Amendment to Listing obligations and disclosure requirements of 2023

SEBI has amended the SEBI Listing Obligations and Disclosure Requirements (LODR) Regulations of 2023 to strengthen the listing regime for listed companies and debenture issuers, protect the interests of investors, and promote market integrity. The amendments cover various aspects, including compliance with corporate governance norms such as Independent Directors and Women on Board, disclosure norms on shareholders’ money, and certain fees or changes to fees related to the listing of corporations and debentures.

Further, the amendments have introduced certain provisions, related to insider trading, making securities fraud and market manipulation offences, deposits and loans received from related parties, utilization of substantial acquisition of shares and takeover regulations.

The most significant changes, however, pertain to the categorisation of listed entities and the requirements applicable to each category.

1. Large Corporations: An entity listed on a recognised stock exchange must comply with the additional requirements applicable to large corporations, including in respect of shareholding structure, shareholder meetings and quorum, audit and accounts, fitting and proper criteria for directors, corporate governance, and nomination and remuneration of directors.

2. Mid-sized Corporations: A mid-sized corporation must comply with the additional requirements applicable to it including in respect of related party transactions.

3. Small and Start-Ups: Small and start-up entities must comply with additional requirements applicable to them including compliance with corporate governance norms and the requirements of Indian Depositories act, 1996.

Apart from these amendments, the LODR Regulations of 2023 have also introduced several additional safeguard arrangements specifically related to Investor Protection and Regulatory Compliance including the appointment of a Compliance Officer, formation and implementation of a policy on related lack party transactions, establishment of a Whistle Blower Policy, and a Code of Conduct for Prevention of Insider Trading.

Amendments to Listing Obligations and Disclosure Requirements (LODR) Regulations of 2023:

1. Categorization of listed entities: The amendments provide for categories of listed entities including large corporations, mid-sized corporations and small and start-ups with distinct requirements for each type of entity.

2. Additional requirements for large corporations: The amendments also introduce additional requirements for large corporations, such as audits and accounts, independent directors, and corporate governance.

3. Related party transactions: The amendments regulate related party transactions by providing disclosure requirements and restrictions on their structure and evaluation.

4. Insider trading: The amendments introduce provisions to make insider trading and securities fraud and market manipulation offences.

5. Disclosure requirements: The amendments provide disclosure requirements on shareholders’ money, fees related to the listing of securities, and deposits and loans received from related parties.

6. Other provisions: The amendments also include provisions related to substantial acquisition of shares and takeover regulations, an increased emphasis on investor protection and market integrity and prevention of market manipulation.

The amendments also clarify the provisions of Prevention of Market Manipulation by introducing a provision that confirms the applicability of the other existing Laws and Regulations. SEBI has also introduced certain provisions related to the functioning of debenture trustees which are in keeping with the changing dynamics and the increasing emphasis on investor protection and market integrity.

Overall, these amendments will help to protect investors and facilitate compliance with the regulatory framework for listed companies as well as promote market integrity.