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CS Executive · Capital Market and Securities Laws · Issue and Listing of Non-Convertible Securities

Kaveri Power Ltd has issued green debt securities and reports to its investors about how the money was used. Which disclosure practice is consistent with the SEBI framework for green debt securities?

The issuer must disclose the environmental objectives and use of proceeds in the offer document and keep reporting on how the funds are utilised. Silence after closure or limiting disclosure to coupon and maturity would not satisfy the transparency purpose of the green debt framework.

  1. ADisclosing the use of proceeds and the environmental objective of the funded projects in the offer document and continuing reporting on utilisationCorrect
  2. BNo disclosure about use of proceeds is required once the issue closes
  3. CDisclosure only to the stock exchange's promoter group and not to investors
  4. DDisclosure confined to the coupon rate and maturity date of the security

Explanation

The framework expects the issuer to state the environmental objectives and use of proceeds in the offer document and to report on utilisation of funds on a continuing basis. Staying silent after closure, or limiting disclosure to coupon and maturity, defeats the purpose of the label. Option B is wrong since the label requires ongoing transparency.

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