Vallabh Joshi
Securities and Exchange Board of India (‘SEBI’) vide its amendments notification dt: March 27, 2025, amended Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (amendment) Regulations, 2025 [LODR amendment’]. LODR amendment is effective immediately for High Value Debt Listed Entity [‘HVDLE’] (i.e. entities only having their principal outstanding non-convertible debt securities of Rs 1000 crore or more as on March 31).
HVDLE will have to ensure compliance with provisions of Chapter IV and Chapter VA of SEBI LODR immediately. HVLDE will have to frame policies, change composition of board of directors, committees of board, compliances relating to subsidiary etc. immediately.
Below is the list of policies that need to be framed and compliances that needs to be done by HVDLE on immediate basis:
A. Policies that need to be framed with approval of board of directors
| Regulation | Particulars |
| 62J | As per reg. 62J of LODR, HVDLE will have to frame whistle blower policy for directors and employees to report genuine concerns. |
| 62K(1) | HVDLE shall formulate a policy on materiality of related party transactions and this policy shall be reviewed by board of directors every three years. |
| 62K(3) – material modification | Audit committee shall define “material modification” and disclose it as part of policy on materiality of related party transaction. |
| 62K(4)(a) – criteria for omnibus approval | Audit committee shall lay down criteria for granting omnibus approval by audit committee. |
| 62O(3) – code of conduct | code of conduct for board of directors and senior management |
B. Immediate Compliances that need to be done by HVDLE.
| Reg. no. of LODR | Compliance that needs to be ensured |
| Reg. 62O (1) – Max. no. of membership and chairmanship of audit committee and stakeholder relationship committee. | Director shall not be a member in more than 10 committees or act as chairperson of more than 5 committees. Audit committee and stakeholder relationship committee are to be counted for the purpose of ascertaining this limit.
To determine 10 committee membership and 5 committee chairmanship, HVDLE and public limited companies are to be counted by HVDLE. |
| Reg. 62O (3) – Compliance with code of conduct | Board of directors and senior management shall affirm compliance with code of conduct. This affirmation needs to be done on an annual basis. |
| Reg. 62O (4) – Disclosure of material financial relationship | Senior Management to disclose material financial and commercial transaction where they have personal interest and that have conflict of interest with HVDLE at large. |
| 62N(11) – D&O Insurance | HVDLE will have to take directors and officers insurance for independent directors |
| 62M(1) and (2) –
secretarial auditor |
HVDLE will have to submit secretarial audit report for FY 24-25 along with annual report dispatched to shareholders for FY24-25.
Secretarial audit report of material subsidiary also needs to be given along with secretarial audit report of HVDLE. HVDLE needs to appoint secretarial auditor for undertaking secretarial audit at the upcoming board meeting of the entity. HVDLE will also have to submit annual secretarial compliance report for FY 24-25 by May 31, 2025 (i.e. within 60 days from end of March 31). |
| 62L (1) | HVDLE is required to appoint an Independent Director on the Board of its unlisted material subsidiary, located in India or abroad. |
| 62L (2) | Financial statements and in particular the investments of unlisted material subsidiary have to be reviewed by the audit committee of the HVDLE |
| 62L (3) | The minutes of the Board meetings of the unlisted material subsidiary to be placed before the Board of Directors of HVDLE. |
| 62L (4) | The unlisted material subsidiary shall inform the Board of Directors of HVDLE about any significant transactions or arrangements |
| Obligations under Chapter III of SEBI LODR | |
| Reg. 6 | HVDLE will have to ensure that position of compliance officer shall be ‘one level below the board of director’. |
| Reg. 5 | HVDLE shall seek all information that is relevant and necessary for listed entity to ensure compliance with applicable laws from key managerial personnel, directors, promoters, promoter group or any other person dealing with the listed entity. |
Compliance with respect to no. of directorships
| 62 E | Directors of the HVDLE can hold positions of director or independent director in maximum seven listed entities including HVDLE. To comply with this there is a limit of six months from March 27, 2025.
Managing Director or Whole Time Director can hold position of independent director in maximum three listed entities including HVDLE. These conditions are not applicable to the ex-officio positions or positions level due to deputation. |
Conclusion
High-value debt listed entities must prioritize timely compliance. Some of these compliances need to be addressed at the upcoming board meeting in order to ensure adherence to regulatory obligations.
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