XB Bank Ltd. formed a SPV and issued ₹1,00,000 secured debt instruments redeemable after 10 years. However, the SPV failed to redeem some secured debt instruments. 2 investors holding ₹5,000 and ₹7,000 secured debt instr

Regulation 34 of the SEBI (Issue and Listing of Securitised Debt Instruments and Security Receipts) Regulations, 2008 provides the rights of investors in securities issued by special purpose distinct entity as follows: The trust deed or other instrument comprising the terms of issue of the securitised debt instruments issued by a special purpose distinct entity shall provide that investors holding such securitised debt instruments have such beneficial interest in the underlying debt or receivables as may have been conferred by the scheme. In the event of failure of the special purpose distinct entity to redeem any securitised debt instruments offered through an offer document or listed, within the time and in accordance with the conditions stated in the offer document or other terms of issue, the investors holding not less than ten per cent in nominal value of such securitised debt instruments shall be entitled to call a meeting of all such investors. In such meeting, the investors may move a motion to: call upon the trustee and the special purpose distinct entity to wind up the scheme and distribute the realisations; remove the trustee; appoint a new trustee in place of the one removed under clause (b): However, any such decision shall be taken by means of a special resolution of the investors of the scheme and sections 109 and 114 of the Companies Act, 2013 shall mutatis mutandis apply to such special resolution. However, the new trustee appointed is registered with SEBI or is exempted from such registration. Application to the given case: In the given case, both the investors together are holding ₹5,000 + ₹7,000 = ₹12,000. Since the total issue is ₹1,00,000, their combined holding is (₹12,000 / ₹1,00,000) * 100 = 12%. This is more than 10% of the nominal value of securitised debt instruments. Hence, both the investors shall be entitled to call a meeting of all such investors. If the holdings are ₹3,000 and ₹7,000, their combined holding is ₹3,000 + ₹7,000 = ₹10,000. This represents (₹10,000 / ₹1,00,000) * 100 = 10% of the nominal value. There will not be any difference in the answer as the percentage of holding is equal to 10% and not less than 10%, which still entitles them to call a meeting of all such investors.