“Stay informed about the latest changes in SEBI’s Listing Obligations and Disclosure Requirements with our note on the Second Amendment Regulations, 2023. Effective from June 14, 2023, these amendments cover crucial aspects like compliance officers, director appointments, cybersecurity, disclosure thresholds, shareholder rights, and reporting requirements. Explore the key amendments and their impact on corporate governance, ensuring your listed company remains compliant with the revised regulations.”
SEBI (Securities and Exchange Board of India) has recently issued the SEBI (Listing Obligations and Disclosure Requirements) (Second Amendment) Regulations, 2023, which will come into effect on June 14, 2023. These amendments introduce several important changes related to compliance officers, directors’ appointments, cybersecurity, disclosure thresholds, shareholder rights, reporting requirements, and more.
Key amendments vide SEBI (Listing Obligations and Disclosure Requirements) (Second Amendment) Regulations, 2023
| Sl. No. | Regulation | Amendment in Listing Regulations | Impact |
| 1. | 6(1A), 17(1E), 26A | Vacancy of Compliance Officer/Director/CEO/CFO/ Managing Director, Whole Time Director or Manager (KMP)
Vacancy caused by resignation in any of the above post has to be filled within 3 months from the date of such vacancy. However, it shall not be applicable if the Listed Company fulfils the requirement of Composition of Board of Directors. Vacancy caused by resignation in any of the above post shall not be fill by appointing a person in interim capacity unless such vacancy is filled in accordance with laws applicable in case of fresh appointment to such office. |
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| 2. | 17(1D) | Appointment of Director
W.e.f., 01.04.2024, the continuation of a Director (NEDs not liable to retire by rotation) serving on the BODs of a Listed Company shall be subject to the approval by the shareholders in a general meeting at least once in every 5 years from the date of their appointment or re-appointment. Continuation of Directors serving on the BODs of a Listed Company as 31.03.2024, without the approval of the Shareholders for the last five years or more shall be subject to the approval by the shareholders in a general meeting to be held after 31.03.2024. Exemptions: i) WTD, MD, Manager, ID or Director retiring by rotation, if Shareholders approval obtained for their reappointment or continuation pursuant to these regulations or Companies Act, 2013 and has been complied with. ii) Directors appointed pursuant to Court Order or Tribunal or Nominee Director of the Government on the Board of a Listed Company other than public sector Company or Nominee Director of a financial sector regulator on the Board of a Listed Company, Director nominated by FIs registered with RBI, Director nominated by Debenture Trustee. |
Appointment of non-retiring NEDs to be taken in General Meeting to be held in 2024. |
| 3. | 27(2)(ba) | Cyber Security
Details of Cyber Security incidents or breaches or loss of data or documents shall be disclosed along with the Quarterly Corporate Governance Reports filed with the Stock Exchanges. |
Details to be given in quarterly CG. |
| 4. | 30(4)(i)(c) | Threshold Limits for disclosure of events or information
Now the Threshold Limits defined for disclosure of events or information, whose value or the expected impact in terms of value, exceeds the lower of the following: i) 2% of turnover as per last audited consolidated financial statements; ii) 2% of net worth as per last audited consolidated financial statements (not applicable if in negative); iii) 5% of average net profit or loss after tax of last 3 consolidated financial statements. However if the criteria above is not applicable but if in the opinion of BODs the events or information if material, it may be disclose. Any continuing event or information which becomes material pursuant to notification of these amendments regulations shall be disclosed within 30 days from the date of coming into effect of these regulations. Such policy shall assist the relevant employees in identifying any potential material event or information and reporting the same to authorised KMP u/r 30(5). |
Policy on determining materiality of event to be amended and revised policy to be placed on the website of the Company. |
| 5. | 30(6) | Now Company shall disclose events or information to Stock Exchanges:
i) Within 30 minutes from the Board Meeting in which decision taken; ii) Within 12 hours, if the information is emanating from the Company; iii) Within 24 hours, if the information is not emanating from the Company. |
Disclosure relating to change in director/KMP/auditor/ compliance officer/RTA to be filed within 30 minutes. |
| 6. | 30(11) | Top 100 Listed Companies w.e.f. 1.10.2023 and top 250 w.e.f. 1.4.2024 Listed Companies shall confirm, deny or clarify any reported event or information in the mainstream media which is not general in nature, within 24 hours of such information.
If listed Entity confirm the reported event/information, it shall also provide current status of event/information. |
Laying down SOP for tracking unusual Price movement or market rumours and determination of its materiality |
| 7. | 30A | Disclosure requirements for certain types of agreements binding Listed Companies.
All the shareholder, promoters, promoter group entities, related parties, directors, KMPs and employees of listed entity/holding/subsidiary/associate, who are parties to the agreements, which impact the management or control of Listed Company or create any liability or impose any restriction that subsist as on the date of notification or being entered later on, shall inform the listed entity within 2 working days of entering into the agreement and listed entity shall in turn disclose to the Stock Exchange and place it on its website. Listed Companies shall disclose the number of above agreements, their salient features, including the link where the complete details of such agreements are available, in the Annual Report for the FY 2022-23 or for the FY 2023-24. |
These may generally include Shareholders Agreement wherein shareholder may put certain condition on management. |
| 8. | 31A | Special rights to Shareholders.
Any special rights granted to the Shareholders of the Listed Company shall be approved by Shareholders in a General Meeting by way of Special Resolution once in every 5 years. |
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| 9. | 33(3)(j) | The listed entity shall submit its Financial Results for the quarter/financial year immediately succeeding the period for which FS have been disclosed in the offer documents for IPO in accordance with the specified timelines or 21 days from the date of listing, whichever is later. | |
| 10. | 34(2)(f) | Business Responsibility and Sustainability Report (BRSR) applicable on top 1000 Companies and assurance of the BRSR core for itself and its value chain, shall be obtained in the manner as may be specified by the Board from time to time. | |
| 11. | 37A | Sale, Lease or otherwise disposal of an undertaking outside scheme of arrangement
Listed Company carrying out Sale, Lease or otherwise disposal of an undertaking shall take prior of approval of Shareholders by way of Special Resolution and also disclose the object and commercial rationale for carrying out such transaction in the Explanatory Statement to the Notice Exemption: Above provision is not applicable to transaction entered into by Listed Company with its wholly owned subsidiary. |
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| 12. | 46(2)(o) | Now Schedule of analysts or institutional investors meet needs to be reported at least 2 working days in advance (excluding the date of intimation and the date of meet) | |
| 13. | 57 | Intimation to Stock Exchanges within 1 working day by way of certificate regarding status of payment of interest or dividend or repayment or redemption of principal of non-convertible securities. | |
| 14. | Schedule III, Part A, Para A | Acquiring or agreement to acquire share or voting rights in a company whether existing or to be incorporated, where cost exceeds the threshold given in 30(4)(i)(c) to be disclosed to the SE.
Agreement to sell or sale of shares or voting rights in a company such that the company ceases to be WOS/Subsidiary/Associate or the amount of sale exceeds the threshold given in 30(4)(i)(c) to be disclosed to SE. |
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| 15. | Now intimation to Stock Exchanges will be required for new ratings obtained from rating agency. | ||
| 16. | Fraud or defaults by a Listed Company, its promoter, Director, KMP, Senior Management or Subsidiary or arrest of KMPs, Senior Management, promoter or director of the Listed Company. | ||
| 17. | Change in Senior Management also needs to be reported to Stock Exchanges. | ||
| 18. | In case of resignation of KMP, senior management, Compliance Officer or director other than an independent director; the letter of resignation along with detailed reasons for the resignation shall be disclosed within 7 days. | ||
| 19. | In case the MD or CEO was indisposed or unavailable to fulfil the requirements of the role in a regular manner for more than 45 days in any rolling period of 90 days, the same along with the reasons for such indisposition or unavailability, shall be disclosed. | ||
| 20. | Any announcement or communication covered under Regulation 30 of these regulations and being material to the Listed Company shall not be made available on any social media platform by its Directors, Promoter, KMPs or Senior Management. | Reviewing and ensuring system in place for preventive leakage of material information prior to dissemination to SE. | |
| 21. | Any action initiated/taken or order passed by any regulatory, statutory or judicial body against the Listed Company or its Directors, KMPs, Senior Management, Promoter or Subsidiary Company in respect to (i) search or seizure; (ii) re-opening of accounts; (iii) investigating; under Companies Act, 2013, (iv) suspension; (v) imposition of fine or penalty; (vi) settlement of proceeding; (vii) debarment; (viii) disqualification; (ix) closure of operations; (x) sanctions imposed; (xi) warning or caution, shall be disclosed to Stock Exchanges. | ||
| 22. | Voluntary revision of financial statement or the report of the Board of Directors of Listed Company, shall be disclosed to Stock Exchanges. | ||
| 23. | Schedule V | Particulars of Senior Management including the changes therein since the close of previous financial Year need to be reported in CG report.
Disclosure of agreements specified at point (7) need to be disclosed in Annual Report. |
Conclusion: The recent amendments to SEBI’s Listing Obligations and Disclosure Requirements regulations bring about significant changes in various aspects of corporate governance, disclosure requirements, cybersecurity, director appointments, and shareholder rights. Listed companies need to familiarize themselves with these amendments, ensure compliance, review their policies, and establish appropriate reporting mechanisms to adhere to the revised regulations effectively.
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