CS Manohar Mishra

CS Manohar Mishra

Comparative Analysis of Listing Agreement and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015

SEBI had notified SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations) on September 2, 2015. A time period of ninety days had been given for implementing the Regulations. However, two provisions of the regulations, which are facilitating in nature, were applicable with immediate effect i.e. w.e.f September 2, 2015. These pertain to (i) passing of ordinary resolution instead of special resolution in case of all material related party transactions subject to related parties abstaining from voting on such resolutions, in line with the provisions of the companies Act, 2013, and (ii) re-classification of promoters as public shareholders under various circumstances.

Applicability of the Regulations (Regulation 3)

These regulations shall apply to the listed entity who has listed any of the following designated securities* on recognized stock exchange(s):

a) #Specified securities listed on main board or SME Exchange or Institutional Trading Platform;

b) Non-convertible debt securities, non-convertible redeemable preference shares, perpetual debt instrument, perpetual non-cumulative preference shares;

c) Indian Depository Receipts;

d) Securitised Debt Instruments;

e) Units issued by mutual funds;

Any other securities as may be specified by SEBI (Board).

Note: 1. *Designated securities are specified securities and other securities such as the non-convertible debt securities, non-convertible redeemable preference shares, perpetual debt instrument, perpetual non-cumulative preference shares, Indian depository receipts, securitised debt instruments, units issued by mutual funds and any other securities as may be specified by the Board.

2. #Specified securities take their meaning from the (Issue of Capital and Disclosure Requirements) Regulations, 2009 to mean the equity shares and other convertible instruments.

Numerous Circulars issued by SEBI relating to Listing Regulations are tabulated below:

1. SEBI vide circular no. CIR/CFD/CMD/4/2015 dated September 09, 2015 had specified the events that have to be necessarily disclosed without applying any test of materiality and the events that should be disclosed by the listed entity, if considered material;

2. SEBI vide Circular No. CIR/CFD/CMD/5/2015 Date-September 24, 2015 had Format for compliance report on Corporate Governance to be submitted to Stock Exchange (s) by Listed Entities;

3. SEBI vide Circular No. CIR/CFD/CMD/6/2015 dated October 13, 2015 had prescribed the format ofUniform Listing Agreement;

4. SEBI vide Circular No. CIR/CFD/CMD/8/2015 dated November 04, 2015 had prescribed the format of Voting Result;

5. SEBI vide Circular No. CIR/CFD/CMD/9/2015 dated November 04, 2015 had prescribed the format for quarterly holding pattern, disclosure norms for corporate governance report and manner for compliance with two-way fungibility of Indian Depository Receipts (IDRs);

6. SEBI vide Circular No. CIR/CFD/CMD/10/2015 dated November 04, 2015 had prescribed the format for Business Responsibility Report (BRR);

7. SEBI vide Circular No. CIR/OIAE/001/2015dated November 30, 2015 had laid down the procedure for Issue of No Objection Certificate for release of 1% of issue amount;

8. SEBI vide Circular NoCIR/CFD/CMD/12/2015 dated November 30, 2015 had prescribed Uniform fine structure for non-compliance with Listing Regulations regarding non-submission of certain periodic reports andStandard Operating Procedure for suspension and revocation of trading of specified securities;

9. SEBI vide Circular No. CIR/CFD/CMD/13/2015 dated November 30, 2015 had prescribed the format of disclosure of shareholding pattern and manner of maintaining shareholding in dematerialized format;

10. SEBI vide Circular No. CIR/CFD/CMD/14/2015 dated November 30, 2015 had prescribed the Manner of achieving minimum public shareholding;

11. SEBI vide Circular No. CIR/CFD/CMD/15/2015dated November 30, 2015 had prescribed the format forpublishing financial results;

12. SEBI vide Circular NoCIR/CFD/CMD/56/2016dated May 27, 2016 had prescribed the format ofStatement on Impact of Audit Qualifications and dispensed the existing requirement of filing Form A or Form B for audit report with unmodified or modified opinion respectively;

13. SEBI vide Circular No. CIR/CFD/FAC/62/2016 dated July 05, 2016 had revised formats for Financial Results and Implementation of Ind-AS by Listed Entities.

The comparative analysis of the Listing Agreement and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 are tabulated below:

Clauses of Listing Agreement Regulations/Schedule/Part of Listing Regulations, 2015Remarks
3(c)

To issue certificates within fifteen days of the date of lodgement for transfer, subdivision, consolidation, renewal, exchange or endorsement of calls/allotment monies.

39(2)

Read with

40(3)

To issue certificates or receipts or advices, as applicable, of subdivision, split, consolidation, renewal, exchanges, endorsements, issuance of duplicates thereof or issuance of new certificates or receipts or advices, as applicable, in cases of loss or old decrepit or worn out certificates or receipts or advices, as applicable within a period of thirty days from the date of such lodgement.

The listed entity shall register transfers of its securities in the name of the transferee(s) and issue certificates or receipts or advices, as applicable, of transfers; or issue any valid objection or intimation to the transferee or transferor, as the case may be, within a period of fifteen days from the date of such receipt of request for transfer.

Time period for Issuance of certificate in case of split, consolidation, renewal, exchanges, endorsements etc. have been increased to 30 days except in case of transfer of shares.

16

Company to give notice of closure of transfer books/record date at least seven working days in advance to stock exchanges.

42(2)The listed entity shall give notice in advance of at least seven working days (excluding the date of intimation and the record date/ date of closure of closure of transfer books) to stock exchange(s) specifying the purpose Of the record date/closure.Seven clear working days’ notice is required
19(a)

Give prior intimation to the Exchange about the Board Meeting at which proposal for Buy Back of Securities, declaration /recommendation of Dividend or Rights or issue of convertible debentures or of debentures carrying a right to subscribe to equity shares or the passing over of dividend or the issue of right is due to be Considered at least 2 working days in advance.

29(1) (b) &(e)

Give prior intimation of Board Meeting at least two working days in advance, excluding the date of the intimation and date of the meeting.

Two clear working days’ notice is required.

19(b)

Give notice simultaneously to the Stock Exchange(s) in case the proposal for declaration of bonus is communicated to the Board of Directors of the company as part of the agenda papers.

(No prior intimation to the Exchange is required about the Board Meeting in case the declaration of Bonus by the Company is not on the agenda of the Board Meeting)

29(1)(f)

Give prior intimation to Stock Exchange(s) at least 2 working days in advance, excluding the date of the intimation and date of the meeting, about the Board Meeting in which the proposal for declaration of bonus securities where such proposal is communicated to the Board of Directors of the listed entity as part of the agenda papers. Provided that in case the declaration of bonus is not on the agenda of the Board Meeting, prior intimation is not required to be given to the Stock Exchange(s).

Two clear working days’ notice is required
20 (a)

& (c)

Intimate to the Stock Exchange(s) within 15 minutes of the closure of the Board Meeting:

(a) all dividends and/or cash bonuses recommended or declared or the decision to pass any dividend or interest payment and date on which dividend shall be paid/dispatched;

(c) decision on Buyback of Securities.

Regulation

30(6)

Schedule

III, Part A,

Para A (4)

(a)&(c)

Disclose to the Stock Exchange(s), within 30 minutes of the closure of the Board Meeting:

(a) 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;

(c) decision on buyback of securities.

Time frame changed to 30 minutes of the closure of the Board Meeting
22(a)

to (c)

Intimate to the SE within 15 minutes of the closure of the Board Meeting :

(a) short particulars of any increase of capital whether by issue of bonus shares through capitalization, or by way of right shares to be offered to the shareholders or debenture holders, or in any other way;

(b) short particulars of the 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;

(c) short particulars of any other alterations of capital, including calls;

Regulation

30(6)

Schedule

III, Part A,

Para A (4)

(e) to (g)

Disclose to the Stock Exchange(s), within 30 minutes of the closure of the Board Meeting:

(e) increase in capital by issue of bonus shares through capitalization including the date on which such bonus shares shall be credited/ dispatched;

(f) re-issue of forfeited shares or securities, or 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;

(g) short particulars of any other alterations of capital, including calls.

Time frame changed to 30 minutes of the closure of the Board Meeting
24 (a)In-principle approval of stock exchange for further issue of securities.28(1)In-principle approval of stock exchange for further issue of securities.Same as Listing Agreement
24(f)The company agrees that it shall file any scheme/petition proposed to be filed before any Court or Tribunal under sections 391,394 and 101 of the Companies Act, 1956, with the stock exchange, for approval, at least a month before it is presented to the Court or Tribunal.37The listed entity shall not file any scheme of arrangement under sections 391-394 and 101 of the Companies Act, 1956 or under Sections 230-234 and Section 66 of Companies Act, 2013 ,whichever applicable, with any Court or Tribunal unless it has obtained observation letter or No-objection letter from the Stock Exchange.Observation letter or No-objection letter to be obtained from the Stock Exchange(s).

Validity of the letter is 6 months from the date of issuance.

25 &

36

In event of granting of any options to purchase any shares of the Company, the Company will promptly notify the Exchange:

(a) of the number of shares covered by such options, of the terms thereof and of the time within which they may be exercised;

(b) of any subsequent changes or cancellation or exercise of such options.

Regulation

30,

Para B of

Part A of

Schedule

III

The Company shall intimate to the Stock Exchange(s) regarding the Various matters provided under Regulation 30(1) to 30(12)
30Promptly notify the Stock Exchange(s):

(a) of any change in the Company’s directorate by death, resignation, removal or otherwise;

(b) of any change of Managing Director, Managing Agents or Secretaries and Treasures;

(c) of any change of Auditors appointed to audit the books and accounts of the Company.

Regulation

30(6),

Schedule

III, Part A,

Para A (7)

Disclose to the SE change in directors, key managerial personnel (Managing Director, Chief Executive Officer, Chief Financial Officer, Company Secretary etc.), Auditor and Compliance Officer within 24 hours.Time frame of 24 hours has been specified
31(a)Forward to the SE promptly six copies of the Statutory and Directors’ Annual Reports along with Form A or Form B, as applicable, Balance Sheets and Profit and Loss Accounts and of all periodical and special reports as soon as they are issued and one copy each to all the recognized stock exchanges in India.34(1)

33(3)(d)

Submit the Annual Report to the SE within 21 working days of it being approved and adopted in the AGM as per the provisions of the Companies Act, 2013.

 

The requirement of sending 6 copies of Annual Report has been dispend.

Now send Annual Report is required to be send within 21 working days of its being approved and adopted by the Shareholder’s at the AGM.

The annual report, besides containing audited financial statements, shall now additionally also include Statement on Impact of Audit Qualifications as stipulated in regulation 33(3) (d).

31(d)Forward to the SE promptly the proceedings of the Annual and Extraordinary General Meetings of the Company.Schedule

III, Part

A, Para A

(13)

Disclose to the SE Proceedings of Annual and Extra-ordinary General Meetings within 24 hours.Time frame of 24 hours is prescribed
35(b)Submit to the Stock Exchange shareholding pattern on a quarterly basis, within 21 days from the end of each quarter.31(1)(b)Submit to the Stock Exchange shareholding pattern on a quarterly basis, within 21 days from the end of each quarter.1.No changes in the time period;

2. New format has been prescribed by SEBI through circular no. CIR/CFD/CMD/13/2015 dated November 30, 2015

35ASubmit voting results to the Stock Exchange within 48 hours of conclusion of its General Meeting.44(3)Submit voting result to the Stock Exchange(s) within 48 hours of conclusion of its General Meeting in the format prescribed by the SEBI1.No changes in the time period;

2. New format has been prescribed by

SEBI vide circular no. Circular No. CIR/CFD/CMD/8/2015 dated November 04, 2015

41(I)

(c)

Submit audited or unaudited quarterly and year to date financial results along with the limited review report to the SE within 45 days of end of each quarter, other than the last quarter.33(3)(a)Submit audited or unaudited quarterly and year to date financial results along with the limited review report to the SE within 45 days of end of each quarter, other than the last quarter.1.No changes in the time period;

2. New format has been prescribed by

SEBI vide circular no. CIR/CFD/CMD/15/2015dated November 30, 2015

41(I)

(d)

Submit audited financial results along with the audit report for the entire financial year to the SE, within 60 days of the end of the financial year.33(3)(d)Submit audited standalone financial results along with the audit report for the financial year to the SE, within 60 days from the end of the financial year.Submit Audited financial statements within 60 days from the end of the FY along with the Audit Report and (Statement on Impact of Audit Qualifications (applicable only for Audit Report with modified opinion)
41(I)

(f)

The financial results shall be submitted to the SE within 15 minutes of conclusion of the meeting of the Board in which they were approved.Schedule

III, Part A,

Para A (4)

(h)

The financial results shall be submitted to the SE within 30 minutes of conclusion of the meeting of the Board in which they were approved.Time frame has been changed to 30 minutes ;
41(III)

(a)

Give prior intimation to SE of the date and purpose of meetings of the Board or Committee in which the financial results will be considered at least 7 clear calendar days prior to the meeting (excluding the date of the intimation and date of the meeting)29(1)(a) &

proviso to

29(2)

Give prior intimation to SE about the BM in which financial results viz. quarterly, half yearly, or annual, as the case may be, is due to be considered at least 5 days in advance(excluding the date of the intimation and date of the meeting)Five clear days notice is required instead of 7 clear Calendar days.
41(III)

(b)

Publish notice in newspaper simultaneously with the submission of the same to the SE.47(1)(a)Publish notice in newspaper simultaneously with the submission of the same to the SEAt least 5 days before the board meeting instead of 7 days
41(VI)

(a)

Within 48 hours of conclusion of the Board meeting at which the financial results were approved, publish a copy of the financial results which were submitted to the SE in newspaper.47(1)(b)

Read with

47(3)

Within 48 hours of conclusion of the BM at which the financial results were approved, publish a copy of the financial results which were submitted to the SE in newspaper.No changes in the publication time limits
47(c)

Ensure that the RTA and/or the In-house Share Transfer facility, as the case may be, produces a certificate from a PCS within 1 month of the end of each half of the financial year, certifying that all certificates have been issued within 15 days of the date of lodgement for transfer, sub-division, consolidation, renewal, exchange or endorsement of calls/allotment monies and a copy of the same shall be made available to the SE within 24 hours of the receipt of the certificate by the Company.

40(9) & (10)

Ensure that the share transfer agent and/ or the in-house share transfer facility, as the case may be, produces a certificate from a practicing company secretary within 1 month of the end of each half of the financial year, certifying that all certificates have been issued within 30 days of the date of lodgement for transfer, sub-division, consolidation, renewal, exchange or endorsement of calls/allotment monies and ensure that certificate be filed with the SE Simultaneously.

1. Certificate has to be issued within 30 days instead of 15 days.

2. Earlier certificate was to be filed within 24 hours of its receipt, now it is to be filed Immediately.

49 (I)

(A)

The Rights of Shareholders4(2)The Rights of ShareholdersSame as Listing Agreement
49 (I)

(B)

Role of stakeholders in Corporate Governance4(2)Role of stakeholders in Corporate GovernanceSame as Listing Agreement
49 (I)

(C)

 

Disclosure and Transparency4(2)Disclosure and TransparencySame as Listing Agreement
49 (I)

(D)

 

Responsibilities of the Board4(2)Responsibilities of the BoardSame as Listing Agreement
49 II)

(A)

Composition of Board17(1)Composition of Board of Director’sSame as Listing Agreement
49 II)

(B)(1)

Independent Directors16(b)Independent DirectorsSame as Listing Agreement
49 II)

(B)(2

Limit on number of Directorships25(1)Limit on number of DirectorshipsSame as Listing Agreement
49 II)

(B)(3)

 

Maximum tenure of Independent Directors25(2)Maximum tenure of Independent DirectorsSame as Listing Agreement
49 II)

(B)(4)

Formal letter of appointment to Independent Directors46(2)(b)Terms and condition of appointment of Independent DirectorsRequirement of issuance of formal letter of Appointment of ID’s has been dispensed.

However, the Companies Act, 2013 still requires the issuance of appointment letter to Independent Directors.

49 II)

(B)(5)

Performance evaluation of Independent Directors17(10)Performance evaluation of Independent DirectorsSame as Listing Agreement
49 II)

(B)(6)

Separate meeting of independent directors25(3) & 25(4)Separate meeting of independent directorsSame as Listing Agreement.

However, SS-1, issued by the ICSI has prescribed that the ID’s should meet once in a Calendar Year.

49 II)

(B)(7)

 

Familiarisation programme for Independent Directors25(7) &

46(2)(i)

Familiarisation programme for Independent DirectorsMore disclosure on the Website of the Company with others details as prescribed under Regulation 46(2)(i)
49 II)

(C)

 

Non-executive Directors’ compensation and disclosures17(6)Non-executive Directors’ compensation and disclosuresSame as Listing Agreement
49 II)

(D)

 

Other provisions as to Board and Committees17(2)(3)(4)

(7), 26(1)

& 25(6)

Other provisions as to Board and CommitteesSame as Listing Agreement
49 II)

(E)

 

Code of Conduct17(5), 25(5), 26(3)

& 16(d)

Code of ConductSame as Listing Agreement
49 II)

(F)

 

Whistle Blower Policy22 & 46(2)

(e)

Whistle Blower PolicySame as Listing Agreement
49 III (A)
Qualified and Independent Audit Committee18(1)Qualified and Independent Audit CommitteeSame as Listing Agreement. However, as per the Companies Act, 2013 majority of the members of the Audit Committee shall be Independent Director’s.
49 III

(B)

The Audit Committee should meet at least four times in a year and not more than four months shall elapse between two meetings18(2)(a) &

18(2)(b)

The audit committee shall meet at least four times in a year and not more than 120 days shall elapse between two meetingsThe gap between the two AC meetings should not exceed 120 days.
49 III

(C)

Powers of Audit Committee18(2)(c)Powers of Audit CommitteeSame as Listing Agreement
49 III

(D)

Role of Audit Committee18(3),

Part C of

Schedule II

Role of Audit CommitteeSame as Listing Agreement
49 III

(E)

 

Review of information by Audit Committee18(3)Review of information by Audit CommitteeSame as Listing Agreement
49(IV)

 

Nomination and Remuneration Committee19Nomination and Remuneration CommitteeSame as Listing Agreement
49(V)

 

Subsidiary Companies24 & 16(1)(c)Corporate Governance requirements with respect to subsidiary of Listed entitySame as Listing Agreement
49(VI)

 

Risk Management17(9) & 21Risk ManagementSame as Listing Agreement
49(VII)

 

Related Party Transactions2(1)(zc) & 23Related Party TransactionsSame as Listing Agreement.

Material Related party transactions requiring Ordinary Resolution which is in line with the Companies (Amendment) Act, 2015.

49(VIII)

(A)

 

Details of all material transactions with related parties in Corporate Governance Report27(1)(b)

& 46(2)(g)

Details of all material transactions with related parties in Corporate Governance Report.

The Annual Report shall contain any other Disclosures specified in Companies Act, 2013 along with the Requirements, specified in Schedule V of SEBI (LODR), Regulations, 2015

Same as Listing Agreement
49(VIII)

(B)

Disclosure of Accounting Treatment34(3) &

Schedule V

Disclosure of Accounting TreatmentSame as Listing Agreement
49(VIII)

(C)

Remuneration of Directors34(3) &

Schedule V

Remuneration of DirectorsSame as Listing Agreement
49(VIII)

(D)

Management Discussion and Analysis report34(3) &

Schedule V

Management Discussion and Analysis reportSame as Listing Agreement
49(VIII)

(E) (4)

Stakeholders Relationship Committee20Stakeholders Relationship CommitteeSame as Listing Agreement
49(VIII)

(I)

 

Proceeds from public issues, rights issue, preferential issues, etc.*

Note: * Sub clauses (F), (G) and (H) deleted pursuant to SEBI Circular No.CIR/CFD/POLICY CELL/7/2014 dated September 15, 2014.

32(1) to (8)Statement of Deviation(s) or variation(s)1.The listed shall submit to the Stock Exchange on a quarterly basis for public issue, rights issue, preferential issue etc.;

2. It shall have to make disclosure of events specified in Para B of Part A of Schedule III;

3. The listed entity shall frame a policy for determination of materiality ;

4. The board of directors of the listed entity shall authorize one or more Key Managerial Personnel for the purpose of determining materiality of an event or information and for the purpose of making disclosures to stock exchange(s).

49(IX)

 

The CEO or the MD or manager or in their absence, a WTD appointed in terms of Companies Act, 2013 and the CFO shall provide the compliance certificate to the BoDs.17(8) & Part B of Schedule IICEO and CFO shall provide the compliance certificate to the Board of Directors.“MD or manager or in their absence, a WTD” have been deleted.
49(X)

 

Report on Corporate Governance27(1)(2) &

Part E of

Schedule II

Report on Corporate GovernanceThe format on Reporting of Corporate Governance has been prescribed by SEBI vide circular no. Circular No. CIR/CFD/CMD/9/2015 dated November 04, 2015

Author: CS Manohar Mishra-Associate Member of the ICSI, a Commerce Graduate from Calcutta University & Post Graduate from Vidyasagar University, he can be contacted at csmanoharmishra@gmail.com

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