Listing Obligations and
Disclosure Requirements
Regulations, 2015
Vinod Kothari
Vinod Kothari & Company
1006-1009 Krishna Building
224 AJC Bose Road
Kolkata – 700017
Phone 033-22811276/ 22813742/7715
E-mail – corplaw@vinodkothari.com
601-C, Neelkanth
98 Marine Drive
Mumbai 400002
Phone 022-22817427
E-mail: bombay@vinodkothari.com
www.vinodkothari.com
Email: vinod@vinodkothari.com
2
Copyright
• The presentation is a property of Vinod
Kothari & Company. No part of it can be
copied, reproduced or distributed in any
manner,
without
explicit
prior
permission.
• In case of linking, please do give credit
and full link
3
About Us
• Vinod
Kothari
Company,
&
▫ Based in Kolkata, Mumbai
• We are a team of
consultants, advisors &
qualified
professionals
having
recently
completed 25 years of
practice.
Our Organization’s Credo:
Focus on capabilities; opportunities follow
4
Scope, Applicability etc.
5
Highlights
• Quick highlights:
▫ Consolidation of listing requirements
▫ Consummation of previous discussion papers
 Discussion paper on materiality:
 Sept.
http://www.sebi.gov.in/cms/sebi_data/attachdocs/1408444809721.pdf
2014
 Jan
http://www.sebi.gov.in/cms/sebi_data/attachdocs/1419934886654.pdf
2015:
 Discussion paper on promoter and promoter group – onboarding and
offboarding:
• Comes into effect from 90th day from date of publication
▫ That is, from 1st Dec 2015
• However, following changes effected immediately
▫ Substitution of Ordinary Resolution in place of Special Resolution for
material RPTs
▫ Provisions related to disclosure of Promoter shareholding and conditions
for reclassification
6
Applicability..
• Listed entity, whose any of the following designated
securities are listed on recognised stock exchange(s):
▫ Specified securities listed on main board or SME
Exchange or institutional trading platform;
▫ non-convertible debt securities
▫ non-convertible redeemable preference shares
▫ perpetual debt instrument
▫ Perpetual non-cumulative preference shares
▫ Indian depository receipts
▫ securitized debt instruments
▫ units issued by mutual funds
▫ any other securities as may be specified by the Board.
7
Statutory basis
• With the LODR Regulations, the listing
agreement gets its own statutory backing
▫ Prior to this, the LA was merely an agreement
between the exchange and the company
 Reference to listing conditions was there in sec 23E
of the SCRA
• The present regulations are made in pursuance
of statutory powers under SEBI Act and SCRA
▫ Sec 11A (2) provides SEBI power to prescribe
conditions of listing
▫ Hence, provisions of sec 15HB of SEBI Act are
applicable
8
PRINCIPLES GOVERNING
DISCLOSURES AND OBLIGATIONS
9
Principles applicable to every listed entity
•
•
•
•
Implement the prescribed accounting standards in letter and spirit
Refrain from misrepresentation
Adequate and timely information to recognised stock exchange(s) and investors
Accounting standards to be adhered to:
▫ AS-3/ Ind AS 7 for cash flow statement
▫ AS- 5/ Ind AS- 8 for disclosure of change in accounting policies/ net profit or
loss for the period, prior period items
▫ AS -25/ Ind AS-34- Internal Financial reporting
▫ AS- 17/ Ind AS for segment reporting
▫ AS-18 for related party disclosure
▫ May also follow IFRS for submission of financial statements
• Annual audit to be conducted by an independent, competent and qualified
auditor
• Equal, timely and cost efficient access of relevant information
• Event based or periodic filings, reports, statements etc. shall contain relevant
information
These provisions are not imbibed in the present listing agreement
10
Overarching principles of listing
obligations and disclosure
• Primarily, obligations of listed entities are two:
▫ Obligations to comply
▫ Obligations pertaining to disclosure
• Reg 4 provides the general principles of
disclosure and listing obligations
▫ New provision
• By Reg 4 (3), this regulation has an overriding
force
• Contents of reg 4 are by and large general
▫ Of course, there is a repeated reference to
compliance in letter and spirit
11
Principles to be followed by listed entity
having its specified securities listed
Reg 4 (2) pertains to specified securities only
Compliance with corporate governance provisions
to achieve the principles of –
Rights of shareholders
Timely information
Equitable treatment of shareholders
Role of stakeholders in corporate governance
Disclosure and transparency
Responsibilities of the board of directors
12
Key functions of board of directors
1/2
• Disclosure of information by directors and KMPs of direct/ indirect
material transaction
• Reviewing and guiding
▫ corporate strategy, major plans of action, risk policy, annual budgets and
business plans, setting performance objectives, monitoring implementation
and corporate performance, and overseeing major capital expenditures,
acquisitions and divestments
• Monitoring the effectiveness governance practices and making changes
• Selecting, compensating, monitoring and replacing KMPs and overseeing
succession planning
• Aligning remuneration of KMPs and of board with the longer term
interests of the entity and its shareholders
• Ensuring a transparent nomination process of directors with the
diversity of thought, experience, knowledge, perspective and gender in
the board of directors
• Monitoring and managing potential conflicts of interest of management,
members of the board of directors and shareholders, including misuse of
corporate assets and abuse in related party transactions
13
Key functions of board of directors
2/2
• Ensuring the integrity of accounting and financial
reporting systems
▫
▫
▫
▫
▫
independent audit
appropriate systems of control in place
appropriate systems of control are in place
financial and operational control
compliance with the law and relevant standards
• Overseeing the process of disclosure and
communications
• Monitoring and reviewing board of director’s
evaluation framework
• provide strategic guidance to ensure effective
monitoring of the management
14
Chap III-Common Obligations of
Listed Entities
15
Common Obligations-1/4
 KMP/Directors/promoters/any other person dealing with the listed entity
comply with responsibilities or obligations as prescribed under the LODR
 New provision
 Burden of compliance is on KMPs, directors and promoters or any other person
 If obligations assigned to them – Reg 5
 Compliance obligation on the CS
 Not clear who could be the other person
 Compliance Officer and his Obligations- Reg 6
 Qualified Company Secretary as the compliance officer
 Responsible for –
 Ensuring conformity with the regulatory provisions
 Co-ordination with and reporting to the Board, recognised stock
exchange(s) and depositories the compliance with rules, regulations
and other directives of these authorities
 Ensuring that the correct procedures have been followed in filing
 monitoring email address of grievance redressal division
Similar to the old provisions provided under Equity Listing Agreement, Debt
Listing Agreement, SME Listing Agreement etc.
16
Common Obligations-2/4
 Appointment of Share Transfer Agent- Reg 7–
 Mandatory if total number of security holders exceeds one lakh
 Other wise the listed entity shall have to be registered with the Board
 Ensuring all activities in relation share transfer facility are maintained
either in house or by Registrar to an issue and share transfer agent
 Half yearly Compliance Certificate with regard to compliance of the above
with stock exchange
 New provision
 Within 1 month of end of half year
 Change of agent only through agreement
 New appointment to be intimated within 7 days
 Submission of information to securities intermediaries – reg 8
 New provision
 Company shall submit regular information to intermediaries
 Intermediaries include rating agencies
 Policy on Preservation of documents - reg 9
 New requirement
 Approved by BoD
 This is a new policy
17
Common Obligations-3/4
Filing of information with recognise stock exchange in
electronic platform- Reg 10
New provision
Proposed scheme of arrangements etc. not to vilolate,
override, limit the provisions of securities laws and
requirements of Ses- Reg 11
Not applicable for units issued by listed mutual funds
Electronic payment of dividend /interest /redemption
/repayment amounts- Reg 12
New provision
RTA to maintain bank details of investors
 ‘Payable-at-par’ warrants or cheques may be issued
 If dividend is more than Rs. 1500 to be sent by speed post
 Obligatory to print bank a/c details on payment warrant
18
Common Obligations-4/4
Grievance Redressal Mechanism – Reg 13
Mandatory registration with SCORES platform or
other electronic platform or system of the Board
• Filing of quarterly statement with respect to number of pending investors’ complaints at the
beginning and ending of the quarter
 Complaints received and disposed and remained
unresolved
 within 21 days of the end of the quarter
▫ Earlier the same was provided under CG Report
in Annual Report and with financial results
19
Chap IV-Obligations applicable in
case of listing of specified
securities
20
Scope
Obligations applicable for specified
securities
 Equity shares and convertible securities
 Listed on Main Board, SME Exchange or ITP
Similar exemptions as earlier Listed entities having paid up equity share capital not
exceeding Rs. 10 crore and net worth not exceeding Rs. 25
crore, as on the last day of the previous financial year.
Listed entities which have listed its specified securities on
the SME Exchange
Body corporates other than companies however is not
exempted although listed in SME Exchange which is a new
requirement.
21
Exemptions to small and SME listed
companies
• Regulations exempted▫
▫
▫
▫
▫
▫
▫
▫
▫
▫
▫
17-Composition of BoD
18-Audit Committee
19-NRC
20-SRC
21-Risk Management Committee
22- Vigil Mechanism
23-RPTs
24-CG requirement with respect to subsidiaries
25- Obligations w.r.t to IDs
26-Obligations w.r.t Directors and senior mgmt
27- other corporate governance requirements
22
Definitions pertinent to corporate
governance- 1/3
• Definition of control
▫ Same as SAST








right to appoint majority of the directors, or
to control the management or
to control policy decisions
directly or indirectly
by virtue of shareholding or
mgmt rights or
shareholders agreement or
by voting agreements
▫ Similar to CA
23
Definitions pertinent to corporate
governance- 2/3
• ID means▫ NED other than nominee director
▫ Not a promoter of the entity/Holding/ Sub/Associate
▫ Not related to the promoters of aforesaid
▫ No material pecuniary relationship with the entity its H/S/A & their promoters/ directors
 Two immediately preceding FYs and the current Year
▫ No relative has/ had pecuniary relationship/ transaction with the entity/H/S/A/
promoters/directors
 Amounting 2% or more of gross turnover/total income 50 lacs- lower, during two immediately
preceding FYs and the current Year
▫ Neither himself nor his relatives is or has been
 KMP or employee of the entity/ H/S/A in 3 immediately preceding FYs
 Employee/ proprietor/partner in any 3 immediately preceding FY s
 of a audit firm, PCS or cost auditor of the listed entities/ H/S/A or legal consulting firm has /
had any transaction with the listed entities/ H/S/A
▫ Not holding together with his relatives 2% or more voting powers
▫ Not CEO/Director of non profit org receiving 25% or more of its receipts from the
entity/promoter/ director/H/S/A or who holds 2% or more total voting power of the entity.
▫ Not a material supplier, service provider, customer or lessor or lessee of the entity
▫ Not less than 21 years of age
24
Definitions pertinent to corporate
governance- 3/3
• Material subsidiaries- Reg 16
▫ Definition includes all subsidiaries
 Earlier it was only material non- listed Indian subsidiary
▫ whose income or net worth exceeds 20% of the
consolidated income or net worth
▫ in the immediately preceding accounting year
 Confusion in the definition of “material” subsidiary
• SMPs
▫
▫
▫
▫
officers/personnel of the listed entity who are
member of core Mgmt. team excluding BoD
One level below the Board
The word ‘officer’ has been inserted newly
25
Obligations applicable for specified
securities
 BoD- Reg 17
 Optimum combination of executive and non-executive directors
 At least one woman director
 Not less than 50% non-executive directors
 Independent directors
 Shall meet at least four times a year
 Board meetings to have maximum time gap of 120 days between any two
meetings.
 Fees and remuneration payable to all NEDs to be approved by
shareholders’ resolution
 However, sitting fees excluded, if within limits as per CA
 Shall be responsible for framing, implementing and monitoring the risk
management plan for the listed entity
 Similar to the earlier requirements
 Reg 17 (9) provides about the company to formulate risk assessment and
minimisation plan
26
Obligations applicable for specified
securities
Obligations
Audit
committee
NRC
committee
Stakeholders
relationship
committee
Risk
management
committee
Composition
•minimum 3
directors
•Two-thirds
independent
•at least three
directors
•All shall be NED
•Atleast 50 %
shall be
independent
Board shall
decide
Majority from
Board
Chairperson
Independent
director
Independent
director
NED
Member of the
Board
Role and
responsibility
Part C Schedule
II
Part D Schedule
II
Part D Schedule
II
Board shall
define
Other
Company
secretary to act as
secretary to the
committee
Applicable to top
100 listed
companies
27
Minimum information to be placed
before the Board
• Part A of Schedule II
▫ Similar to the details under clause 49
28
Audit committee- Reg 18
• No change as compared to Clause 49
• Mandatory review by Audit Committee- Part C of
schedule II
▫ quarterly statement of deviation(s) including report of
monitoring agency, if applicable, submitted to stock
exchange(s)
▫ annual statement of funds utilized for purposes other
than
those
stated
in
the
offer
document/prospectus/notice
▫ This is a new requirement
▫ Appears that the requirement is not limited to
public/rights offers
 Includes preferential offers as well
29
Nomination and Remuneration
Committee- Reg 19
• To see whether to extend or continue the term of
appointment of the independent director, on the
basis of the report of performance evaluation of
independent directors
▫ This is new role of NRC
• Other provisions are similar to the earlier
provisions.
30
Risk Management Committee- Reg
21
• Applicable only to top 100 companies by market
capitalisation– reg 21 (5)
• Not necessarily a committee of the board, unless
so required by other applicable laws (say, NBFC
Directions)
▫ Majority shall be board members
▫ Chairperson to be member of Board
• Board to determine the role and responsibility
31
Obligations applicable for specified
securities
Vigil Mechanism- reg 22For directors and employees
adequate safeguards against victimization of director(s)
or employee(s) or any other person
direct access to the chairperson of the audit committee
32
Related Party Transactions- Reg 23
Related party transactions (“RPT”) Formulation of policy on “materiality” and on dealing with RPT
 Material RPT
 Previous +proposed transaction during FY exceeds 10% of annual consolidated
turnover
 All RPT shall require prior approval of the audit committee
 Audit committee may grant omnibus approval (reviewed quarterly)
 Quarterly review of RPTs pursuant to omnibus approval
 Resolution valid for 1 year
 Material RPT shall require approval of shareholders
 Earlier it was Special Resolution
 Now ordinary resolution
 All related party to abstain from voting
 Existing transactions may be continued only after approval of shareholders at the
general meeting held after these regulations
 Exceptions
 transactions entered into between two government companies;
 transactions entered into between a holding company and its wholly owned
subsidiary whose accounts are consolidated with such holding company and placed
before the shareholders at the general meeting for approval.
33
Obligations pertaining to material
subsidiaries – reg 24
• Atleast 1 ID to be director of unlisted indian material
subsidiary
• Audit committee to review the FS
▫ In particular investments by such subsidiary
• minutes of board meetings to be placed before board
of the company
• statement of all significant transactions and
arrangements entered into by the unlisted
subsidiary to be placed before board of the company
▫ any individual transaction or arrangement that
exceeds or is likely to exceed 10% of the total revenues
or total expenses or total assets or total liabilities, as
the case may be, of the unlisted material subsidiary for
the immediately preceding accounting year
34
Obligations pertaining to material
subsidiaries – reg 24
• SR will be required in case of-
▫ disposal of shares in its material subsidiary resulting
in reduction of its shareholding to less than 50% or
cessation of control over the subsidiary
▫ Selling, disposing and leasing of assets amounting to
more than 20% of the assets of the material subsidiary
on an aggregate basis during a financial year
• In case of chain subsidiaries, if there is an
intermediate
listed
company.
such
listed
intermediate listed company to also comply with the
regulations
35
Obligations pertaining to
Independent directors – reg 25
• In case of resignation/ removal of ID
▫ Replacement at the next Board meeting or 3
months, later
 CA provides for 180 days
▫ Other provisions are similar
36
Obligations applicable to directors–Reg
26
• Member in not more than ten committees
• Chairperson of not more than five committees
across all listed entities in which he is a director
▫ Chairpersonship and membership of the audit committee and the
Stakeholders Relationship Committee shall be considered
determination of limit
• Disclosures to the board relating to all material,
financial and commercial transactions, where there
personal interest
• NEDs to disclose their shareholding held directly or
on behalf of others and the same shall be inserted in
the notice of general meeting.
• Similar to the earlier provisions
37
Obligations applicable to senior
management –Reg 26
Disclosure to BoD with regard to material, financial
and commercial transactions having personal
interest that may have a potential conflict with the
interest of the listed entity
▫ conflict of interest relates to dealing in the shares of
listed entity;
▫ commercial dealings with bodies, which have
shareholding of management and their relatives etc.
38
Senior Management Personnel
KMPs
Whole Time
Director
HoD1
Chairman
Managing
Director
HoD2
Whole Time
Director
HoD3
SMPs
39
Quarterly Compliance Certificate- Reg 27
Listed entity shall submit a quarterly compliance report on
corporate governance within fifteen days from close of the
quarter other than
Listed entities having paid up equity share capital not
exceeding Rs 10 crore and net worth not exceeding Rs 25
crore, as on the last day of the previous financial year.
Listed entities which have listed its specified securities on
the SME Exchange
Body corporates other than companies however is not
exempted even if listed in SME Exchange which is a new
requirement
40
In-principle approval – reg 28
• Before issuing securities
▫ where the securities are listed only on recognised stock
exchange(s) having nationwide trading terminals, from all
such stock exchange(s)
▫ If not listed on any recognised stock exchange having
nationwide trading terminals, from all the stock exchange(s)
in which the securities of the issuer are proposed to be listed
▫ If listed on recognised stock exchange(s) having nationwide
trading terminals as well as on the recognised stock
exchange(s) not having nationwide trading terminals, from
all recognised stock exchange(s) having nationwide trading
terminals
• Not required if securities issued pursuant to the scheme of
arrangement for which No-Objection Letter from
recognised stock exchange(s) already received
41
Prior intimations – Reg 29- 1/2
• Meeting of Board held for following matters
▫ financial results viz. quarterly, half yearly, or annual
 5 days in advance
 Earlier it was 7 days
▫ proposal for buyback of securities;
▫ proposal for voluntary delisting
▫ fund raising by way of further public offer, rights issue, IDR,
GDR, FCCB, QIPs, Debt Issue, Preferential issue, any other
method and for determination of issue price,
▫ declaration/recommendation of dividend,
▫ issue of convertible securities including convertible debentures
or of debentures carrying a right to subscribe to equity shares
or the passing over of dividend
▫ declaration of bonus securities if included in agenda
• At least 2 working days in advance
• AGM / EGM/ postal ballot for approval for further fund
raising indicating type of issuance
42
Prior intimations – Reg 29-2/2
• Atleast 11 working days in advance
▫ New requirement
▫ any alteration in the form or nature of any of its
securities that are listed on the stock exchange or
in the rights or privileges of the holders thereof
▫ any alteration in the date on which, the interest on
debentures or bonds, or the redemption amount of
redeemable shares or of debentures or bonds,
shall be payable
43
Material Events- Reg 30
44
Disclosure of material events
• Evidently, one of the most important parts of the LODR Regulations
• Global view
▫ IOSCO principles on Ongoing Disclosures and Material Developments Reporting
by Listed Entities
 http://www.iosco.org/library/pubdocs/pdf/IOSCOPD132.pdf
▫ Para 202.05 of NYSE Listing guidance
 http://nysemanual.nyse.com/LCMTools/PlatformViewer.asp?selectednode=chp_1_
3_2_6&manual=%2Flcm%2Fsections%2Flcm-sections%2F
▫ Australian Stock Exchange Guidance note no 8
 http://www.asx.com.au/documents/about/guidance-note-8-clean-copy.pdf
▫ FSA UK’s Disclosure and Transparency Rules
 http://www.fsa.gov.uk/pubs/ukla/disclosure_transparency.pdf
• Are there any quantitative norms available?
▫ The key question to be asked is, when is the information material?
 Generally, estimated impact of 10% or more is considered material
 Impact of 5% or less is considered non material
 ASIC guidance in Para 8.7 of Guidance Note no 8
▫ The 10%/ 5% rules are rules of thumb – regulators have generally denied them
but the rule can be practically handy
▫ Also, in Hutchison v. Deutsche Bank Securities Inc., 647 F.3d 479 (2d Cir. 2011),
US court held materiality is to be tested based on aggregate assets of issuer, not
equity value
45
Rulings on meaning of material
information
• The question of whether an information
disclosed/not disclosed was material has agitated
minds of lawmakers/companies all over the world
• Several rulings exist from different parts of the
world
▫ The canonical rule of materiality in TSC Industries,
Inc. v. Northway, Inc., 426 U.S. 438 (1976).
 there must be a substantial likelihood that the disclosure
of the omitted fact would have been viewed by the
reasonable investor as having significantly altered the
‘total mix’ of information made available”
▫ Australia ruling in Jubilee Mines NL v Riley
▫ Australian ruling James Hardie Industries NV v ASIC
▫ Singapore ruling in Airocean
46
Approaches to disclosure of material
information
• Two approaches
▫ General guidance approach
▫ Prescriptive approach
 Deemed material events
 Illustrative events, but to be tested on the
benchmark of materiality
47
Types of materiality
• Deemed material – Part A of Schedule III
• Material based on application of guidelines – Part B of Schedule III,
read with reg 30 (4)
▫ Guidance of SEBI vide 9 Sept 2015
• Implications of materiality
▫ Intimation to stock exchange within 24 hours
 If based on board meeting results, then within 30 min
▫ Put material developments on website
 Keep the same for 5 years
▫ Continue to provide updates of material developments on such events
▫ Question of closure of trading window may also arise
• Formulation of policy on materiality
▫ The Board shall authorise one of the KMPs to determine materiality
• Disclosures required for material subsidiaries as well
• Response to rumours
▫ Reg 30 (11) allows the company the option to confirm or deny rumours
about material developments
48
Material event
An event occurred
Whether covered
under Part A of Sch.
III
Yes
No
No
Whether covered
under Part B of Sch.
III
Yes
Apply significant price sensitivity test or any change/
discontinuance of existing significant price sensitive
information earlier disclosed
No
No disclosure to be
made
Yes
Whether the
information is
significant
Disclosure to be made
49
Events- Deemed to be material-1/4
• Acquisition(s) (including agreement to acquire)
▫ Even 5% acquisition may amount to material acquisition
▫ US 8-K treats an acquisition as material only if the acquisition involves
investment upto 10% of assets of the acquirer
• Scheme
of
Arrangement
(amalgamation/
merger/
demerger/restructuring),
• sale or disposal of any unit(s), division(s) or subsidiary of the Company
• any other restructuring
• issuance or forfeiture of securities
• split or consolidation of shares
• buyback of securities
• any restriction on transferability of securities or alteration in terms
• structure of existing securities including forfeiture, reissue of forfeited
securities, alteration of calls, redemption of securities etc.
50
Events- Deemed to be material-2/4
• Outcome of Meetings of the board of directors held for discussing▫ declaration of dividends and/or cash bonuses recommended or declared or
▫ the decision to pass any dividend and the date on which dividend shall be
paid/dispatched
▫ any cancellation of dividend with reasons thereof
▫ the decision on buyback of securities
▫ the decision with respect to fund raising proposed to be undertaken
▫ increase in capital by issue of bonus shares through capitalization including the
date on which such bonus shares shall be credited/dispatched
▫ reissue of forfeited shares or securities, or the issue of shares or
securities held in reserve for future issue or the creation in any form or
manner of new shares or securities or any other rights, privileges or
benefits to subscribe to;
▫ short particulars of any other alterations of capital, including calls;
▫ financial results;
• To be disclosed within 30 minutes of conclusion of the meeting
51
Events- Deemed to be material-3/4
• Agreements• joint venture agreement(s),
• family settlement agreement(s) (to the extent that it impacts management and
control of the Company),
• agreement(s)/treaty (ies)/contract(s) with media companies) which are binding
and not in normal course of business, revision(s) or amendment(s) and
termination(s) thereof.
• Revision in Rating(s)
• Fraud/defaults by promoter or key managerial personnel or by Company or
arrest of key managerial personnel or promoter.
• Change in directors, key managerial personnel, Auditor and Compliance
Officer.
• Appointment or discontinuation of share transfer agent.
• Corporate debt restructuring.
• One time settlement with a bank
• Reference to BIFR and winding-up petition filed by any party / creditors.
52
Events- Deemed to be material-4/4
• Issuance of Notices, call letters, resolutions and circulars sent
to shareholders, debenture holders or creditors or any class
of them or advertised in the media by the Company.
• Proceedings of Annual and extraordinary general meetings of
the Company.
• Amendments to memorandum and articles of association of
Company, in brief.
• Schedule of Analyst or institutional investor meet and
presentations on financial results made by the Company to
analysts or institutional investors
53
Material events subject to the
Guidance prescribed
• the omission of an event or information, which is likely
to result in discontinuity or alteration of event or
information already available publicly; or
• 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
• 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 Company, the event / information is
considered material
54
Guidance to consider an event as
Material-1/2
• Commencement or any postponement in the date of
commencement of commercial production or commercial
operations of any unit/division.
• Change in the general character or nature of business
brought about either in entirety or piecemeal
• Capacity addition or product launch.
• Awarding, bagging/ receiving, amendment or termination of
awarded/bagged orders/contracts not in the normal course
of business.
• Agreements (viz. loan agreement(s) (as a borrower) or any
other agreement(s) which are binding and not in normal
course of business) and revision(s) or amendment(s) or
termination(s) thereof.
55
Guidance to consider an event as
Material-2/2
• Disruption of operations of any one or more units or division of the
Company due to natural calamity (earthquake, flood, fire etc.), force
majeure or events such as strikes, lockouts etc.
• Effect(s) arising out of change in the regulatory framework applicable to
the Company
• Litigation(s) / dispute(s) / regulatory action(s) with impact.
• Fraud/defaults etc. by directors (other than key managerial personnel) or
employees of Company.
• Options to purchase securities including any ESOP/ESPS Scheme.
• Giving of guarantees or indemnity or becoming a surety for any third
party.
• Granting, withdrawal , surrender , cancellation or suspension of key
licenses or regulatory approvals.
 Any event likely to affect business
56
Time limit and other administrative
measure
Administrative Measures –
• The board of directors to authorize one or more Key Managerial
Personnel for the purpose of determining materiality of an event
or information.
• The contact details of such personnel shall be also disclosed to the
stock exchange(s) and as well as on the listed entity's website
• Policy on determination of materiality is a new requirement
Disclosure to the Stock exchange–
• Not later than twenty four hours from the occurrence of the event
or information
• In case Board Meeting held for discussion of prescribed items▫ Within 30 minutes of conclusion
57
Guidance on when an event/information
is deemed to be occurred
• upon receipt of approval of Board of Directors
• In certain events/information after receipt of
approval of both i.e. Board of Directors and
Shareholders
• The events/ information in the nature of price
sensitive nature on receipt of approval of the
event by the Board of Directors, pending
Shareholder’s approval
• In the events/information such as natural
calamities, disruption etc. can be said to have
occurred when the Company becomes aware of.
58
Filing of shareholding pattern – Reg 31
Statement showing holding of securities and shareholding
pattern separately for each class of securities shall be
submitted to the Stock exchange –
▫ 1 day prior to listing of its securities on the stock
exchange(s);
▫ on a quarterly basis, within 21 days from the end of each
quarter; and,
▫ within 10 days of any capital restructuring of the listed
entity resulting in a change exceeding two per cent of the
total paid-up share capital
Exception : Listed entities which have listed their specified
securities on SME Exchange, the statements shall be
submitted on a half yearly basis within 21 days from the end
of each half year
59
Re-classification of Promoter
Holdings- Reg 31A
60
Promoter
Person who are in
control
Persons instrumental in the formation of a
plan/programme/ pursuant to which
securities are offered to public
Persons named in
the offer document
Following persons shall not be deemed promoter1. Persons acting in mere professional capacity
2. FIs , FPIs, MFs & Scheduled Banks merely holding atleast 10% of equity cap of the
issuer.
61
Promoter Group
Promoter
Promoter Body Corporate (PBC)
Subsidiary
Companies
Holding
Companies
Body corporate in
which PBC holds
atleast 10% of
equity share capital
Fellow
Associates of
PBC
Body corporate
which holds atleast
10% equity share
capital in PBC
Immediate relatives = Parents, Siblings, Spouse and Children (including
step children)
Fellow associates = Any body corporate where group of
individuals/companies/combination thereof holds 20% or more eq. sh. capital
in such body corporate and also the PBC
Promoter Individual (“X”)
Body corporate
(“Y”) in which “X
“/ HUF/Firm
(where “X” is a
member) holds
atleast 10% equity
share capital
Body
Corporate
(“Z”) where
“Y” holds
atleast 10%
equity share
capital
HUF/Firm where the aggregate
holding of “X” is atleast 10%
62
Promoter holdings- Reg 31A
• New requirement
• Reclassification of promoters pursuant to
▫ Transmission/ Inheritance
▫ Open Offer
▫ Company becoming professionally managed
• Listed entity shall ensure that 100 percent of
shareholding of promoter(s) and promoter group is in
dematerialized form
• The shareholding shall be maintained on a continuous
basis in the manner as specified by the Board
Note –
This was not required earlier in the Listing Agreement.
63
Re-classification of shareholding of
Promoters and promoters Group
• Promoters and Promoters group to disclose
shareholding separately
• Approval of SE requires before any modification
/ re-classification
• In case of transmission etc. the successor to be
classified as promoter
64
Replacement of outgoing promoter
• Approval of Shareholders
• Not more than 10% of the paid up equity capital
shall be held by the outgoing promoter along with
PAC & Promoter group
• Shall not continue to have any special rights
• All agreements granting shareholders special rights
shall be terminated
• The outgoing promoter and his relatives shall not act
as a KMP for more than 3 years from the date of
shareholders approval
▫ Resolution to specifically approve
65
Re- classification of promoter
shareholding as public
• In case of professionally managed companiesNo group can hold more than 1%.
• Shall not directly or indirectly, exercise control
• Increase in the level of public shareholding
pursuant to re-classification shall not be counted
for
compliance
with
minimum
public
shareholding as per SCRA
• The event of re-classification to be disclosed to
SE
• Board may relax conditions
66
Deviations from use of proceeds of
public issue, rights issue,
preferential issue etc. Reg 32
67
Deviations from use of proceeds of issues1/2
• Applicable for public issue, rights issue, preferential
issue etc.
• Quarterly submission of report
▫ indicating deviations in the use of proceeds from the
objects stated in the offer document or explanatory
statement to the notice for the general meeting, as
applicable;
▫ indicating category wise variation (capital
expenditure, sales and marketing, working capital
etc.) between projected and the actual utilization of
funds
68
Deviations from use of proceeds of
issues- 2/2
• Continue reporting till fully utilized
• Statement to be placed before audit committee before
submission
• Explanation for the variation in directors’ report
• Preparation of annual statement of funds utilized for
purposes other than those stated in the offer
document/prospectus/notice
▫ certified by Statutory auditor
▫ placing it before the audit committee till such time the
full money utilized
• Submission of report of monitoring agency
▫ Placing of such report before audit committee annually
69
Financial Statements- Reg 33
70
Financial statements
• power to approve financial results is only with the
board of directors
▫ General practice of committee approval before Board
• Limited review report to be place before Board
• option for submission of quarterly consolidated
results
• intimation shall be given in first quarter of FY.
• disclosures pertaining to investor complaints and
explanation of reasons for variations etc. is not
required to disclose in financial results
• Audit report with modified opinion and the
accompanying annual audit report shall be reviewed
▫ by the stock exchange(s) and
▫ Qualified Audit Report Review Committee
71
Interim financial statements – reg
33
• Quarterly financial statements to comply with
AS 25 or IndAS 34
• Form A (for unmodified opinion)/ B (for
modified opinion) to be submitted along with
annual results (standalone as well as
consolidated)
• Last quarter figure (audited) are balancing
figure between 3rd Y-T-D and Annual results
• The requirement was there in LA as well
72
Miscellaneous provisions
73
Requirements for annual report &
AIM – Reg 34 & 35
• Annual report to be submitted
▫ within 21 days of adoption at AGM
 New requirement
▫ Similar disclosures as earlier provided under CA
and listing agreement
• BRR is applicable to top 100 listed companies as
on March 31 every financial year.
• Annual Information Memorandum to be
submitted as specified by SEBI.
▫ New requirement
74
Disclosures on appointment & reappointment of directors- Reg 36
• Disclosures to the shareholders
▫ brief resume of the director
▫ nature of his expertise in specific functional areas
▫ disclosure of relationships between directors
inter-se
▫ names of listed entities in which the person also
holds the directorship and the membership of
Committees of the board
 Earlier it was for all companies
▫ shareholding of non-executive directors
75
Schemes of arrangement – Reg 37
• Draft schemes to be filed with SEs for
observation before filing with court etc.
▫ Filing with court only after observation from SEs
▫ Such letter to be placed before authority
▫ Validity of observation letter is 6 months
• Submission of documents with SEs
sanction of the scheme
after
76
Certificate for split/ consolidation
of securities- Reg 39
• Issue of certificate within 30 days of lodgment
▫ Earlier it was 6 weeks
• Compliance of procedural requirements may be
delegated to RTA
77
Transfers – Reg 40- 1/2
• Detailed procedures with timelines has been prescribed
▫ for transfer/ transmission/ transposition of securities
• Board may delegate the power to transfer
▫ to a committee or to compliance officer or to the registrar to an issue and/or
share transfer agent
▫ Delegated authority to place report on transfer of securities to the board of
directors in each meeting
• Registration of
▫ Transfer within 15 days
 Otherwise to compensate the aggrieved party
▫ Transmission for securities held in dematerialized mode within 7 days
▫ Transmission for physical securities- within 21 days
• Record to be maintained
• No registration
▫ in case of any statutory restriction
▫ If transferor objects and within 60 days of objection place any prohibitory order
• Indebtedness of transferor is not a valid ground to reject transfer
• In case of delay in transfer the company has to compensate to aggrieved
party and any claim / dispute is to be settled by arbitration as per
exchange bye-law
78
Transfers – Reg 40- 2/2
• Half yearly certificate from PCS
▫ Within 1 month of end of half year
▫ Certificate to be filed with SEs simultaneously
• Provisions are applicable for
▫ deletion of name of the deceased holder
▫ transmission of securities to the legal heir
▫ transposition of securities
• Schedule VII to be followed
79
Record date- Reg 42
• Annual Book closure requirement is done away
with
• Requirement is for fixing record date
• Recommendation or declaration of dividend
and/or cash bonuses at least 5 WDs before the
record date
• Other provisions are similar
80
Remote e-voting- Reg 44
• All resolutions
• In terms of MGT rules
• Submission of results within 48 hours of
conclusion of the meeting
• Proxy form to all
81
Change of name- Reg 45
Mandatory name change (within 6 months) in case
company change its activities which is not reflected in its
name.
Prior approval of SE is mandatory before making
application to ROC
 Both are new requirements
Other provisions are same
82
Website of listed company – Reg
46- 1/2
• Shall have a functional website
▫ Details of business
▫ terms and conditions of appointment of independent directors
▫ composition of various committees of board
▫ code of conduct of board and SMPs
▫ details of establishment of vigil mechanism
▫ criteria of making payments to NEDs
 If not in annual report
▫ RPT policy
▫ Material Subsidiary Policy
▫ Familiarization programme for IDs
 No of programmes attended during the year on cumulative basis
 No of hours spend during the year on cumulative basis
 Other relevant details
▫ Policy on determination of material events
 Contact details of KMPs authorised by the Board for the purpose of
determination of materiality and disclosure thereon
83
Website of listed company – Reg
46-2/2
• the email address for grievance redressal
• contact information of the designated officials responsible for
assisting and handling investor grievances
• financial information
▫ notice of meeting of the board of directors where financial results
shall be discussed
▫ financial results, on conclusion of the meeting of the board of
directors where the financial results were approved
▫ complete copy of the annual report
• shareholding pattern
• details of agreements entered into with the media companies and/or
their associates
• schedule of analyst or institutional investor meet and presentations
• new name and the old name for a continuous period of one year
• Advertisements made under regulation 47
84
Newspaper advertisement – Reg 47
• notice of meeting of the board of directors where financial results to be discussed
• financial results along-with the modified opinion(s) or reservation(s), if any,
expressed by the auditor
▫ If both standalone & CFS has submitted then CFS to be published
• statements of deviation(s) or variation on quarterly basis, after review by audit
committee
▫ explanation in directors report in annual report
• notices given to shareholders by advertisement
• Reference in newspaper publication shall be on the website
• Publication shall be simultaneously with the submission of the same to SEs
▫ FS to be published within 48 hours of conclusion of the meeting of board of
directors
• Atleast 1 English language national daily circulating in the whole or substantially
the whole of India
• 1 daily newspaper published in the language of the region, where the registered
office is situated
• Not applicable to entities whose securities are listed on SME Exchange.
• Website link
▫ New requirement
85
Other Corporate Governance
Requirements- Reg 27
86
Other Requirement-1/2
• May comply with requirements as specified in Part E
of Schedule II.
▫ Non discretionary requirements
 non-executive chairperson may be entitled to maintain a
chairperson's office at the company’s expense
 half-yearly declaration of financial performance including
summary of the significant events in last six-months to
the shareholders
 may move towards a regime of financial statements with
unmodified audit opinion
 Separate posts of chairperson and CEO
 internal auditor may report directly to the audit
committee
87
Other Requirement-2/2
• Quarterly Compliance Report on corporate
governance report within 15 days
▫ Not applicable small listed entities and entities
listed on SME Exchange
 Body corporate other than companies even if listed
in SME Exchange
▫ Detailed material RPTs along with the above
• Report to be singed by Compliance Officer or
CEO
88
Additional disclosures in Annual
Report
89
New disclosures in Annual Report
• Schedule V (10)
 Details of non-compliance, penalties imposed by SE
/ SEBI / Regulatory Authority on any matter related
to capital market
 During last 3 years
 Web link of material subsidiary policy, RPT policy
 Disclosures of commodity price risks & commodity
hedging activities
 Non-compliance of any requirement of CG along
with reason
90
Policies under the Regulations
91
Policies-1/5
Reg
No.
Name of the
policy
Specific Requirements/Contents
Approv
al
Earlier
provisio
ns
Disclosure
on the
website
9
Preservation of
documents Policy
To be classified into two categories:1. documents whose preservation
shall be permanent in nature ;
BoD
--
Not required
2. documents with preservation
period of not less than eight years
after completion of the relevant
transactions:
16 (1c)
Policy
determining
"material
subsidiary"
on Although Regulation 6 is silent about
the contents of this Policy, it is
understood that the Policy among
other things will contain process for
determining
such
material
subsidiaries and also the general
obligations of the holding company in
this regard.
Regulatio Clause 49
ns, 2015
is silent
regarding
this. The
Board can
can such a
policy.
Required to
be disclosed;
Any changes
to be updated
within
2
working days
of
such
change
92
Policies-2/5
Reg
No.
Name of the
policy
17(9)(b)
Risk
Management
Policy
17(5)
Specific
Requirements/Contents
Approval
The policy should lay down BoD
procedures to inform members
of board of directors about risk
assessment and minimization
procedures
Code of Conduct For all members of the Board BoD
and SMPs
Correspo
nding
requirem
ents
Website
disclosure
Clause 49
--
Clause 49
To be disclosed;
Any changes to be
updated within 2
working days of
such change
19
(4)
and
20(4)
with ref
to Part D
of
Schedule
II
Remuneration
of the
directors, key
managerial
personnel and
other employees
Nomination and remuneration NRC
committee shall frame the
policy in consonance with the
Companies Act, 2013 and other
relevant laws
--
--
93
Policies-3/5
Reg
No.
Name of the
policy
Specific
Requirements/Contents
Approval
Corresp
onding
require
ments
Website
disclos
ure
Audit
Committee
Clause 49
Not
required
19(4),
Board
Diversity
20(4),
Policy
Schedule
I part D
23 (1)
Materiality
of
related
party
transactions and on
dealing with
related party
transactions
As the very name suggests, the policy
has to contain details pertaining to
laying
down
thresholds
for
determining ‘materiality’ and on
dealing
with
related
party
transactions.
Regulations,
2015 is silent
regarding
this.
The
Board
can
pass such a
policy.
Clause 49
Required
to
be
disclosed;
Any
changes
to
be
updated
within 2
working
days
of
such
change
23(3)
In line with RPT Policy
Audit
Committee
Clause 49
Not
required
Criteria for
granting omnibus
approval for RPTs
94
Policies-4/5
Reg
No.
Name of the
policy
25(7) Familirization
Programme for
IDs
30
Policy
determination
materiality
46
Vigil Mechanism
Specific
Requirements/Contents
Approval
Correspo
nding
requirem
ents
Website
disclosure
To familiarize the IDs with the
industry where the company
operates, business model etc.
No specific
requirement
Clause 49
To be disclosed;
on To be framed on the basis of BoD
of Regulation 30 (4) and Schedule
III
Any changes to
be
updated
within 2 working
days of such
change
--
For directors and employees to Regulations,
Clause 49
report genuine concerns
2015 is silent
regarding this.
The Board can
pass such a
policy.
Required to be
disclosed;
To be disclosed;
Any changes to
be
updated
within 2 working
days of such
change
95
Policies-5/5
Reg
No.
Name of the
policy
46
Criteria for making
payment to NEDs
Specific
Approval
Requirements/Conte
nts
For payment to NEDs
NRC
including IDs
Corresponding
requirements
Clause 49
To be disclosed,
if not disclosed
in
annual
report;
Any changes to
be
updated
within
2
working days of
such change
Sch II
Part D
criteria for
evaluation of
performance of
independent
directors and the
board of directors
For performance
evaluation of IDs
NRC
Clause 49
Not required
96
Intimations under LODR
97
Prior intimation- 1/2
Reg. No
Particulars
Time line
29(1)(a)
Meeting of Board held for approval financial results viz. quarterly,
half yearly, or annual
5 days in advance
29(1)(b) to
(f)
Meeting of Board held for –
• Buyback
• voluntary delisting
• further public offer, rights issue, IDR, GDR, FCCB, QIPs, Debt
issue, preferential issue and determination of issue price etc.
• declaration/recommendation of dividend
• issue of convertible securities
• declaration of bonus securities if included in agenda
2 working days in
advance
Proviso to
29(1)(d)
AGM / EGM/ postal ballot for approval for further fund raising
indicating type of issuance
2 working days in
advance
29(3)(a)
any alteration in the form or nature of any of its securities that are
listed on the stock exchange or in the rights or privileges of the
holders thereof
11 working days in
advance
98
Prior intimation- 2/2
Reg. No
Particulars
Time line
29(3)(b)
any alteration in the date on which, the interest on debentures or
bonds, or the redemption amount of redeemable shares or of
debentures or bonds, shall be payable
11 working
advance
42(2)
Notice of record date or date of closure of transfer books
days
in
At least 7 working days
(excluding the date of
intimation
and
the
record date)
50 (1)
Information of interest on debentures and bonds, and redemption
amount of redeemable shares or of debentures and bonds
11 working days before
date on and from which
they are payable
50 (2)
intention to raise funds through new non-convertible debt
securities or non-convertible redeemable preference shares
proposes to list either through a public issue or on private
placement basis,
Prior to meeting of the
Board in which it shall be
considered
50 (3)
recommendation or declaration of issue of non convertible debt
securities or any other matter affecting the rights or interests of
holders of non convertible debt securities or non convertible
redeemable preference shares is proposed to be considered
at least two working days
in advance, excluding the
date of the intimation and
date of the meeting
99
Post event intimation- 1/5
Reg.
No
Particulars
Time line
7(3)
Compliance certificate with regard to maintenance of share transfer facility
either in house or through Share transfer agents, RTI
Within 1 month of
end of each half of
the financial year
7(4)
Changes or Appointment of new Share Transfer Agent
13(3)
27(2)(a)
Within 7 days of
entering into the
agreement
Within 21 days from
A statement giving the number of investor complaints pending at the the end of each
beginning of the quarter, those received, disposed off and those remaining quarter
unresolved at the end of the quarter.
Compliance report on corporate governance, Details of Material RPT
Within 15 days from
close of the quarter
100
Post event intimation- 2/5
Reg.
No
Particulars
Time line
30
Material events as enumerated under Schedule III
Not later than 24
hours of occurrence
30
Outcome of Meetings of the Board of Directors• dividends and/or cash bonuses recommended or declared or the
decision to pass any dividend and the date on which dividend shall be
paid/dispatched;
• any cancellation of dividend with reasons thereof;
• the decision on buyback of securities;
• the decision with respect to fund raising proposed to be undertaken;
• increase in capital by issue of bonus shares through capitalization
including the date on which such bonus shares shall be
credited/dispatched;
• reissue of forfeited shares or securities, or the issue of shares or
securities held in reserve for future issue or the creation in any form or
manner of new shares or securities or any other rights, privileges or
benefits to subscribe to;
• short particulars of any other alterations of capital, including calls;
• financial results;
• decision on voluntary delisting by the listed entity from stock
exchange(s).
Within 30 minutes of
the Meeting
101
Post event intimation- 3/5
Reg.
No
Particulars
Time line
31(1)
Statement showing holding of securities and
shareholding pattern separately for each class of
securities, in the format specified by the Board from
time to time within the timeline prescribed

1 day prior to listing of its securities
on the stock exchange(s);

within 21 days from the end of each
quarter;

within 10 days of any capital
restructuring resulting in a change
exceeding 2% of the total paid-up
share capital;

specified securities being listed on
SME Exchange within 21 days from
the end of half year
102
Post event intimation- 4/5
Reg.
No
Particulars
Time line
32(1)
Statements for public issue, rights issue, preferential
issue etc.-
• On a quarterly basis till the time of full
utilisation;
(a) indicating deviations in the use of proceeds from
the objects stated in the offer document or
explanatory statement to the notice for the
general meeting;
•
33(3)
33(3)
(b) indicating category wise variation (capital
expenditure, sales and marketing, working
capital etc.) between projected utilisation of
funds and the actual utilisation of funds
quarterly and year-to-date standalone financial
results and consolidated financial statements ,if any
audited
standalone financial results for the
financial year
specified securities are listed on SME
Exchange then on a half-yearly basis
within 45 days of end of each quarter,
other than the last quarter
within sixty days from
financial year;
the end of the
specified securities are listed on SME
Exchange then on a half-yearly basis
103
Post event intimation- 5/5
Reg.
No
Particulars
Time line
34(1)
Annual Report
21 working days of AGM
37(5)
Documents relating to the scheme of arrangement
Upon sanction of the Scheme by the
Court or Tribunal
39(3)
Information regarding loss of share certificates
and issue of the duplicate certificates
Within 2 days of getting information
44(3)
details regarding the voting results in the format
specified
48 hours of the conclusion of its General
Meeting
104
Chap V- Obligation of Debt
Listed Entities
105
Applicability
• Listed Entity which has listed its:
▫ Non-convertible Debt Securities
▫ Non-Convertible Redeemable Preference Shares
• Perpetual debt instrument and Perpetual noncumulative preference shares.
106
Intimation to SEs- Reg 50
• Prior intimation before the due date of payment of
interest, redemption etc.
 at least 11 working days
• Intention to raise funds through new non-convertible debt
securities or non-convertible redeemable preference shares.
 May be given prior to the BM wherein the proposal shall be
considered.[New insertion]
 Also applicable to entities which has listed its specified securities
and either NCDS or NCRPS or both
• At least 2 working days in advance, about the BM , at which the
recommendation/declaration of issue of
 non convertible debt securities/non convertible redeemable
preference shares or
 matter affecting their rights/ interests
 Also applicable to entities which has listed its specified
securities and either NCDS or NCRPS or both
107
Prior intimation for issue of debt
securities
• The requirement for prior intimation issue of
debt securities was there earlier as well
▫ Prior intimation of “board meeting”
• Several questions
▫ What if there is no board meeting but resolution
by circulation?
▫ What if there is no board meeting but the power is
vested in a committee?
• The spirit of the requirement is flow of
information
▫ The purpose cannot be scuttled by too strict a
literal intepretation
108
Disclosure of Price Sensitive
Information- Reg 51
• Promptly inform SE
▫ information affecting performance/operation,
▫ price sensitive information or
▫ any action affecting payment of interest/dividend of shares or
redemption of non convertible debt securities or redeemable
preference shares.
• Disclosures as specified in Part-B of Sch-III
• Intimation to be provided first to the Exchange(s) before
providing to any third party. [New insertion]
109
Financial Results- 1/2-Reg 52
• Un- audited results-
▫ may submit on half yearly basis
▫ within 45 days from the end of the half year
▫ accompanied by limited review report
 By Statutory Auditor
 By PCA in case of PSU
• Audited results for last half year
▫ within 60 days from the end of FY
▫ advance intimation to SEs
• Half-yearly results shall be taken on record by the board
▫ Signed by the MD/ Executive director.
• Modified opinion in audit reports to be addressed by the BoD
▫ At the time of publishing
• Also applicable to entities which has listed its specified
securities and either NCDS or NCRPS or both
• Earlier same provision was there under Reg 29 of DLA
110
Financial Results- 2/2
• The annual audited results to be submitted along with
the annual audit report and with :
 Form A for audit report with unmodified opinion, or
 Form B for audit report with modified opinion.
• Review of Form B and the annual audit report by SE and the
Qualified Audit Report Review Committee in the manner
specified in Schedule VIII.
• Also applicable to entities which has listed its specified securities
and either NCDS or NCRPS or both
111
Disclosure in Financial statements
• credit rating and change in credit rating
• asset cover available, in case of non convertible debt securities
▫ Not applicable for Banks & NBFCs
• debt-equity ratio
• previous due date for the payment of interest etc. and whether paid or
not
• next due date for the payment of interest etc.
• debt service coverage ratio
▫ not applicable for Banks & NBFCs
• interest service coverage ratio
•
•
•
•
•
•
▫ not applicable for Banks & NBFCs
outstanding redeemable preference shares (quantity and value)
capital redemption reserve/debenture redemption reserve
net worth
net PAT
EPS
Not applicable for unsecured debt issued by regulated financial sector
entities for meeting capital requirements
112
Other provisions w.r.t financial
results
• Certificate from debenture trustee to the effect of
taking note of the contents of FS aforesaid
• Half yearly results to include a statement of
material deviations in the use of proceeds of
NCDs
• Financial results and statement refereed to SubReg 4
▫ to be published in atleast one national daily
▫ circulating in whole of India
▫ within 2 calendar days of conclusion of BM
• Also applicable to entities which has listed its specified securities
and either NCDS or NCRPS or both
113
Annual Report -Reg-53
• Annual report to contain disclosures as specified in
Companies Act, 2013 along with the following:






Audited financial statements
Cash flow statement
Auditors report
Directors report
Name of the debenture trustees with full contact details
Related party disclosures as specified in Para A of Schedule V.
• Also applicable to entities which has listed its specified securities and
either NCDS or NCRPS or both
114
Asset Cover and Credit RatingReg-54 & 55
• Maintain 100% asset cover to discharge the principal
amount for the non-convertible debt securities issued.
 Except for unsecured debt securities issued by regulated
financial sector.
• Disclose to SE for security created and maintained for
secured listed non-convertible debt securities.
 Quarterly/half-yearly/year-to-date
statements, as applicable
and
annual
financial
• Rating obtained for non-convertible debt
securities shall be reviewed at least once a year
by a credit rating agency registered by the Board.
• [Also applicable to entities which has listed its specified securities
and either NCDS or NCRPS or both]
115
Debenture Trustees 1/2
Reg-56
• Entity to forward the following t0 DT promptly:
 Annual report
 Certificate from auditors in respect of utilisation of funds
during the implementation period of the project for
which the funds have been raised. [New provision]
 Copy of all notices, resolutions and circulars relating to▫ new issue of non convertible debt securities
▫ the meetings of holders of non-convertible debt securities
 Intimation regarding- [New provision]
▫ any revision in the rating
▫ any default in timely payment of interest or redemption or
both
▫ failure to create charge on the assets;
116
Debenture Trustees- 2/2
• Half-yearly certificate of maintenance of 100% asset
cover along with half yearly financial results for
listed non convertible debt securities either by:
 practicing company secretary or
 a practicing chartered accountant
• Not applicable to banks or NBFC or where bonds are
secured by a Government guarantee.
• With the consent of DT, information can be sent in
electronic form/fax.
• [Also applicable to entities which has listed its
specified securities and either NCDS or NCRPS or
both]
117
Other submission to SE- Reg 57
 Submit a certificate to the SE regarding timely
payment of interests or principal within 2 days of
the interest or principal or both becoming due.
 File an undertaking on annual basis stating
compliance of terms of Trust Deed and SEBI
(Issue and Listing of Debt Securities) Regulations,
2008.
 Any other information as specified by the Board
from time to time.
 [Also applicable to entities which has listed its
specified securities and either NCDS or NCRPS or
both]
118
Documents and information to Security
holders, Reg- 58
• Entities are required to provide the following:
 Hard copies of annual reports
 Half yearly communications as specified in Reg 52(4)&(5)
• Notice of meetings of NCD holders stating provisions for
appointment of proxy.
• Send proxy forms to security holders.
• [Also applicable to entities which has listed its specified
securities and either NCDS or NCRPS or both]
119
Structure of NCDs- Reg 59
• No material modification to the structure of the
debenture in terms of coupon, conversion,
redemption, or otherwise without approval of
▫
▫
▫
▫
BoD
Debenture Trustee in case of NCDs
Prior approval of SEs
requisite majority of holders of that class
• Provisions of CA to be complied with
▫ [Also applicable to entities which has listed its
specified securities and either NCDS or
NCRPS or both]
120
Record date- Reg 60
• Record the for the purpose of payment of
interest, redemption or repayment amount etc.
• Minimum 7 working days advance notice to SE
• Also applicable to entities which has listed its
specified securities and either NCDS or NCRPS
or both
121
Terms of NCDs Reg 61
• Ensure timely payment of interest
• shall not declare or distribute any dividend in case of
default payment of interest on debt securities or
redemption thereof or in creation of security as per the
terms of the issue of debt securities
▫ Not applicable for unsecured debt securities issued by
regulated financial sector entities eligible for meeting
capital requirements
• shall not forfeit unclaimed interest/dividend▫ To be transferred to IEPF in terms of CA
• Redemption only on pro rata or by lot unless terms of
issue provide otherwise
• Reg 40 and schedule VII to be followed for transfer of
securities
• [Also applicable to entities which has listed its specified securities and either
NCDS or NCRPS or both]
122
Website disclosure- Reg 62
• Shall maintain a functional website having▫ details of its business
▫ financial information including complete copy of the annual
report including balance sheet, profit and loss account, directors
report etc.
▫ contact information of the designated officials responsible for
assisting and handling investor grievances
▫ email address for grievance redressal and other relevant details
▫ name of the debenture trustees with full contact details
▫ the information, report, notices, call letters, circulars,
proceedings, etc. concerning NCRPS or NCDs
▫ all information and reports including compliance reports filed by
the listed entity
▫ information with respect to the following events:
 default by issuer to pay interest on or redemption amount
 failure to create a charge on the assets
 revision of rating assigned to the non convertible debt securities
123
Intimation to Stock Exchange
124
Prior Intimation to Stock Exchange-1
Reg
Particulars
Timeline
50(1)
Interest on debentures/bonds, and redemption
amount of shares /debentures/bonds becomes
payable
At least 11 working days before
the amount becomes due.
50(2)
Intention to raise funds through the non
convertible debt securities/redeemable pref.
shares
Prior to the issuance.
or
Prior to the BM
50(3)
For recommendation or declaration of issue of
non convertible debt securities or any other
matter affecting the rights of security holders
At least 2 working days of the
BM(excluding the date of
intimation and the date of
meeting)
60
Notice of the record date
At least 7 working days in
advance (excluding the date of
intimation and the record
date), or as per SE discretion.
125
Post Intimation To Stock Exchange-1/3
Reg
Particulars
Timeline
51(1)
Information affecting performance/operation, price
sensitive information or any action affecting payment of
interest/dividend of shares or redemption of non
convertible debt securities or redeemable preference
shares.
Promptly
52(1)
Un-audited results to be submitted
Within 45 days from the
end of the half year.
52(2)
Audited results to be submitted
Within 60 days from the
end of last half year
If, unaudited results submitted for last half year
Audited results for the
entire year to be
submitted as soon as they
are approved by BOD.
126
Post Intimation To Stock Exchange-2/3
Reg
Particulars
Timeline
52(7)
Submit a statement of material deviation, if any in
use of issue proceeds
On half yearly basis along with
the financial results
54(2)
ASSET COVER: The extent and nature of security Quarterly, half-yearly, year-tocreated and maintained with respect to its secured date and annually .
listed non-convertible debt securities
57(1)
A certificate certifying timely payment of interests or Within 2 days of the interest or
principal obligations or both in respect of the non principal or both becoming due
convertible debt securities.
127
Post Intimation To Stock Exchange3/3
Reg
Particulars
Timeline
57(2)
Undertaking stating all documents and Annual basis
intimations required to be submitted to
Debenture Trustees in terms of Trust Deed and
SEBI (Issue and Listing of Debt Securities)
Regulations, 2008 have been complied with.
128
Intimation to Debenture Trustees1/2
Reg
Particulars
56(1)(a)
Copy of Annual Report along with the copy of certificate Promptly as a certificate of
of utilisation of fund issued by auditor
utilisation issued by the Auditor
of the Company
*In case the debentures or preference shares issued for
financing working capital.
*The auditor's certificate may be
submitted at the end of each
financial year till said purpose of
fund raising is achieved.
a copy of all notices, resolutions and circulars relating
Promptly:
to(i) as they are sent to
(i) new issue of non convertible debt securities
shareholders/ holders of non
convertible debt securities
56(1)(b)
Timeline
(ii) the meetings of holders of non-convertible debt (ii) as they are sent to the holders
securities
of non convertible debt securities
or advertised in the media
including those relating to
proceedings of the meetings
129
Intimation to Debenture Trustees-2/2
Reg
Particulars
Timeline
56(1)(d)`
Certificate from PCA/PCS
regarding maintenance of
100% asset cover and half
yearly financial results
Half-yearly
Exception: Banks, NBFC
registered with Bank
130
Comparative Analysis
LODR DLA Broad Head
Particulars
Reg 56
Along with the Annual Report,
certificate from auditors in
respect of utilisation of funds
--
Documents and Intimation
to Debenture Trustees.
Intimation regarding revision in
rating, default in timely payment of
interest etc, failure to create charge.
Reg 54
(2)
Reg
16 A
Extent and nature of
security created and
maintained
Disclose to SE
LODR-Quarterly, Half yearly or year
to date, as applicable
DLA: Half yearly basis only.
131
Comparative Analysis
LODR
DLA
Broad Head
Particulars
--
Reg-7
ECS, Direct Credit, RTGS
or NEFT to be used for
payment of interest etc
No such requirement in LODR.
Reg 52
(8)
Reg 29
Publication of financial
results
LODR: Within 2 calendar days of
the conclusion of the BM.
DLA: 48 hours.
--
Reg 50
(2)
Reg
19A
--
Publication in newspaper
the statement of material
deviation in the use of
issue proceeds
No such requirement in LODR.
Intention to raise funds
LODR: Intimation may be given to
SE prior to the Board meeting.
DLA: Intimation to be given only
before the issuance.
132
Comparative Analysis
LODR
DLA
Broad Head
Particulars
Reg 50
(3)
--
Intimation of BM to SE
2 working days in advance
wherein issue of securities or
matter affecting the rights or
interests of security holders is to
be considered.
Reg 59
(2)
--
Material modification to
the structure of NCDS or
NCRPS
-To comply CA, 2013
-Approval by majority of that
class.
Earlier these 2 conditions were
not there.
--
Reg
21A
Deposit with SE 1% of
amount of debt
securities before the
opening of subscription
No such requirement in LODR
133
Comparative Analysis
LODR
DLA
Reg 58
--
--
Broad Head
Particulars
Documents to Security ● Proxy form to be given
holders.
Reg 28 RPT disclosure
A
Loans and advances in the nature of
loans if
(i) no repayment schedule or
repayment beyond seven years; or
(ii) no interest or interest below sec
372A of CA by name and amount.
Above disclosure is not required
under LODR.
Sch V
--
RPT disclosure
Not applicable to listed Banks.
134
Comparative Analysis
LODR
DLA
Broad Head
Reg 52
(2)
Reg 29 To take note of
A
Half-yearly results
Particulars
DLA: By the BoD or its Sub-committee.
LODR: Shall be done by BoD only.
Reg 52
(2)
Reg 29 Modified opinion
C
in Audit report
DLA: States Qualified opinion.
LODR: States Modified opinion.
Reg 52
(3)
--
Form A & Form B
to SE
● Form A for audit report with
unmodified opinion,
● Form B for audit report with
modified opinion.
135
Comparative Analysis
LODR
DLA
Broad Head
Particulars
Reg 50
--
Intimation to SE
before due date of
payment
Prior intimation before the due date of
payment of interest, redemption etc.
at least 11 working days
Reg 52
(6)
--
NCRPS
Additional disclosures as notes to
financial statement has been
prescribed for NCRPS.
Reg 55
--
Credit Rating
Review of each rating once in a year by
a credit rating agency.
136
Comparative Analysis
LODR
DLA
Reg 57
--
Broad Head
Particulars
Submission to SE
A certificate for timely payment of
interests or principal within 2 days of
the interest or principal or both
becoming due.
File an undertaking on annual basis
stating compliance of terms of Trust
Deed and SEBI (Issue and Listing of
Debt Securities) Regulations, 2008.
Reg 61
--
Terms of NCDS or
NCRPS
No dividend in case of default payment
of interest etc.
Not applicable for unsecured debt
securities issued by regulated financial
sector entities eligible for meeting
capital requirements.
137
Comparative Analysis
LODR
DLA
Reg 62
--
Broad Head
Particulars
Press release with
respect to the
events
Entity may issue press release w.r.t
website disclosures.
138
Business Responsibility Report
139
BRR- Regulation 34
•
•
•
•
Applicable for top 100 listed entities
Along with Annual Report
Within 21 working days of adoption at AGM
Format yet to be prescribed
140
Contents of BRR in existing
format
141
Existing format
• General information
including
about
the
company
▫ 3 key products/services
▫ Number of international & national locations of
business activity
▫ Market served i.e. local, state etc.
• Financial details
▫
▫
▫
▫
▫
Paid up capital
Total turnover
PAT
Spending on CSR
List of activities of CSR
142
Existing format
• Other details
▫ Number of subsidiaries
▫ Number of subsidiaries and percentage of other
entities participating in the BR initiatives
• BR information
▫ Details of directors responsible for BR policy
▫ Principle wise BR policy and explanation thereon
• Governance related to BR
▫ Frequency of assessment of BR performance by BoD,
Committee or CEO
▫ Whether company publish BR or any Sustainability
Report, link for viewing the same and frequency of
such publication
• Other Principles
143
Principles under BRR
144
Principle 1
• Does the policy relating to ethics, bribery and
corruption cover only the company?
• Does
it
extend
to
the
Group/Joint
Ventures/Suppliers/Contractors/NGOs/Others?
• How many stakeholder complaints have been
received in the past financial year and what
percentage was satisfactorily resolved by the
management?
145
Principle 2- 1/2
• List of 3 products or services whose design has
incorporated social or environmental concerns, risks
and/or opportunities.
• For each such product, provide the following details in
respect of resource use (energy, water, raw material etc.)
per unit of product(optional):
▫ reduction during sourcing/production/ distribution
achieved since the previous year throughout the value
chain?
▫ Reduction during usage by consumers (energy, water) has
been achieved since the previous year?
• Does the company have procedures in place for
sustainable sourcing (including transportation)?
▫ If yes, what percentage of your inputs was sourced
sustainably?
146
Principle 2- 2/2
• Has the company taken any steps to procure
goods and services from local & small producers,
including communities surrounding their place
of work?
▫ If yes, what steps have been taken to improve their
capacity and capability of local and small vendors?
• Does the company have a mechanism to recycle
products and waste?
▫ If yes, what is the percentage of recycling of
products and waste (separately as <5%, 5-10%,
>10%).
147
Principle 3- 1/5
• Total number of employees
• Total number of employees hired on
temporary/contractual/casual basis
• Number of permanent women employees.
• Number of permanent employees with
disabilities
• employee association that is recognized by
management.
• What percentage of your permanent employees
is members of this recognized employee
association?
148
Principle 3- 2/5
• Number of complaints relating to child labour,
forced labour, involuntary labour, sexual
harassment in the last financial year and
pending, as on the end of the financial year in
the following format
Category
Child
labour/forced
involuntary labour
No of complaints filed during
the financial year
labour/
Sexual harassment
Discriminatory
employment
No of complaints pending as on
end of the financial year
149
Principle 3- 3/5
• What percentage of the under mentioned
employees were given safety & skill up-gradation
training in the last year?
▫
▫
▫
▫
Permanent Employees
Permanent Women Employees
Casual/Temporary/Contractual Employees
Employees with Disabilities
150
Principle 4- 4/5
• Has the company mapped its internal and
external stakeholders?
• Out of the above, has the company identified the
disadvantaged, vulnerable & marginalized
stakeholders?
• Are there any special initiatives taken by the
company to engage with the disadvantaged,
vulnerable and marginalized stakeholders?
151
Principle 5- 5/5
• Does the policy of the company on human rights
cover only the company or extend to the
Group/Joint
ventures/
suppliers/
Contractors/NGOs/Others?
• How many stakeholder complaints have been
received in the past financial year and what
percent was satisfactorily resolved by the
management?
152
Principle 6
• Does the policy related to Principle 6 cover only the company or
extends
to
the
Group/Joint
Ventures/Suppliers/Contractors/NGOs/others
• Does the company have strategies/ initiatives to address global
environmental issues such as climate change, global warming, etc?
• Does the company identify and assess potential environmental
risks?
• Does the company have any project related to Clean Development
Mechanism and details thereof?
• Has the company undertaken any other initiatives on - clean
technology, energy efficiency, renewable energy, etc.
• Are the Emissions/Waste generated by the company within the
permissible limits given by CPCB/SPCB for the financial year being
reported?
• Number of show cause/ legal notices received from CPCB/SPCB
which are pending (i.e. not resolved to satisfaction) as on end of
Financial Year
153
Principle 7
• Is the company a member of any trade and
chamber or association and name of the major
ones that the business deals with.
• Has the company advocated/lobbied through
above associations for the advancement or
improvement of public good?
▫ if yes, specify the broad areas
154
Principle 8
• Does
the
company
have
specified
programmes/initiatives/projects in pursuit of the policy
related to Principle 8?
▫ If yes details thereof
• Are the programmes/projects undertaken through in-house
team/own
foundation/external
NGO/government
structures/any other organization?
• Have the company done any impact assessment of its
initiative?
• What is the company's direct contribution to community
development projects▫ Amount in INR and the details of the projects undertaken.
• Have the company taken steps to ensure that this community
development initiative is successfully adopted by the
community?
155
Principle 9
• What percentage of customer complaints/consumer
cases are pending as on the end of financial year?
• Does the company display product information on the
product label, over and above what is mandated as per
local laws?
• Is there any case filed by any stakeholder against the
company regarding unfair trade practices, irresponsible
advertising and/or anti-competitive behaviour during
the last five years and pending as on end of financial
year.
▫ If so, details thereof.
• Did the company carry out any consumer survey/
consumer satisfaction trends?
156
Queries that may arise
157
Regulation 24(4)-significant transaction by
material subsidiary
• Whether regulation 24(4) is applicable to all
subsidiaries or only material subsidiary?
▫ The Explanation below the aforesaid Regulation has made
it very clear that sub- regulation (4) is applicable with
regard to the Material Unlisted Subsidiary companies
only. Hence, the statement of significant transaction or
arrangement entered into by an unlisted material
subsidiary shall have to be placed before the Board of a
listed entity.
158
Regulation 29(3)-alteration of nature/ form
of securities
• What form or nature of securities include for the
said Regulation?
▫ Regulation 29 is applicable to those entities whose specified
securities are listed. The terms “Specified Security” has been
defined to mean equity shares and convertible securities which
include convertible debt instrument and convertible preference
shares.
▫ Further, in terms of Regulation 63, the aforesaid Regulation is
also applicable to those entities whose specified securities as
well as non- convertible debenture or non- convertible
preference or both are listed.
▫ On a combined reading of the aforesaid provisions, the term
‘securities’ shall include the specified securities as well as NCDs/
NCRPS if they are listed by virtue of clause (a).
159
Regulation 30(8)- website
disclosure of material events
• Is the listed entity required to adopt a separate
Archival Policy?
▫ The aforesaid Regulation does not prescribe for
formulation of a separate archival policy.
▫ Regulation 9, which requires listed entities to
frame a policy of preservation of documents, the
archival policy may form part of the said policy.
▫ The policy for determination of material events
may also contain a clause to the effect that the
preservation of the documents after five years
shall be in terms of archival policy/ preservation
of documents policy of the entity.
160
Regulation 30(9)- events/information
w.r.t material subsidiary
• The events or information referred to is
concerned
for
material
subsidiary
or
information of a subsidiary which will be
material to the Holding Company?
▫ Since the Regulation is concerned about disclosing
of those events/ information which are material
for a listed entity, apparently, the intention of the
said Regulation seems to be for disclosure of
events/ information with respect to all
subsidiaries which are or may be material for the
listed entity.
161
Regulation 50(1)-intimation of due date
of payment of interest etc.
• If the dates are mentioned in the offer
document/Information Document, whether
separate intimation has to be given to SE?
▫ The aforesaid Regulation is very specific about giving
of 11 working days prior intimation with regard to the
due date for payment of interest/ redemption amount
etc. Hence, even if the offer document/ information
document already contains the due date of payment of
interest etc., it apparently seems that the said
Regulation has not provided any exemption and
accordingly, the listed entity shall have to make such
prior intimation.
162
Regulation 54(2)-quarterly/half
yearly/annual disclosure
• How shall an NCD listed entity comply with
quarterly and year-to-date disclosure of information
w.r.t extent & nature of security created
and
maintained for secured listed NCDs?
▫ Sub- regulations (1) & (2) of Regulations 52 are applicable to those
entities whose NCDs or NCRPS are only listed. However, if the
specified securities of such entities are also listed then the
provisions related to financial statements as provided under
Regulation 33 will be applicable whereby preparation and
submission of quarterly, half yearly and annual financial
statements have been provided. Therefore, if only NCDs are listed
then the entity is required to comply with provisions of Regulation
52(1) & (2) but not Regulation 33.
▫ Therefore, it is clear that listed entity shall have to make the
disclosures in the quarterly/half yearly/year to date/ annual
financial statements as may be applicable to the listed entity, and
if the entity is only required to follow Regulation 52, then the
disclosure shall be in half yearly and annual financial statements.
163
Regulation 56(1)-certificate of Statutory
Auditor w.r.t utilisation of issue proceeds
• What kind of certificate by the auditors is
required and when shall the same be given?
▫ Apparently, it may be construed that if the fund is
raised for a particular project, the certificate shall have
to be provided at the end of each of the financial years
till the completion of the project along with the annual
report.
▫ Further, the proviso clearly states that if funds are
raised for working capital, general corporate purpose
etc. then the aforesaid certificate shall have to be
provided for each financial year till it is fully utilized or
the purpose has been achieved
164
Regulation 62(2)-press release & Para A of
part A of sch III
• The word ‘may’ shall have
implication or not mandatory?
mandatory
▫ Issuing a press release is a non- mandatory
requirement.
• Whether
intimation
to
SE
about
investors/analyst meet should be accompanied
by investors’ presentation in terms of point 15 of
Para A of Part A of Schedule III?
▫ It seems the presentation is also required to be
submitted