XYZ Ltd., a mid-sized corporation, frequently raises funds through corporate bond issuances. While these bonds provide a stable investment avenue, investors often face liquidity concerns, especially in times of market vo

SEBI has introduced Liquidity Window facility for investors in debt securities through Stock which allows investors holding listed debt securities to sell them back to the issuer using a put option on specific dates, ensuring liquidity. It is felt that establishing a framework of providing a Liquidity Window facility by the issuers through use of put options exercisable on pre-specified dates or intervals will provide uniform norms for such issuer(s) to consider Liquidity Window facility in the manner specified. The provisions of this circular has become applicable on and from November 01, 2024. The circular inter-alia covers the following features and the conditions governing the Liquidity Window facility: Issuer Discretion and Prospective Applicability: The Liquidity Window can only be provided at the discretion of the Issuer. Further, this option is only available for prospective issuances either by way of public issue or private placement. Eligible securities: All listed debt securities governed by the SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021 are eligible for the Liquidity Window Facility. Prior approval of the Board of Directors of the issuer is required to provide the Liquidity Window. Stakeholders Relationship Committee (SRC): For entities which have listed their specified securities, the implementation and outcome of the Liquidity Window shall be monitored by the SRC. However, for entities which only have listed debt securities (for whom constitution of SRC is not mandatory), the monitoring of the implementation and outcome of the Liquidity Window shall be under the aegis of the board of directors, or such board-level committee as determined by the board of directors. Eligible Investors: The issuers have the option to specify the classes of investors for whom the Liquidity Window shall be provided. Minimum Holding Period: The Liquidity Window can only be offered to investors after the expiry of one year from the date of issuance of the debt securities. Period of Liquidity Window: The issuers offering the Liquidity Window shall keep it open for a minimum of three working days. The Liquidity Window facility can be provided on a monthly or quarterly basis, but the schedule of such facility shall be provided upfront in the offer documents. Reporting and Disclosure Requirements: After closure of a Liquidity Window, the issuer is required to submit a report to the stock exchanges on which such debt securities are listed. However, the form and manner of such disclosures are yet to be specified by the stock exchanges in consultation with SEBI.