SEBI Revises LODR Framework: HVDLE Threshold Raised to ₹5,000 Crore and Corporate Governance Norms Streamlined

The Securities and Exchange Board of India has rolled out the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2026, bringing sweeping modifications to the existing LODR regulatory structure. The primary objective behind these amendments centers on simplifying compliance requirements, particularly for High Value Debt Listed Entities (HVDLEs), while simultaneously strengthening investor protection mechanisms and clarifying various governance-related provisions.

Enhanced HVDLE Threshold: A Major Relief for Mid-Sized Debt Issuers

One of the most significant changes introduced through these amendments relates to the reclassification criteria for HVDLEs. Previously, entities with outstanding non-convertible debt securities amounting to ₹1,000 crore or more were categorized as HVDLEs and were subjected to stringent corporate governance requirements. The new regulations have substantially revised this threshold upward to ₹5,000 crore, thereby excluding a considerable number of mid-sized debt issuers from the more rigorous compliance framework.

This five-fold increase in the threshold value represents a pragmatic approach by SEBI to rationalize regulatory burdens. Entities that were earlier caught within the HVDLE net but now fall below the revised threshold of ₹5,000 crore will be exempted from continuing HVDLE-specific obligations. This transition provides much-needed regulatory relief to smaller debt issuers while allowing them to focus resources on core business operations rather than extensive compliance protocols.

Implications of Threshold Revision

The upward revision carries multiple implications for market participants. First, it reduces the compliance cost burden for entities with outstanding debt between ₹1,000 crore and ₹5,000 crore, who will no longer need to maintain the enhanced governance infrastructure mandated for HVDLEs. Second, it allows regulatory authorities to concentrate supervisory efforts on genuinely large debt issuers whose systemic importance warrants heightened oversight. Third, it aligns the regulatory framework with the evolving market dynamics and maturity of the Indian debt market.

The amendments explicitly clarify that entities which cease to qualify as HVDLEs under the revised threshold will not be required to continue complying with HVDLE-specific regulations. This prospective application ensures that regulatory relief is immediately available rather than being delayed by transitional complications.

Streamlined Investor Service Requirements

The amended regulations introduce tighter timelines for processing investor service requests, demonstrating SEBI's commitment to enhancing investor experience and protection. Regulation 39(2) has been modified to mandate that listed entities must credit securities to demat accounts within a period of thirty days from receipt of investor service requests related to subdivision, split, consolidation, renewal, exchanges, and issuance of duplicate securities on account of loss or damaged certificates.

This thirty-day timeline provides certainty to investors and eliminates ambiguity that previously existed in processing such requests. By establishing a clear deadline, the regulation ensures that listed entities maintain efficient back-office operations and investor service desks. The provision also indirectly encourages entities to adopt technology-driven solutions for faster processing of such requests.

Dematerialization Mandates Reinforced

Complementing the investor service timeline changes, Regulation 40(1) has been comprehensively revised to reinforce dematerialization requirements across various corporate actions. The amended provision categorically states that requests for effecting transfer of securities shall not be processed unless the securities are held in dematerialized form with a depository. This represents a continuation of SEBI's long-standing policy to phase out physical certificates entirely from the securities market.

Furthermore, the revised regulation mandates that transmission or transposition of securities, whether held in physical or dematerialized form, shall be effected only in dematerialized form. This ensures that even legacy holdings in physical mode gradually transition to demat form through natural corporate actions like transmission on death or transposition for reordering names.

An important proviso has been retained to clarify that nothing in these requirements shall prevent registration of transfers executed before April 01, 2019, which may still be held in physical form, subject to conditions specified by the Board. This grandfathering clause protects legitimate transactions completed in the past while ensuring forward-looking compliance.

Unclaimed Amounts: Clarity on IEPF Transfers

Regulation 61A(3) has been substituted to provide comprehensive clarity on the treatment of unclaimed amounts held in escrow accounts. For entities falling within the definition of "company" under the Companies Act, 2013 and rules made thereunder, unclaimed amounts must be transferred to the Investor Education and Protection Fund in accordance with section 125 of the Companies Act, 2013 and rules made thereunder.

However, recognizing that not all listed entities are incorporated as companies under the Companies Act, 2013, the regulation introduces a specific proviso for other entity types. For listed entities that do not fall within the definition of "company" under the Companies Act, 2013, unclaimed amounts that remain unpaid for a period of seven years from the maturity date of non-convertible securities must be transferred to the Investor Protection and Education Fund created by the Board under section 11 of the Act.

Additionally, the regulation clarifies that amounts transferred to the Investor Protection and Education Fund shall not bear any interest, thereby removing any ambiguity about post-transfer obligations of the fund administrator.

Corporate Governance Reforms for HVDLEs

Revised Board Composition and Meeting Requirements

The amendments introduce several refinements to board composition and functioning requirements for HVDLEs. Regulation 62D has been modified to clarify various aspects of director appointments, age limits, and board meeting frequencies.

A new proviso has been inserted to clarify that HVDLEs shall ensure compliance with the age-related approval requirements at the time of appointment, re-appointment, or any time prior to a non-executive director attaining the age of seventy-five years. This provides operational flexibility while maintaining the principle of shareholder approval for directors above the specified age threshold.