SEBI vide Notification No. SEBI/LAD-NRO/GN/2018/10 dated May 9, 2018 Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018. The key amendments to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 are as under:
| Regulation No. | Changes / Amendment | Remarks/Analysis |
| 2(1)(zb) | Insertion of following proviso in the definition of ‘related party’:
“Provided that any person or entity belonging to the promoter or promoter group of the listed entity and holding 20% or more of shareholding in the listed entity shall be deemed to be a related party.” |
Effective from April 01, 2019, intends to widen the scope of related party by bringing the entities of promoter or promoter group who are having 20% or more shareholding in the listed entity. |
| 16(1)(b) | Following amendment / insertions in the definition of ‘Independent Directors’:
Amendment: (ii) who is or was not a promoter of the listed entity or its holding, subsidiary or associate company “or member of promoter group of the listed entity”; Insertion: “(viii) who is not a non-independent director of another company on the board of which any non-independent director of the listed entity is an independent director:” |
Members of promoter group included in the definition and hence cannot be appointed as Independent Directors.
Intending to stop cross-appointments in the companies. A non-independent director of another company, where non-independent director of listed entity is independent director, cannot be appointed as independent director in that listed entity. To be effective from October 01, 2018 |
| 16(1)(c) | Following amendment in the definition of ‘material subsidiary’:
“material subsidiary” shall mean a subsidiary, whose income or net worth exceeds “ten percent” of the consolidated income or net worth respectively, of the listed entity and its subsidiaries in the immediately preceding accounting year.” |
This will increase compliance burden for the companies. Earlier exceeding ‘twenty percent’ criteria were considered as material subsidiaries.
To be effective from April 01, 2019. If required, Policy for Determining Material Subsidiaries needs to be amended. |
| 16(1)(d) | Following amendment in the definition of ‘senior management’:
“senior management” shall mean officers/personnel of the listed entity who are members of its core management team excluding board of directors and normally this shall comprise all members of management one level below the “chief executive officer / managing director / whole time director / manager (including chief executive officer / manager, in case they are not part of the board) and shall specifically include company secretary and chief financial officer.”
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Clarity provided as earlier definition stated that officers / personnel of the listed entity who are members of its core management team one level below the executive directors, including all functional heads. Now clarified that CFO and CS are part of senior management. However, Companies Act, 2013 includes the earlier definition.
To be effective from April 01, 2019. If required, Nomination and Remuneration Policy needs to be amended. |
| 17(1)(a) | Insertion of following proviso and explanation in the Regulation of ‘Board of Directors’:
“Provided that the Board of directors of the top 500 listed entities shall have at least one independent woman director by April 1, 2019 and the Board of directors of the top 1000 listed entities shall have at least one independent woman director by April 1, 2020; Explanation: The top 500 and 1000 entities shall be determined on the basis of market capitalisation, as at the end of the immediate previous financial year.”
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Appointment of Independent Woman director mandatory in top 500 and top 1000 listed entities based on the market capitalization.
To be effective from April 01, 2019 and April 01, 2020 respectively. |
| 17(1) | Following insertion of sub-clause (c) in the Regulation 17 of ‘Board of Directors’:
“(c) The board of directors of the top 1000 listed entities (with effect from April 1, 2019) and the top 2000 listed entities (with effect from April 1, 2020) shall comprise of not less than six directors. Explanation: The top 1000 and 2000 entities shall be determined on the basis of market capitalisation as at the end of the immediate previous financial year.”
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Composition of Board of minimum 6 directors in top 1000 and top 2000 listed entities based on the market capitalization.
To be effective from April 01, 2019 and April 01, 2020 respectively. |
| 17(1) | Following insertion of sub-regulation (1A) in the Regulation 17 of ‘Board of Directors’:
“(1A) No listed entity shall appoint a person or continue the directorship of any person as a non-executive director who has attained the age of seventy five years unless a special resolution is passed to that effect, in which case the explanatory statement annexed to the notice for such motion shall indicate the justification for appointing such a person.”
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Appointment of non-executive directors who are of the age seventy five years and above shall be done by passing special resolution and the notice for such appointment shall indicate the justification for such appointment. Companies Act, 2013 provided for appointment of executive director above seventy years of age by special resolution.
To be effective from April 01, 2019. |
| 17(1) | Following insertion of sub-regulation (1B) in the Regulation 17 of ‘Board of Directors’:
“(1B). With effect from April 1, 2020, the top 500 listed entities shall ensure that the Chairperson of the board of such listed entity shall – (a) be a non-executive director; (b) not be related to the Managing Director or the Chief Executive Officer as per the definition of the term “relative” defined under the Companies Act, 2013: Provided that this sub-regulation shall not be applicable to the listed entities which do not have any identifiable promoters as per the shareholding pattern filed with stock exchanges. Explanation – The top 500 entities shall be determined on the basis of market capitalisation, as at the end of the immediate previous financial year.” |
It is discretionary requirement to all listed entities under Part E of Schedule II of Listing Regulations for non-executive director to maintain chairpersons office and a separate posts of Chairperson and MD or CEO. However, not to be related to MD or CEO is being inserted.
To be effective from April 01, 2020 to top 500 listed entities. |
| 17(1) | Following insertion of sub-regulation (2A) in the Regulation 17 of ‘Board of Directors’:
“(2A) The quorum for every meeting of the board of directors of the top 1000 listed entities with effect from April 1, 2019 and of the top 2000 listed entities with effect from April 1, 2020 shall be one-third of its total strength or three directors, whichever is higher, including at least one independent director ; Explanation I – For removal of doubts, it is clarified that the participation of the directors by video conferencing or by other audio-visual means shall also be counted for the purposes of such quorum. Explanation II – The top 1000 and 2000 entities shall be determined on the basis of market capitalisation, as at the end of the immediate previous financial year.” |
Quorum determined for Board meetings to be higher of 1/3rd or three directors for top 1000 and top 2000 listed entities based on the market capitalization. Earlier no provision for the same was provided in Listing Regulations.
To be effective from April 01, 2019 and April 01, 2020 respectively. Section 174 of the Companies Act provide for higher of 1/3rd or two directors. |
| 17(1) | Following insertion of sub-clause (ca) and (e)in sub-regulation (6) in the Regulation 17 of ‘Board of Directors’:
“(ca) The approval of shareholders by special resolution shall be obtained every year, in which the annual remuneration payable to a single non-executive director exceeds fifty per cent of the total annual remuneration payable to all non-executive directors, giving details of the remuneration thereof.” “(e) The fees or compensation payable to executive directors who are promoters or members of the promoter group, shall be subject to the approval of the shareholders by special resolution in general meeting, if- (i) the annual remuneration payable to such executive director exceeds rupees 5 crore or 2.5 per cent of the net profits of the listed entity, whichever is higher; or (ii) where there is more than one such director, the aggregate annual remuneration to such directors exceeds 5 per cent of the net profits of the listed entity: Provided that the approval of the shareholders under this provision shall be valid only till the expiry of the term of such director. Explanation: For the purposes of this clause, net profits shall be calculated as per section 198 of the Companies Act, 2013.” |
This will increase compliance burden for the companies as the remuneration payable to non-executive director/executive directors is provided under section 198 of Companies Act, 2013. Special resolution is required for payment of remuneration within the ceiling of 10% and over 5% of Net Profits to individual executive director. Companies Act, 2013 did not stated the
Earlier no provision for the same was provided in Listing Regulations. To be effective from April 01, 2019. |
| 17(1) | Following substitution in sub-regulation (10) in the Regulation 17 of ‘Board of Directors’:
“(10) The evaluation of independent directors shall be done by the entire board of directors which shall include – (a) performance of the directors; and (b) fulfillment of the independence criteria as specified in these regulations and their independence from the management: Provided that in the above evaluation, the directors who are subject to evaluation shall not participate.” |
Additional requirement for checking the fulfillment of the independence criteria and independence from management of Independent Directors.
To be effective from April 01, 2019. |
| 17(1) | Following insertion of sub-regulation (11) in the Regulation 17 of ‘Board of Directors’:
“11. The statement to be annexed to the notice as referred to in sub-section (1) of section 102 of the Companies Act, 2013 for each item of special business to be transacted at a general meeting shall also set forth clearly the recommendation of the board to the shareholders on each of the specific items.” |
To set forth clearly the recommendations of the board on each specific items of special business transacted at the general meeting(s).
Earlier no provision for the same was provided in Listing Regulations. To be effective from April 01, 2019. |
| 17(A) | Following insertion of new regulation 17(A) ‘Maximum Number of Directorships’:
“The directors of listed entities shall comply with the following conditions with respect to the maximum number of directorships, including any alternate directorships that can be held by them at any point of time – (1) A person shall not be a director in more than eight listed entities with effect from April 1, 2019 and in not more than seven listed entities with effect from April 1, 2020: Provided that a person shall not serve as an independent director in more than seven listed entities. (2) Notwithstanding the above, any person who is serving as a whole time director / managing director in any listed entity shall serve as an independent director in not more than three listed entities. For the purpose of this sub-regulation, the count for the number of listed entities on which a person is a director / independent director shall be only those whose equity shares are listed on a stock exchange.” |
Now obligation on the directors of the listed entities limiting the maximum number of other directorships including alternate directorships in other listed entities to be 8 from FY 2019-20 and 7 from FY 2020-21.
Earlier no provision for the same was provided in Listing Regulations. However, obligation for restriction for independent directorship and whole-time directors or Managing Directors serving as independent directors continues to be same. To be effective from April 01, 2019 and April 01, 2020 respectively. |
| 19 | Following insertion of new sub-regulations 2(A) and 3(A) in Regulation 19 ‘Nomination and Remuneration Committee’:
“(2A) The quorum for a meeting of the nomination and remuneration committee shall be either two members or one third of the members of the committee, whichever is greater, including at least one independent director in attendance.” “(3A) The nomination and remuneration committee shall meet at least once in a year.” |
Earlier no provision for the same was provided in Listing Regulations. Now Nomination and Remuneration Committee to meat atleast once in a year. Further the quorum for the meeting shall be one third of the composition or two members, whichever is higher.
To be effective from April 01, 2019 |
| 20 | Following insertion of new sub-regulations 2(A) and amendment in Regulation 20 ‘Stakeholder Relationship Committee’:
Sub regulation -1 amended as follows: (1) The listed entity shall constitute a Stakeholders Relationship Committee to specifically look into “various aspects of interest” of shareholders, debenture holders and other security holders. insertion of new sub-regulations 2(A): “(2A) At least three directors, with at least one being an independent director, shall be members of the Committee.” sub-regulation (3) shall be substituted: “(3) The Chairperson of the Stakeholders Relationship Committee shall be present at the annual general meetings to answer queries of the security holders.” insertion of new sub-regulations 3(A): “(3A) The stakeholders relationship committee shall meet at least once in a year.” |
The scope/role of committee now enhanced to various aspects of interest of stakeholders etc. Earlier the role was to specifically look into the mechanism of redressal of grievances of shareholders etc.
Further the role of the committee was to consider and resolve the grievances of the security holders of the listed entity including complaints related to transfer of shares, non-receipt of annual report and non-receipt of declared dividends Earlier the composition of Committee was at the discretion of the Board. To be effective from April 01, 2019. |
| 23 | Following amendment in Regulation 23 ‘Related Party Transactions’:
(1) The listed entity shall formulate a policy on materiality of related party transactions and on dealing with related party transactions “including clear threshold limits duly approved by the board of directors and such policy shall be reviewed by the board of directors at least once every three years and updated accordingly:” insertion of new sub-regulation 9: “(9) The listed entity shall submit within 30 days from the date of publication of its standalone and consolidated financial results for the half year, disclosures of related party transactions on a consolidated basis, in the format specified in the relevant accounting standards for annual results to the stock exchanges and publish the same on its website.” |
Now the Board of directors should approve the threshold limits which should be clearly stated in the policy of materiality of related party transactions and further board of directors at least once in three years and update accordingly.
The Company already has the Policy on Materiality of and on Dealing with Related Party Transactions with thresholds limits duly approved by the Board. To be effective from April 01, 2019. Disclosure of related party transactions on consolidated basis to be made every half yearly and publish the same on website. Additional compliance as already forms part of the financial statements. To be effective from half year ending March 31, 2019. |
| 24 | Following amendment in Regulation 24 ‘Corporate governance requirements with respect to subsidiary of listed entity’:
the existing sub-regulation (1) shall be substituted: “(1) At least one independent director on the board of directors of the listed entity shall be a director on the board of directors of an unlisted material subsidiary, whether incorporated in India or not. Explanation- For the purposes of this provision, notwithstanding anything to the contrary contained in regulation 16, the term “material subsidiary” shall mean a subsidiary, whose income or net worth exceeds twenty percent of the consolidated income or net worth respectively, of the listed entity and its subsidiaries in the immediately preceding accounting year.” insertion of new sub-regulations 24A: Secretarial Audit. Every listed entity and its material unlisted subsidiaries incorporated in India shall undertake secretarial audit and shall annex with its annual report, a secretarial audit report, given by a company secretary in practice, in such form as may be specified with effect from the year ended March 31, 2019.” |
Earlier appointment of one independent director of the listed entity on the board of its unlisted material subsidiary incorporated in India was mandated. However, now it is irrespective of the country of incorporation, one independent director of the listed entity should be appointed on the board of its unlisted material subsidiary. The unlisted subsidiary shall be treated as material if its income or net worth exceeds 20% of the consolidated income or net worth respectively.
To be effective from April 01, 2019. Secretarial Audit to be effective from the year ended March 31, 2019 for the listed entity and its material unlisted subsidiaries incorporated in India which shall be annexed to annual report. Duplication for listed entities as secretarial audit is already provided for in Companies Act, 2013.
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| 25 | Following amendment in Regulation 25 ‘Obligations with respect to independent directors’:
existing sub-regulation (1) shall be substituted “(1) No person shall be appointed or continue as an alternate director for an independent director of a listed entity with effect from October 1, 2018.” insertion of new sub-regulations: “(8) Every independent director shall, at the first meeting of the board in which he participates as a director and thereafter at the first meeting of the board in every financial year or whenever there is any change in the circumstances which may affect his status as an independent director, submit a declaration that he meets the criteria of independence as provided in clause (b) of sub-regulation (1) of regulation 16 and that he is not aware of any circumstance or situation, which exist or may be reasonably anticipated, that could impair or impact his ability to discharge his duties with an objective independent judgment and without any external influence. (9) The board of directors of the listed entity shall take on record the declaration and confirmation submitted by the independent director under sub-regulation (8) after undertaking due assessment of the veracity of the same. (10) With effect from October 1, 2018, the top 500 listed entities by market capitalization calculated as on March 31 of the preceding financial year, shall undertake Directors and Officers insurance (‘D and O insurance’) for all their independent directors of such quantum and for such risks as may be determined by its board of directors.” |
Now from October 01, 2018 an alternate director cannot be appointed for an independent director of a listed entity. However, as per Companies Act, 2013 if person is qualified to be appointed as independent director, he can be appointed as alternate director for an independent director.
Companies Act, 2013 also provides for independent directors to give declaration that they meet the criteria of independence pursuant to the Act. However, w.e.f. April 01, 2019 the board of directors shall take on record the declaration under these amended regulations after undertaking the due assessment of the veracity of the same.
Is shall be mandatory w.e.f. October 01, 2018 for the top 500 listed entities to undertake Directors & Officers Insurance for all their independent directors of such risks and quantum as may be decided by the Board.
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| 32 | Following insertion of sub-regulation in Regulation 32 ‘Statement of deviation(s) or variation(s)’:
“(7A) Where an entity has raised funds through preferential allotment or qualified institutions placement, the listed entity shall disclose every year, the utilization of such funds during that year in its Annual Report until such funds are fully utilized.” |
Listed Company who has raised funds through preferential allotment or QIP shall disclose every year the statement of utilization of funds during that year in its Annual Report until such funds are fully utilized.
To be effective from April 01, 2019.
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| 33 | Following insertion of new clauses and new sub-regulations in Regulation 33 ‘Financial Results’:
Following insertion of new clauses in sub-regulation 3 of Regulation 33: “(g) The listed entity shall also submit as part of its standalone and consolidated financial results for the half year, by way of a note, statement of cash flows for the half-year. (h) The listed entity shall ensure that, for the purposes of quarterly consolidated financial results, at least eighty percent of each of the consolidated revenue, assets and profits, respectively, shall have been subject to audit or in case of unaudited results, subjected to limited review. (i) The listed entity shall disclose, in the results for the last quarter in the financial year, by way of a note, the aggregate effect of material adjustments made in the results of that quarter which pertain to earlier periods.” Following insertion of new sub-regulations in Regulation 33: “(8) The statutory auditor of a listed entity shall undertake a limited review of the audit of all the entities/ companies whose accounts are to be consolidated with the listed entity as per AS 21 in accordance with guidelines issued by the Board on this matter.” |
To be effective from April 01, 2019, listed entities who has subsidiaries shall along with quarterly/year-to-date standalone financial results shall also submit the quarterly/year-to-date consolidated financial results. At least, 80% of each of the consolidated revenue, asset and profits for the purpose of quarterly consolidated results should have been subject to audit or subjected to limited review. The statutory auditor shall undertake a limited review of the audit of all the entities/companies whose accounts are to be consolidated.
Along with the consolidated/ standalone financial results for the half year the statement of cash flows for half-year by way of note to be also submitted.
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| 34 | Following substitution of sub-regulation 1 in Regulation 34 ‘Annual Report’:
“(1) The listed entity shall submit to the stock exchange and publish on its website- (a) a copy of the annual report sent to the shareholders along with the notice of the annual general meeting not later than the day of commencement of dispatch to its shareholders; (b) in the event of any changes to the annual report, the revised copy along with the details of and explanation for the changes shall be sent not later than 48 hours after the annual general meeting.” The amendment at clause (a) shall be applicable in respect of the Annual report filed for the year ended March 31, 2019 and thereafter. “ |
To be effective for the Annual Report filed for the year ended March 31, 2019, the Company shall submit to the stock exchange and publish on website the annual report along with the Notice of the AGM on or before the date commencement of dispatch to shareholders. |
| 36 | Following insertion of new sub-regulations in Regulation 36 ‘Documents & information to shareholders’:
(5) The notice being sent to shareholders for an annual general meeting, where the statutory auditor(s) is/are proposed to be appointed/re-appointed shall include the following disclosures as a part of the explanatory statement to the notice: (a) Proposed fees payable to the statutory auditor(s) along with terms of appointment and in case of a new auditor, any material change in the fee payable to such auditor from that paid to the outgoing auditor along with the rationale for such change; (b) Basis of recommendation for appointment including the details in relation to and credentials of the statutory auditor(s) proposed to be appointed.” |
To be effective from April 01, 2019, the explanatory statement to the notice of annual general meeting where the auditor(s) is/are proposed to be appointed shall include the proposed fees payable, any material change in the fee payable from that of the outgoing auditor along with the rationale for such change. The terms of appointment and basis of recommendation including their credentials shall also be disclosed.
The term “material change” needs to be specified. The rationale for upward change in fee might not be in certain circumstances feasible to be explained. Further Regulation 30 already states that in case of new appointment the brief profile of the new appointed auditors to be disclosed. |
| 44 | Following insertion of new sub-regulations in Regulation 44 ‘Voting by shareholders’:
“(5) The top 100 listed entities by market capitalization, determined as on March 31st of every financial year, shall hold their annual general meetings within a period of five months from the date of closing of the financial year. (6) The top 100 listed entities shall provide one-way live webcast of the proceedings of the annual general meetings. Explanation: The top 100 entities shall be determined on the basis of market capitalisation, as at the end of the immediate previous financial year.” |
Title being replaced to” Meetings of Shareholders and Voting”.
Top 100 listed entities shall hold their annual general meetings within 5 months from the closing date of the financial year. Earlier no specific provision was there in listing regulations. Companies Act, 2013 provides that annual general meetings to be held with 6 months from the closing date of the financial year. Further top 100 listed entities to provide for one-way live webcast of the proceedings of the annual general meetings. To be effective from April 01, 2019.
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| 46 | Following insertion of new sub-clauses in Regulation 46 ‘Website’:
“(r) With effect from October 1, 2018, all credit ratings obtained by the entity for all its outstanding instruments, updated immediately as and when there is any revision in any of the ratings. (s) separate audited financial statements of each subsidiary of the listed entity in respect of a relevant financial year, uploaded at least 21 days prior to the date of the annual general meeting which has been called to inter alia consider accounts of that financial year.”
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It is clarified that the dissemination of the information under this regulation shall be under a separate section on the website.
To be effective from April 01, 2019. All the credit ratings obtained for all the outstanding instruments of the listed entity shall be updated immediately upon any revision in any of the ratings. To be effective from October 01, 2018. Now separate audited financial statements of each of the subsidiary of the listed entity shall be uploaded at least 21 days prior to the date of the annual general meeting called for considering inter alia the consolidated results. To be effective from April 01, 2019. Contradiction observed as these amendments state that “separate audited financial statements of each subsidiary” which concludes that each subsidiary financials to be audited whereas Companies Act, 2013 provides for unaudited financial statements of foreign subsidiaries to be placed on website if the audit is not mandatory in the host country. |
| Schedule II | In Schedule ‘Corporate Governance’ the following insertions:
Insertion of following sub-clause in Part C, Clause A ‘Role of Audit Committee’: “(21) reviewing the utilization of loans and/ or advances from/investment by the holding company in the subsidiary exceeding rupees 100 crore or 10% of the asset size of the subsidiary, whichever is lower including existing loans / advances / investments existing as on the date of coming into force of this provision.” Insertion of following sub-clause(s)/substitutions in Part D: (I) Clause A ‘Role of Nomination and Remuneration Committee’: “(6) recommend to the board, all remuneration, in whatever form, payable to senior management.” (II) Clause B ‘Stakeholders Relationship Committee’: “The role of the committee shall inter-alia include the following: (1) Resolving the grievances of the security holders of the listed entity including complaints related to transfer/transmission of shares, non-receipt of annual report, non-receipt of declared dividends, issue of new/duplicate certificates, general meetings etc. (2) Review of measures taken for effective exercise of voting rights by shareholders. (3) Review of adherence to the service standards adopted by the listed entity in respect of various services being rendered by the Registrar & Share Transfer Agent. (4) Review of the various measures and initiatives taken by the listed entity for reducing the quantum of unclaimed dividends and ensuring timely receipt of dividend warrants /annual reports/statutory notices by the shareholders of the company.” |
To be effective from April 01, 2019.
The role of audit committee included scrutiny of inter-corporate loans and investments. Now, the committee shall also review the utilization of loans/advances received by the subsidiary exceeding Rs. 100 crores or 10% of asset size of subsidiary, whichever is lower including the existing loans/advances/investments. The role of Nomination and Remuneration Committee apart from identifying the persons who may be appointed in senior management includes formulation of policy relating to the remuneration of directors, KMPs and other employees. Now, the committee shall also recommend to the board remuneration payable to senior management in whatever form. In view of amendment in Regulation 20 to increase the role/scope of Stakeholders Relationship Committee to specifically look into various aspects of interest of shareholder, debenture holders and other security holders, the role of committee also now clearly defined to inter-alia include resolving grievances, review of measures/initiatives taken for exercise of effective voting, reducing the quantum of unclaimed dividend and ensuring timely service of dividend warrants, annual reports etc. Further the Committee shall also review of adherence to the service standards adopted by listed entity in respect of various services provided by RTA. In Part E Discretionary requirements, Clause D shall be omitted w.e.f. April 01, 2020, which states for separate posts of chairperson and CEO. |
| Schedule III | In Schedule III, in Part A, under the Clause A dealing with ‘Events which shall be disclosed without any application of the guidelines for materiality as specified in sub-regulation (4) of Regulation (30)’, after the existing sub-clause 7, the following new sub-clauses are inserted:
“(7A) In case of resignation of the auditor of the listed entity, detailed reasons for resignation of auditor, as given by the said auditor, shall be disclosed by the listed entities to the stock exchanges as soon as possible but not later than twenty four hours of receipt of such reasons from the auditor. (7B) Resignation of auditor including reasons for resignation: In case of resignation of an independent director of the listed entity, within seven days from the date of resignation, the following disclosures shall be made to the stock exchanges by the listed entities: i. Detailed reasons for the resignation of independent directors as given by the said director shall be disclosed by the listed entities to the stock exchanges. ii. The independent director shall, along with the detailed reasons, also provide a confirmation that there is no other material reasons other than those provided. iii. The confirmation as provided by the independent director above shall also be disclosed by the listed entities to the stock exchanges along with the detailed reasons as specified in sub-clause (i) above.” |
Pursuant to Regulation 30, change in directors, auditors etc. to be intimated to stock exchange(s) along with reasons viz. resignation, removal or otherwise etc.
Now, resignation of auditor shall be disclosed within 24 hours of receipt of the same along with detailed reasons of the resignation as given by the auditor. Incase, of resignation of independent director, to be disclosed within 7 days of resignation along with the detailed reasons for resignation as given by the said director and a declaration confirming that there is no other material reasons other than as provided also to be disclosed. To be effective from April 01, 2019. |
| Schedule IV | In Schedule IV, in Part A ‘Disclosure of Financial Results’, in clause C, the existing sub-clauses (i) and (ii) thereunder shall be substituted with the following:
“i. The management shall mandatorily make an estimate which the auditor shall review and report accordingly. ii. Notwithstanding the above, the management may be permitted to not provide estimate on matters like going concerns or sub-judice matters; in which case, the management shall provide the reasons and the auditor shall review the same and report accordingly.” |
The listed entity to include a note in the financial results if the auditor has expressed any modified opinion(s) or reservations in the audit report or limited review report which has impact on the profit or loss of the reportable period. Now the management shall mandatorily make an estimate on the said reservations or modified opinion(s) which auditor shall review and report. However, management is exempted from making an estimate incase of matters under judicial consideration or matters like going concerns provided the reasons for the same provided by the management are reviewed and reported accordingly by the auditor.
To be effective from April 01, 2019. |
| Schedule V | In Schedule V pertaining to Annual Report:
In Part A ‘Related Party Disclosure’, after the existing clause 2, the following new clause is inserted: “(2A) Disclosures of transactions of the listed entity with any person or entity belonging to the promoter/promoter group which hold(s) 10% or more shareholding in the listed entity, in the format prescribed in the relevant accounting standards for annual results.” In Part B dealing with ‘Management Discussion and Analysis’, in clause 1, after the existing sub-clause (h), the following new sub-clauses are inserted: “(i) details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanations therefor, including: (i) Debtors Turnover (ii) Inventory Turnover (iii) Interest Coverage Ratio (iv) Current Ratio (v) Debt Equity Ratio (vi) Operating Profit Margin (%) (vii) Net Profit Margin (%) or sector-specific equivalent ratios, as applicable. (j) details of any change in Return on Net Worth as compared to the immediately previous financial year along with a detailed explanation thereof.” In Part C dealing with ‘Corporate Governance Report’, the following amendments / insertions: i. in clause (2), – 1. in sub-clause (c), after the word “chairperson”, the symbol and words “, and with effect from the Annual Report for the year ended 31st March 2019, including separately the names of the listed entities where the person is a director and the category of directorship” shall be inserted. 2. after the existing sub-clause (g), the following new sub-clauses are inserted: “(h) A chart or a matrix setting out the skills/expertise/competence of the board of directors specifying the following: (i) With effect from the financial year ending March 31, 2019, the list of core skills/expertise/competencies identified by the board of directors as required in the context of its business(es) and sector(s) for it to function effectively and those actually available with the board; and (ii) With effect from the financial year ended March 31, 2020, the names of directors who have such skills / expertise / competence (i) confirmation that in the opinion of the board, the independent directors fulfill the conditions specified in these regulations and are independent of the management. (j) detailed reasons for the resignation of an independent director who resigns before the expiry of his tenure along with a confirmation by such director that there are no other material reasons other than those provided.” In clause (9), after the existing sub-clause (p), the following new sub-clause are inserted: “q) list of all credit ratings obtained by the entity along with any revisions thereto during the relevant financial year, for all debt instruments of such entity or any fixed deposit programme or any scheme or proposal of the listed entity involving mobilization of funds, whether in India or abroad.” In clause (10), after the existing sub-clause (g), the following new sub-clauses are inserted: “(h) Details of utilization of funds raised through preferential allotment or qualified institutions placement as specified under Regulation 32 (7A). (i) a certificate from a company secretary in practice that none of the directors on the board of the company have been debarred or disqualified from being appointed or continuing as directors of companies by the Board/Ministry of Corporate Affairs or any such statutory authority. (j) where the board had not accepted any recommendation of any committee of the board which is mandatorily required, in the relevant financial year, the same to be disclosed along with reasons thereof: Provided that the clause shall only apply where recommendation of / submission by the committee is required for the approval of the Board of Directors and shall not apply where prior approval of the relevant committee is required for undertaking any transaction under these Regulations. (k) total fees for all services paid by the listed entity and its subsidiaries, on a consolidated basis, to the statutory auditor and all entities in the network firm/network entity of which the statutory auditor is a part.” |
Save as specified otherwise, the amendments to Schedule V shall be applicable in respect of Annual Reports filed for the year ended March 31, 2019.
The Annual Report shall disclose the transactions of the listed entity with person or entity belonging to promoter or promoter group who holds 10% or more shareholding the listed entity. In Management Discussion and Analysis details of any change in Return on Net Worth (Net Income/ Shareholders’ Equity) compared to the immediately previous financial year along with a detailed explanation thereof to be provided. Further details of any significant change i.e. 25% or more compared to the immediately previous financial year, in key financial ratios to be provided along with detailed explanations. The key financial ratios shall also include the following ratios: (i) Debtors Turnover (ii) Inventory Turnover (iii) Interest Coverage Ratio (iv) Current Ratio (v) Debt Equity Ratio (vi) Operating Profit Margin (%) (vii) Net Profit Margin (%) or sector- specific equivalent ratios, as applicable. In Corporate Governance Report for the year ended March 31, 2019, disclosure in relation to number of directorship held on other board of directors including the name of the listed entities and category of directorship shall be made along with committees in which a directors is a member or chairperson. Further confirmation shall be provided that in the opinion of the board, the independent directors are independent of management and fulfills the criteria specified under these regulations. Incase of any resignation of independent director before the expiry of the tenure, the detailed reasons along with confirmation as provided in these regulations to be disclosed. With effect from the financial year ending March 31, 2019, a chart or a matrix setting out the skills/expertise/competence of the board of directors as required in the context of business(es) and sector(s) for listed entity to function effectively and those actually available with the board shall be disclosed. With effect from the financial year ended March 31, 2020, the names of directors who have such skills / expertise / competence shall also be disclosed. Following additional disclosures shall be made: a. List of all credit ratings along with revisions, if any, during the relevant financial year; b. Details of utilization of funds raised through QIP or preferential allotment; c. Total fees paid for all services by listed entity and its subsidiaries, on a consolidated basis to statutory auditors and all other network firm/entity which statutory auditor is a part; d. Reasons for non-acceptance of recommendation of /submission of any committee which is required for approval of the board of directors; and e. a certificate from a company secretary in practice that none of the directors have been debarred or disqualified from being appointed or continuing as directors of companies by the SEBI/Ministry of Corporate Affairs or any such statutory authority.
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