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JC - Legal Updates - SEBI’s adopts blockchain for monitoring charged assets!!!

Legal Updates

06 Apr 2022

SEBI’s adopts blockchain for monitoring charged assets!!!

Every issuer, issuing listed non-convertible securities will now be required to procure a 12-digit unique alphanumeric identity code (“Unique ID”) for the assets that are being offered as security (i.e. the assets on which the charge is created) from the depository while making an application for obtaining the international securities identification number (“ISIN”).

Salient features of adoption of Distributed Ledger Technology for monitoring security:

1)       An alert will be sent to the issuer and the debenture trustee for their action, when a duplicate or a near duplicate asset is entered into the system for obtaining the Unique ID.

2)       The debenture trustee shall on a yearly basis reconcile the list of assets of the issuer to identify any duplicates and the depositories on a continuous basis shall ensure that only 1 Unique ID is allocated to each asset.

3)       An alert will be sent to the issuer and all the stakeholders when the security cover shall deplete below the required limits.

These requirements shall become applicable to the issues of listed non-convertible securities opening on or after 01st April 2022. In case such requirement is not complied with, the issuers shall have to provide an explanation to the depository regarding the non-compliance with the same. However, such dispensation is available until 01st July 2022 only and subsequently ISIN shall not be allotted in case the issuer fails to comply with this requirement. The existing issuers of the listed non-convertible securities shall be required to comply with the same by or before 30th September 2022.

The above changes have been introduced by Securities and Exchange Board of India (“SEBI”) by way of a circular titled operational guidelines for ‘Security and Covenant’ monitoring using Distributed Ledger Technology (DLT) dated 29th March 2022 in furtherance to the circular issued by SEBI titled ‘Security and Covenant’ monitoring using Distributed Ledger Technology dated 13th August 2021, for tracking the assets offered as security for the listed non-convertible securities.


For any further information, please contact Ms. Apurva Kanvinde (apurva.kanvinde@jclex.com) or Mr. Sumitava Basu (sumitava.basu@jclex.com).