In exercise of the powers conferred by item (h) of sub-clause (iv)
(15) of section 10 of the Income-tax Act, 1961 (43 of 1961), the Central G
hereby authorises the entities mentioned in column (2) of the Table given below to issue,
tax-free, secured, redeemable, non-convertible bonds during the financial year 015-16,
aggregating to amounts mentioned in column (3) of the said table, subje
to the
conditions, namely :-
CONDITIONS
1. Eligibility - The following shall be eligible to subscribe to the bonds:-
(i)
Retail Individual Investors (RIIs);
(ii)
Qualified Institutional Buyers (QIBs);
(iii) corporates (including statutory corporations), trusts, partnersh
Limited Liability Partnerships, co-operative banks, regional rur
and other legal entities, subject to compliance with their respect
and
(iv)
High Networth Individuals (HNIs).
firms,
banks
e Acts;
2. Tenure of bonds - The tenure of the bonds shall be for ten or fifteen 0 twenty
years.
3. Permanent Account Number - It shall be mandatory for the subscr ers to
furnish their Permanent Account Number to the issuer of the bonds.
4. Rate of interest -
(i) There shall be a ceiling on the coupon rates based
Government security (G-sec) rate;
(ii) the reference G-sec rate shall be the average of the base yield of G I ec for
equivalent maturity reported by Fixed Income Money Market and De ivative
Association of India (FIMMDA) on a daily basis (working day) prevai . ng for
two weeks ending on the Friday immediately preceding the filing of t e final
prospectus with the Exchange or Registrar of Companies (ROC) in
pu blic issue and the Issue opening date in case of private placement;
(iii) the ceiling coupon rate for AAA rated issuers shall be the referenc
rate less fifty five basis points in case of RIIs and reference G-sec r
eighty basis points in case of other investor segments referred to at (ii)
(iv) of paragraph 1 above;
(iv) in case the rating of the issuer entity is AA+, the ceiling rate shall
basis points above the ceiling rate for AAA rated entities [as gi
n in
c1ause(iii)];
(v) in case the rating of the issuer entity is AA or AA-, the ceiling r e shall be
twenty basis points above the ceiling rate for AAA rated entities [
clause(iii) 1;
(vi) these ceiling rates shall apply for annual payment of interest
d in case
the schedule of interest payments is altered to semi-annual, t e interest
rates shall be reduced by fifteen basis points;
(vii) the higher rate of interest, applicable to RIIs, shall not be availa e in case
the bonds are transferred by RIIs to non retail investors.
5. Issue expense and brokerage-
(i) In the case of private placement, the total issue expense shall
t exceed
0.25 per cent of the issue size and in case of public issue it shall
t exceed
0.65 per cent of the issue size;
(ii) the issue expense would include all expenses relating to the
sue like
brokerage, advertisement, printing, registration etc.
6. Public issue -
(i) At least seventy per cent of the aggregate amount of bonds issue by each
entity shall be raised through public issue;
(ii) forty per cent of such public issue shall be earmarked for RIIs.
7. Private placement -
(i) While adopting the private placement route to issue the bonds, ea
shall adopt the book building approach as per regulation 11 of the S
and Exchange Board of India (Issue and Listing of Debt Securities) Re
2008, wherein bids shall be sought on the coupon rate subject to
specified by the entity and the allotment shall be made at the price bid;
entity
curities
lations,
ceiling
(ii) the bonds shall be paid for and issued at a premium with a fixed co pon, to
facilitate trading of the instrument under a single International S
Identification Number (ISIN) and the yield shall be computed based on t
quoted and allotment shall be done for best price (lowest yield) thereof;
(iii) the ceiling rate of the interest shall either be equal to or lower than
mentioned in paragraph 4 above;
(iv) while calling for bids, there shall be no limit on the number of ar
gers
who can bid for the issue.
8. Repayment of bonds -
(i) The issuer entity shall submit a financing plan to the Ministry of inance to
demonstrate its ability to repay the borrowed funds on the epayment
becoming due;
(ii) the financing plan referred in sub-paragraph (i) shall be submi ed to the
Infra-Finance Section, Infrastructure Division, Department of ~conomic
Affairs, Ministry of Finance, within three months of closure of he issue,
duly supported by a resolution of the respective entity's Board of I irectors,
9. Selection of merchant bankers -
(i)
Merchant bankers shall be selected through competitive biddin process
with transparent pre-qualification criteria and the final selectior shall be
based on financial bids;
(ii) the benefit under section 10 of the Income-tax Act, 1961(43 of IS )1) shall
be admissible only if the holder of such bonds registers his/ t r or its
name and the holding with the entity,
(iii) the issue of bonds shall be made in compliance with the pub c issue
requirements specified in the Companies Act, 2013 and Securi 'es and
Exchange Board of India (Issue and Listing of Debt Se turities),
Regulations, 2008, including inter-alia the filing of a prospectus lTith the
Registrar of Companies, as applicable,
TABLE
SI.
Entities
No.
Allocated
; Imount
of bonds
(~ in crore)
(1)
(2)
1
National Highways Authority of India (NHAI)
24000
2
Indian Railways Finance Corporation (IRFC)
6000
3
Housing and Urban Development Corporation 5000
(HUDCO)
4
Indian Renewable Energy Development Agency 2000
(IREDA)
5
Power Finance Corporation Limited (PFC)
1000
6
Rural Electrification Corporation Limited (REC)
1000
7
NTPC Limited
1000
Explanation: - For the purposes of this notification, -
(3)
To
(i)
Qualified Institutional Buyers shall have the same meaning as
signed to
them in the Securities and Exchange Board of India (Disclosure
Investor
Protection) Guidelines, 2000.
(ii)
Retail individual Investors means those individual investors, Hindu
ndivided
Family (through Karta ), and Non Resident Indians (NRIs), on repa iation as
well as non repatriation basis, applying for upto rupees ten lakh in each
issue and individual investors investing more than rupees ten lakh shall be
classified as High Net Worth Individuals.
(iii)
The bonds issued to NRIs shall be subject to the provisions of n
ification
number FEMA 4j2000-RB, dated the 3 rd May, 2000 and notificatio
FEMA 20j2000-RB dated the 3 rd May, 2000, issued under clause (
section (3) of sections 6 and 47 of the Foreign Exchange Manage
1999 (42 of 1999), as amended from time to time.
(iv)
The credit rating referred to in paragraph 4 of this notification shall
credit rating, as assigned by a credit rating agency which is approve by the
Securities and Exchange Board of India as well as the Reserve Bank f India
and where an entity has been rated differently by more than on
rating
agency, the lower of the two ratings shall be considered.
The Manager,
Government of India Press,
Mayapuri Press,
New Delhi.
(DEEPSH
Director to the Gove nment
