Published On: April 11th 2026
Authored By: Sai Sloka Duvvuri
Nirma University
I. Introduction
The Indian capital markets have long focused on the governance of equity-listed companies and their accountability to shareholders. The Securities and Exchange Board of India, through its Listing Obligations and Disclosure Requirements Regulations (LODR), issues detailed requirements on board composition, disclosures, and compliance for equity issuers. The corporate bond market in India is slowly expanding as companies have started relying on debt instruments for capital raising, which in turn increases the need for investor protection.[1] Large debt issuances expose institutional investors to credit and governance risks that require regulatory oversight.[2]
The governance requirements for entities that listed only debt securities have remained narrow, resulting in regulatory gaps in areas such as disclosure of material events and related party transactions. The SEBI (LODR) Amendment Regulations, 2025[3] introduced a governance framework for High Value Debt Listed Entities (HVDLEs), defined on the basis of a specified threshold of outstanding listed non-convertible debt.[4] This amendment imposes governance standards, which were once associated only with equity listings, on major debt issuers and increases transparency and accountability toward debt market participants.[5] This article aims to analyse this new development in the context of its implications upon HVDLEs in the Indian corporate landscape.
II. Background
The LODR Regulations set out the disclosure and governance framework for listed entities in India. They consolidate listing conditions across stock exchanges and establish a uniform compliance regime, laying down requirements on continuous disclosures, periodic reporting, and governance standards.[6] The regulatory scheme is directed toward maintaining transparency, protecting investors, and preserving market integrity in relation to listed securities.
The corporate governance provisions under the LODR framework were originally structured for equity-listed entities.[7] Requirements relating to board composition, appointment of independent directors, audit committees, related party transactions, and internal control mechanisms were framed primarily with shareholder protection as the central concern. These obligations are contained in Chapter IV of the Regulations and apply to entities with listed equity shares. Entities that listed only debt securities were subject to disclosure requirements but were not brought within the same governance structure applicable to equity issuers.
High value debt listed entities were subsequently brought under a limited governance regime based on threshold criteria.[8] Entities with listed non-convertible debt of at least ₹500 crore were made subject to certain governance provisions on a comply-or-explain basis. Under this model, issuers were required either to follow specified governance standards or to disclose reasons for non-compliance. While this approach allowed regulatory flexibility, it also resulted in uneven governance practices among large debt issuers. The resulting inconsistency in oversight and standards is addressed through the 2025 amendment.
III. Understanding the Major Amendments under the SEBI (LODR) Amendment Regulations, 2025
The recent amendments to the SEBI LODR Regulations introduced a revised threshold and a new classification framework for debt-listed entities. Under these regulations, a High Value Debt Listed Entity (HVDLE) is defined as an entity with listed non-convertible debt securities having an outstanding value of ₹1,000 crore or more. These revised limits restrict compliance obligations to issuers with significant debt exposure and market presence.
Applicability is determined with reference to the outstanding value of listed non-convertible debt securities as on 31 March 2025. Any entity meeting or exceeding the ₹1,000 crore threshold on that date is classified as an HVDLE for regulatory purposes. Classification does not depend solely on fresh issuances but on the aggregate outstanding listed debt. Once covered under this framework, the entity becomes subject to the Regulations even where its equity shares are not listed.
The amendment also introduces a new Chapter VA in the LODR Regulations, which sets out corporate governance norms specifically for HVDLEs. This chapter separates governance requirements for major debt issuers from the equity-oriented governance provisions contained elsewhere in the Regulations.[9] It deals with board composition, committee structures, related party transaction controls, and disclosure obligations. An entity that newly qualifies as an HVDLE is allowed six months from the date on which it crosses the threshold to comply with the applicable governance requirements.[10] This period is intended to enable reconstitution of the board and committees and to facilitate the adjustment of internal compliance systems in a structured manner.
IV. Impact on Governance Requirements
The recent regulations introduce a corporate governance framework specifically for High Value Debt Listed Entities[11] through the insertion of Chapter VA into the SEBI (LODR) Regulations, 2025.[12] The new scheme places large debt issuers within a compliance structure comparable to that applicable to equity-listed companies under Chapter IV of the LODR Regulations.[13]
The board composition mandates under Chapter VA, read with Regulations 15 to 27, aim for a balance between executive and non-executive directors. Every entity is required to appoint at least one woman director. Where the chairperson is an executive director, not less than one half of the board must consist of independent directors; in other cases, at least one third of the board must be independent. These requirements are intended to ensure effective supervision and balanced decision-making at the board level, thereby protecting the rights of shareholders, creditors, and investors.
The amendments also require HVDLEs to constitute board committees pursuant to Regulations 18, 19, and 20. Each HVDLE is required to have an Audit Committee, a Nomination and Remuneration Committee, and a Stakeholders Relationship Committee.
Audit Committee (Regulation 18): The Audit Committee must contain a majority of independent directors. It is entrusted with oversight of financial reporting, internal controls, and related party transactions.
Nomination and Remuneration Committee (Regulation 19): This committee deals with nomination and remuneration matters, including the selection and evaluation of directors.
Stakeholders Relationship Committee (Regulation 20): This committee is constituted to address investor grievances in relation to listed securities.
Board process requirements under Regulations 17 and 25 govern meeting frequency and quorum. Boards are required to meet at specified intervals during the financial year, and quorum provisions ensure the presence of non-executive and independent directors for valid proceedings.
Disclosure and reporting obligations are reinforced through Regulation 27 on corporate governance reporting. HVDLEs are to submit periodic compliance reports to stock exchanges. The board is also expected to oversee risk management and material financial risks affecting repayment capacity. These requirements align the governance practices of major debt issuers with those applicable to equity-listed entities.
V. Impact on Debt Markets
SEBI’s 2025 notification strengthening governance norms for high-value debt issuers reflects the need to understand the changing structure of corporate finance in India.[14] Corporate bonds and listed debt securities function as an alternative to traditional bank lending, especially for large issuers seeking long-term funds.[15] This development has wider implications because a broader class of institutional investors and debt holders are exposed to governance and disclosure failures. A stronger governance framework supports more reliable credit assessment and promotes disciplined conduct by issuers.
Debt investors depend on timely disclosures and financial reporting since they do not participate directly in management decisions. Weak governance standards can delay recognition of financial stress and conceal related party exposure. Past credit events in the bond market illustrate that delayed disclosures and inadequate board oversight can harm debt holders, even where warning signals were available to equity investors.
The IL&FS group default crisis in 2018 is a prominent example. Infrastructure Leasing and Financial Services and its group entities defaulted on multiple debt obligations despite holding high credit ratings before the crisis. The group had raised funds through bonds and commercial paper, and subsequent scrutiny raised concerns regarding board supervision, group-level leverage, and risk reporting practices.[16] Debt mutual funds and bond holders faced immediate losses and liquidity pressure while equity exposure remained limited because several group entities were unlisted.
A similar pattern emerged in 2019 with the default of Dewan Housing Finance Corporation Limited on its bond and repayment obligations following signs of liquidity stress and asset quality deterioration. Later investigations pointed to governance failures, possible diversion of funds, and related party exposures.[17] Bond holders and fixed income funds recorded substantial write-downs. These episodes demonstrate that delayed transparency and weak internal controls adversely affect debt investors.[18]
The revised framework brings Indian regulation closer to governance practices followed in major bond markets, where large issuers are subject to requirements on board independence, audit oversight, and committee supervision. Stricter governance obligations can reduce information gaps between debt issuers and investors.
VI. Conclusion
The new governance framework for high value debt listed entities marks a meaningful shift in regulatory approach, though several policy questions remain unresolved. While the revised threshold brings large issuers within its scope, there is continuing debate on whether the limit should be set higher so that the regime applies only to the most significant debt issuers. A lower threshold could expand coverage but may subject moderately sized entities to a compliance structure designed for larger borrowers. SEBI’s regulatory practice has reflected a gradual tightening of governance standards through several amendments and consultation processes, seeking to adjust the balance between proportional regulation and uniform governance norms. It allows for a practical balance between compliance burden and investor assurance. The effectiveness of the regime will, however, depend on whether entities incorporate governance standards into their internal decision-making processes rather than treating them as a formal compliance exercise. A principle-oriented compliance culture will ultimately shape the long-term impact of these reforms.
References
[1] ‘Indian firms raise record funds via corporate debt in 2024; to rise further’ (Reuters, 30 December 2024) <https://www.reuters.com/world/india/indian-firms-raise-record-funds-via-corporate-debt-2024-seen-rising-further-2024-12-30/> accessed 10 February 2026.
[2] ‘SEBI strengthens corporate governance framework for SME-listed and high-value debt companies’ (Mondaq, 8 April 2025) <https://www.mondaq.com/india/securities/1608088/sebi-strengthens-corporate-governance-framework-for-sme-listed-and-high-value-debt-companies> accessed 10 February 2026.
[3] Securities and Exchange Board of India, SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations 2025, Notification No F No SEBI/LAD-NRO/GN/2025/239 (27 March 2025).
[4] ‘SEBI introduces stricter governance norms for high-value debt listed entities under amended regulations’ (DMD Advocates, 21 April 2025) <https://www.dmd.law/publications/sebi-introduces-stricter-governance-norms-for-high-value-debt-listed-entities-under-amended-regulations/> accessed 10 February 2026.
[5] PwC India, ‘SEBI amends LODR Regulations to provide corporate governance norms for listed entities’ (PwC Regulatory Insights, 8 April 2025) <https://www.pwc.in/assets/pdfs/news-alert/regulatory-insights/2025/pwc_india_regulatory_insights_8_april_2025_sebi_amends_lodr_regulations_to_provide_corporate_governance_norms_for_listed_entities.pdf> accessed 10 February 2026.
[6] ‘SEBI raised HVDLE threshold to ease compliance for large debt issuers’ (TaxGuru, 14 April 2025) <https://taxguru.in/sebi/sebi-raised-hvdle-threshold-ease-compliance-large-debt-issuers.html> accessed 10 February 2026.
[7] ‘SEBI LODR Regulations 2015’ (CAclubindia, 12 July 2023) <https://www.caclubindia.com/articles/sebi-lodr-regulations-2015-25746.asp> accessed 10 February 2026.
[8] ‘SEBI’s consultation on governance norms for debt-listed firms’ (TaxGuru, 25 April 2025) <https://taxguru.in/sebi/sebis-consultation-governance-norms-debt-listed-firms.html> accessed 10 February 2026.
[9] ‘One size, many fits? Rethinking SEBI’s 2025 RPT overhaul for debt market realities’ (NuALSSLR, 23 May 2025) <https://www.nualsslr.com/post/one-size-many-fits-rethinking-sebi-s-2025-rpt-overhaul-for-debt-market-realities> accessed 10 February 2026.
[10] ‘Debt with discipline: Key changes introduced to SEBI LODR Regulations relevant for high-value debt listed entities’ (Cyril Amarchand Mangaldas Blogs, 18 June 2025) <https://corporate.cyrilamarchandblogs.com/2025/06/debt-with-discipline-key-changes-introduced-to-sebi-lodr-regulations-relevant-for-high-value-debt-listed-entities/> accessed 10 February 2026.
[11] Securities and Exchange Board of India, ‘Relaxation in the threshold for identification of High Value Debt Listed Entities (HVDLEs) and measures facilitating ease of doing business for HVDLEs including provisions relating to Related Party Transactions: Board Memorandum’ (SEBI, January 2026) <https://www.sebi.gov.in/sebi_data/meetingfiles/jan-2026/1767338915207_1.pdf> accessed 10 February 2026.
[12] Securities and Exchange Board of India, SEBI (Listing Obligations and Disclosure Requirements) Regulations 2025, Regulation Chapter VA (as inserted by SEBI (LODR) (Amendment) Regulations, 2025, Notification No F No SEBI/LAD-NRO/GN/2025/239, 27 March 2025) <https://egazette.gov.in/WriteReadData/2025/262027.pdf> accessed 10 February 2026.
[13] The Gazette of India: Extraordinary, Part III-Sec 4, Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2025, Chapter IV (Notification No F No SEBI/LAD-NRO/GN/2025/239, 27 March 2025) <https://egazette.gov.in/WriteReadData/2025/262027.pdf> accessed 10 February 2026.
[14] ‘India’s corporate bond market booms; record ₹10 trillion raised in corporate bonds in 2025, says Rajkumar Subramanian of PL Wealth’ (The Economic Times, 8 January 2026) <https://economictimes.indiatimes.com/markets/bonds/indias-corporate-bond-market-booms-record-rs-10-trillion-raised-in-corporate-bonds-in-2025-says-rajkumar-subramanian-of-pl-wealth/articleshow/122837041.cms> accessed 10 February 2026.
[15] NITI Aayog, Deepening the Corporate Bond Market in India (December 2025) <https://niti.gov.in/sites/default/files/2025-12/Deepening_the_Corporate_Bond_Market_in_India.pdf> accessed 10 February 2026.
[16] ‘Crisis-ridden IL&FS under regulatory scanner for alleged corporate governance disclosure lapses’ (The Times of India, 29 September 2018) <https://timesofindia.indiatimes.com/business/india-business/crisis-ridden-ilfs-under-regulatory-scanner-for-alleged-corporate-governance-disclosure-lapses/articleshow/65858473.cms> accessed 10 February 2026.
[17] ‘DHFL makes fresh default on ₹1,571 crore bond repayments’ (The Times of India, 2 October 2019) <https://timesofindia.indiatimes.com/business/india-business/dhfl-makes-fresh-default-on-rs-1571-crore-bond-repayments/articleshow/70742083.cms> accessed 10 February 2026.
[18] ‘SEBI’s ₹1000 crore threshold reshaping corporate governance in debt markets’ (IR Global, 10 July 2025) <https://irglobal.com/article/sebis-%E2%82%B91000-crore-threshold-reshaping-corporate-governance-in-debt-markets/> accessed 10 February 2026.
