Corporate Grouping Notice: Mandatory Disclosure Changes – BSE Circular

In the realm of corporate governance, transparency and disclosure play pivotal roles in maintaining market integrity. This article delves into the recent notice issued by the Bombay Stock Exchange (BSE) concerning corporate grouping of listed companies. We’ll explore the implications, requirements, and procedures mandated by this directive.

The notice, dated February 9, 2024, underscores the importance of promptly informing the exchange about any alterations in corporate structures. Such changes encompass various events like mergers, demergers, acquisitions, and delistings. BSE emphasizes the necessity of intimate disclosure within two working days of the effective date through their online listing center.

The introduction of an online facility streamlines the process, making it more convenient for listed entities to report corporate group modifications. This facility, accessible via the BSE Listing Centre, aims to enhance compliance efficiency and transparency.

Listed companies, as well as those planning to go public, must adhere to specific criteria when identifying their corporate groups. These include ownership relationships, subsidiary associations, and disclosures in annual reports. The notice outlines a comprehensive set of parameters to ensure accurate determination of corporate affiliations.

Moreover, the notice clarifies that the corporate group repository is devised solely for compliance with SEBI regulations and should not be construed as a legal interpretation. It serves as a practical tool for listed entities to meet regulatory obligations and mitigate compliance risks.

Conclusion: In conclusion, BSE’s notice regarding corporate grouping underscores the importance of timely and accurate disclosure in the capital markets. By introducing an online reporting mechanism and delineating clear criteria, the exchange aims to foster transparency and accountability among listed entities. Compliance with these requirements is imperative to uphold market integrity and investor confidence. Listed companies are urged to familiarize themselves with the disclosure obligations outlined in the notice and ensure diligent adherence to regulatory standards.

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BSE

To

All Listed Companies / Proposed to be listed

This is in continuation to the Circular No. 20231130-27 dated November 30, 2023 inter alia informing about maintaining a repository containing names of companies forming a part of each Indian corporate group. Through said circular BSE has also informed that in case of any change in its corporate group pursuant to any event such as Corporate Restructuring, Takeover, Merger, Demerger, Acquisition, Delisting etc., the companies have to intimate the Exchange within Two Working Days of the Effective Date of the change through email.

In this regard, BSE has now introduced online facility for filling of information related to change in the corporate group through listing centre.

The said facility is available in listing centre login on below path:

BSE Listing Centre> Listing Compliance > Corporate Group Repository

In case of any change in its corporate group pursuant to any event such as Corporate Restructuring, Takeover, Merger, Demerger, Acquisition, Delisting etc., the companies have to intimate the Exchange within Two Working Days of the Effective Date of the change through listing centre as mentioned above along with supporting document.

For identifying the corporate group, following criteria / parameters shall, inter alia, be considered by the listed companies / proposed to be listed companies –

1. A company and all its subsidiary companies will have the same ownership group. A company is said to be a subsidiary of another company when majority shares (50% or more) are held by the other company in the said company.

2. All associate companies of a company also belong to the same group. A company is said to be an associate of another company when shares in the range of 20 to 50 per cent are held by the other company in the said company.

3. If the annual report of the company specifically attributes itself to a group.

4. If the annual report of a company does not specify its affiliation with an ownership group but the website of the company does, then ownership is determined using the website as the primary source.

5. Sometimes the parent company of a group might list all its affiliates on its website, this information is also required to be used as a reference for determining the ownership group of a company.

6. Related party relationships as disclosed in the Annual report are also to be checked for determining the ownership group of an entity.

7. In case of a company that serves as a joint venture between an Indian group and a foreign group, it is attributed to the Indian group to the company.

8. If a promoter / promoter group of a company is also a major shareholder of another company, then that another company is considered as part of the same group. For example, if P-1 is promoter / promoter group of company C-1 and if P-1 is a major shareholder of another company — C-2, then C-2 is part of the same group as C-1.

It may be noted that the corporate group repository has been formulated only for the purpose of compliance with SEBI circular no. SEBI/ HO/ AFD/ AFD –PoD –2/ CIR/ P/ 2023/148 dated August 24, 2023 and should not be considered as a legal interpretation/ definition of the terms such as ‘group/ related party/ associate companies’ mentioned in any other SEBI Regulation/ Circular/ Act etc.

The listed entities / or propose to list are requested to take note of the aforementioned disclosure requirements and exercise abundant precaution while identifying and intimating its Corporate Group.

Ashok kumar Singh
DGM-Listing Compliance

Lalit Phatak
Associate Manager-Listing Compliance