INTRODUCTION OF SEBI (LISTING OBLIGATIONS
AND DISCLOSURE REQUIREMENTS)
REGULATIONS,2015
Listing Regulations has two fold objective:
Time Span
of 90 days
for
implementation
Bringing the basic framework governing the regime of listed entities in line with the
Companies Act, 2013
Compiling all the mandates of varied SEBI Regulations/ circulars governing equity
as well as debt segments of capital market under the ambit of single document
Passing
of
Ordinary
Resolution
instead
of
special resolution in case of
material
related
party
transactions subject to
related parties abstaining
from voting
on such
resolutions in terms of
regulation 23(4)
IInd
Provision
Ist
Provision
The following Two Provisions of the Listing Regulations are
applicable with immediate effect which are as follows:
Reclassification of Promoters as
public
shareholders
under
special circumstances prescribed
in Regulation 31A
MAIN HIGHLIGHTS
Regulation 9:
Preservation of Documents
The listed company is required to formulate a policy for preservation of documents duly
approved by the Board of Directors, classifying them in at least two categories as follows-
documents whose preservation shall be permanent in nature;
documents with preservation period of not less than eight years
after completion of the relevant transactions.
(Maintenance of documents in electronic mode will be deemed to be
complying with the aforesaid regulation.)
This Regulation is, to some extent, in line with the provisions of
Companies Act, 2013 and ensures better governance
in the operations of the company.
Regulation 13:
Grievance Redressal Mechanism
Every listed company is required to comply with the following:
To get itself registered on the SCORES platform or any other similar platform to
electronically handle the investor complaints as specified by the Board.
To file a Statement within 21 days from the end of the relevant quarter to the stock
exchange pertaining to the status of investors complaints detailing the following
information:
• No. of Complaints Pending:
• pending at the beginning,
• Received and disposed of during the quarter,
• Unresolved at the end of the quarter;
The said statement is also required to be placed before the Board of Directors on a quarterly
basis.
In the erstwhile Listing Agreement, the information pertaining to pending investors
complaints were being submitted on a quarterly basis only along with the Financial Results
required to be filed with the stock exchange within 45/60 days (as the case may be) from the
end of the relevant quarter.
Regulation 23
Related Party Transaction
Important Provisions relating to Related Party Transaction (RPT)
Seek approval from shareholders in General Meeting by passing an ordinary resolution for
approving material related party transactions subject to the stipulation that such related parties
shall be abstained from voting on such resolution.
Special Resolution was required
With the intent to harmonize the provisions with the Companies Act, 2013,
the requirement of shareholder approval for material related
party transaction has been relaxed from Special Resolution to
Ordinary Resolution.
Regulation 29:
Prior Intimations
The listed company is required to give prior intimation to Stock Exchange about the
Board Meeting held, from time to time in the following manner:
For Financial
Results
At least 5 days
advance
notice(excluding the
date of intimation and
date of meeting)
before consideration
of Financial Results of
the company.
at least 7 clear calendar
days advance notice
(excluding the date of
intimation and date of
meeting)
For Corporate
Actions
At least 2 working days
advance notice
(excluding the date of
intimation and date of
meeting) for considering
the proposals related to
buyback of securities,
voluntary delisting, fund
raising including
determination of issue
price.
For alteration in the date of payment of
interest or nomenclature of the specified
securities
At least 11 working days 'advance notice for
considering the proposals pertaining to:
a. Change in nomenclature of any of the securities
listed on the Stock Exchange;
b. Alteration in the date on which,
•the interest is required to be paid on
debentures or bonds;
• the redemption amount is required to be paid on
redeemable shares or debentures or bonds.
at least 21 advance notice was required
Regulation 30:
Disclosure of Events or Information.
The main highlights of the Regulations are outlined as follows:
The responsibility is casted on the Board of listed entities, to authorize one or more
KMPs for the purpose of determining materiality of an event or information and making
disclosures to the stock exchange.
The Listed Entity is required to frame a Policy For Determination Of Materiality Of
Events, duly approved by the Board of Directors of such entity.
The criteria for determining the materiality of events/information is prescribed in the
regulation and they are narrated as below:
a)the omission of an event or information, which is likely to result in discontinuity or
alteration of event or information already available publicly; or
b)the omission of an event or information is likely to result in significant market reaction
if the said omission came to light at a later date; or
c) In case where the criteria specified in sub-clauses (a) and (b) are not applicable, an
event/information may be treated as being material if in the opinion of the board of
directors of listed entity, the event / information is considered material.
Post 5 years, the requirement of disclosure of such events is as per the
archival policy of the Listed Company.
Any delay in filing disclosures beyond the timeframe of 24 hours shall be
accompanied by an explanation for delay.
All events or information of material subsidiaries are to be disclosed by
such listed entity.
The details of above stated authorized KMPs is required to be disclosed to
the Stock Exchange(s) as well as on the Company’s website.
“material subsidiary” shall mean a subsidiary, whose income or net
worth exceeds twenty percent of the consolidated income or net worth
respectively, of the listed entity and its subsidiaries in the immediately
preceding accounting year.
•
•
Material event/ information are needed to be disclosed as per the following
timeline:
Within 24hours from the occurrence of the events as specified in Part - A of
Schedule III of the said regulations.
Within 30minutes of the conclusion of the Board Meeting regarding events
specified in sub- para 4 of Para A of Part A of Schedule III of the said
regulations.
Every Listed Company is required to update material developments on a
regular basis pertaining to the disclosures made till the event is resolved/
closed and host the said events along with all updated information on its
website at least for a period of 5 years.
The listed company is required to update any change in the content of its
website within 2 working days from the date of such change in the content.
The provisions of this Regulation have removed all the ambiguities of
Clause 36 of the erstwhile Listing Agreement and addition of provisions related to
explanation for delay in disclosure would surely bring more transparency in the
business affairs of the Company.
Regulation 31(A)
Disclosures of Class of Shareholders and
Conditions For Reclassification
The Stock Exchange may allow for reclassification upon receipt of a request from the listed
company or the concerned shareholder, along with requisite evidence. The reclassification
will be allowed subject to compliance of specified conditions.
I. Reclassification of Promoter as Public Shareholder
A. In case of change in Promoter
When a new promoter replaces the previous promoter subsequent to an open offer or
in any other manner, re-classification shall be permitted subject to approval of
shareholders in the general meeting.
Shareholders need to specifically approve whether the outgoing promoter can hold
any KMP position in the company. In any case, the outgoing promoter cannot act as
KMP for a period of more than 3 years from the date of shareholders’ approval.
The outgoing promoter along with the promoter group and persons acting in
concert cannot hold more than 10% of the paid-up equity share capital of the
company and shall not have any special rights through any formal or informal
arrangements.
B. In case of Inheritance:
In case of transmission/succession/inheritance, the inheritor shall be classified as
promoter.
C. In case of Company not having any identifiable promoter:
Existing promoters may be re-classified as public in case the company becomes professionally
managed and does not have any identifiable promoter subject to the approval of shareholders
in a general meeting. A company will be considered as professionally managed for this
purpose, if:
No person or group along with Persons Acting in Concert (PACs) taken together
holds more than 1% of the paid-up equity share capital of the company (including
any convertibles/outstanding warrants/ADR/GDR Holding).
Mutual Funds/Banks/Insurance Companies/Financial Institutions/FPIs can each hold
up to 10% of the paid-up equity share capital of the company (including any
convertibles/outstanding warrants/ADR/GDR Holding).
Erstwhile promoters and their relatives may hold KMP position in the company only
subject to shareholders’ approval and for a period not exceeding 3 years from the
date of shareholders’ approval.
The outgoing promoter shall not have any special rights through any formal or
informal arrangements.
D. Other Conditions:
The outgoing promoter shall not, directly or indirectly, exercise control over the
affairs of the company.
Increase in public shareholding pursuant to re-classification of promoters shall not
be counted towards achieving compliance with minimum public shareholding (MPS)
requirement under clause 40A of equity listing agreement.
The event of re-classification may be disclosed as a material event in accordance with
the listing agreement/regulations.
E Power to relax the provisions on a case to case basis
SEBI may relax any condition for reclassification in specific cases, if it is satisfied
about non-exercise of control by the outgoing promoter or its person acting in concert.
II. Reclassification of Public Shareholder as a Promoter:
Then Public shareholder is required to make an open offer in accordance with the
provisions of SEBI (SAST) Regulations, 2011.
To resolve the ambiguities as to re classification, SEBI has inserted this
regulation to place a regulatory framework for re-classification of
promoters in listed companies as public shareholders
under various circumstances.
Regulation 35
Annual Information Memorandum
The annual Information Memorandum is needed to be submitted by the
listed entities to the stock exchange, in the manner as may be specified by
SEBI from time to time.
SEBI has proposed the format of Annual
Information Memorandum in its Discussion
paper
SECRETARIAL STANDARDS
Setting grounds for Corporate Governance
Secretarial
Standards
Effective from
July 01,2015
SECRETARIAL
STANDARD -1
(SS-1)
• Meeting of the
Board of
Directors
SECRETARIAL
STANDARD -2
(SS-2)
• General
Meetings
APPLICABILITY
OF SECRETARIAL
STANDARDS
• Except OPCs
applicable on
all companies
• All General
Meetings
• All Committee
Meetings
• All Board
Meetings
Brief Highlights of SS -1
Any Director at any time have the authority to summon a Meeting of the Board
unless the articles provide otherwise
Agenda setting out the businesses to be transacted at the meeting of the Board along
with their notes shall be served to the Directors at least 7 days before meeting
Notes on item of the business which are in the nature of unpublished Price
sensitive Information may be given at a shorter Notice (i.e. can be less than 7
days)
Any item not included in the Agenda may be taken up for consideration with the
permission of chairman and with the consent of majority director present which
shall include 1 independent director, if any
Presence of all the members of any committee constituted by the Board is necessary
to form the quorum for Meeting of such committee.
Brief Highlights of SS -1
The Chairman of the Board or in his absence the Managing Director/Whole Time
Director/Director other than the interested Director have the authority to decide whether the
approval of the Board for a particular matter be obtained by means of a resolution by
circulation.
SS-1 has list out the following items that need to be noted in the minutes:
• The fact that interested director was not present during the discussion and did not vote.
• The views of the director particularly the independent director, if specially insisted upon by such
director provided the views are not defamatory, irrelevant or immaterial.
• If any Director has participated only for a part of the meeting, the agenda item in which he did not
participated
• The fact of the dissent and the name of the director who dissented.
• Ratification by Independent Director or majority of Director in case meeting held at a shorter notice &
transaction of any item not included in the agenda.
Office copies of notices, agenda, notes on agenda & other related papers shall be preserved in
good order in physical or in electronic form for as long as they remain current or (8) eight
financial years (whichever is later)
Brief Highlights of SS - 2
A General Meeting shall be convened by or on authority of the Board
In all cases relating to appointment or re-appointment and/or fixing of remuneration
of Director (all categories), details of each such directors (as prescribed in SS-2)
shall be given in the explanatory statement
If any Director is unable to attend the meeting , the chairman shall explain such
absence at the Meeting
The Statutory and Secretarial Auditor, should attend the Annual General
Meeting unless exempted by the company.
The Chairman shall explain the objective and implications of the resolution
before they are put to vote at the meeting
Modification to any resolution which do not change the purpose of the resolution
materiality may be proposed/seconded & adopted at the meeting, thereafter the
modified resolution shall be duly passed
Brief Highlights of SS - 2
In case of public companies, the chairman shall not propose any resolution in
which he is deemed to be concerned
A member who is a related party is not entitled to vote on resolution relating to
approval of any contract or arrangement in which such member is a related party
Resolutions for items which are likely to affect the market price of the securities
of the company shall not be withdrawn. However, any resolution for consideration
through e-voting shall not be withdrawn.
Reading of Report by the Statutory Auditor at the Annual General Meeting
Reading of Report by the Secretarial Auditor at the Annual General Meeting
EXEMPTIONS TO PRIVATE COMPANY
(vide notification no. GSR 446 (E) dated 5.06.2015 )
KEY HIGHLIGHTS :
 Definition of related party {Section 2(76)}
The transaction done between a private company and following companies noted below is
out of the purview of the Related party transaction referred to u/s 188
• Holding Company
• Subsidiary Company
• Associate Company
• Subsidiary of the Holding Company to which it is also a Subsidiary
 Now a private company can offer shares to employees under the scheme of
employee’s stock option with an ordinary resolution instead of a special resolution.
{Section 62(1) (b)}
 Private Company can accept from its members deposit upto (paid up share capital +
free reserves ) without complying with the conditions of { section 73 (2) (a) to (e)}:
(a) issuance of circular
(b) Filing of circular with MCA
(c) Maintaining Deposit repayment reserve
(d) Provide deposit insurance etc as prescribed u/s 73 (2) (a) to (e)
EXEMPTIONS TO PRIVATE COMPANY
(vide notification no. GSR 446 (E) dated 5.06.2015 ) contd
 Now there is no need to file Form MGT-14 for the purposes of resolution passed u/s 179
read with Rule 8 of the Companies (Meeting of Board and its power) Rules, 2014.
{Section 117 (3) (g)}
 The provisions relating to giving notice of 14 days along with the deposit of Rs. 1 lakh
etc. for contesting for directorship shall not be applicable on private companies
{section 160}
 At a general meeting of a private company, the motion of appointment of more than one
director can be made by a single resolution {Section 162}
EXEMPTIONS TO PRIVATE COMPANY
(vide notification no. GSR 446 (E) dated 5.06.2015 ) contd
 An interested director can now participate in the Board Meeting in which he is interested
subject to a condition that he discloses his interest in such contract or arrangement.
{Section 184 (2)}
 Loan to Director are allowed for private companies which not falls in the criteria as
prescribed {Section 185}
 A member even after being related party, is allowed to vote on special resolution passed
u/s 188 (1) of the Act. {Second proviso of section 188(1)}
 Now there is no need to pass resolution for appointment of managing director , whole time
director or manager u/s 196 of the Act and no need to comply with Schedule V of the Act.
{Section 196 (4) & (5)}