Based on the report of the Committee on Corporate Governance under the Chairmanship of Mr. Uday Kotak, SEBI notified the amendments to the SEBI LODR Regulations. These amendments are expected to improve the governance standards in large listed companies.

The listed companies are expected to be in compliance with the requirements of the revised SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015:

1. Related Party Definition: New Proviso added – “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”

2.Related Party Transaction [Reg 23(1)]: The listed entity shall formulate a policy on materiality of related party transactions (RPT) 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.

3. Related Party Transaction [Reg 23(1A)]: With effect from July 01, 2019 a transaction involving payments with respect to brand usage or royalty shall be considered material if such transaction(s) during a financial year, exceed 2% of the annual consolidated turnover of the listed entity as per the last audited financial statements.

4. Related Party Transaction [Reg 23(4)]: A related party shall not vote to approve shareholder’s resolution.

5. Related Party Transaction [Reg 23(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.

The above is applicable from half year ended 31 March 2019.

6. Independent Director [Reg 16(1)(b)(ii)] : A non – executive director who is or was not a promoter of the listed entity or its holding, subsidiary or associate company or member of the promoter group of the listed entity (Effective from 1 October 2018).

7. Independent Director [Reg 16(1)(b)(viii)]: Following new criteria added: Reg 16(1)(b)(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. [Effective from 1 October 2018]

8. Evaluation of ID [Reg 17(10)]: The evaluation of independent directors to include:

a. performance of the directors; and

b. fulfilment 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.

9. Independent Director [Reg 25(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.

10. Independent Director [Reg 25(8) & (9)]: [(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.

11. Material Subsidiary [Reg 16(1)(c)]: Threshold is reduced to 10%. “material subsidiary” shall mean a subsidiary, whose income or net worth exceeds 10% of the consolidated income or net worth respectively, of the listed entity and its subsidiaries in the immediately preceding accounting year.

12.Senior Management [Reg 16(1)(c)]: 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.

13.Board Composition [Reg 17(1)(a)]: Top 500 listed entities should have atleast one independent woman director by April 1, 2019.

Top 1000 listed entities should have atleast one independent woman director by April 1, 2020.

14. Board Composition [Reg 17(1)(c)]: The board of 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.

15. Board Composition [Reg 17(1A)]: Special resolution required for appointing or continuing directorship of a non-executive director who has attained the age of 75 years.

Explanatory statement shall provide the justification for appointing such a person

16. Board Composition [Reg 17(1B)]: With effect from April 1, 2020, the top 500 listed entities shall ensure that the Chairperson 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:

17. Quorum [Reg 17(2A)]: For top 1000 listed entities (from 1 April 2019) For top 2000 listed entities (from 1 April 2020) Quorum for every Board meeting shall be 1/3 total strength or three directors, whichever is higher, including at least one independent director.

18. Remuneration of NED [Reg 17(6)(ca)]: If remuneration of a single NED exceeds 50% of the total annual remuneration payable to all non-executive directors, then approval of shareholders by special resolution required every year.

19. Remuneration of ED [Reg 17(6)(e)]: The fees or compensation payable to executive directors (who are promoters or members of the promoter group) shall require the approval of the shareholders by special resolution in general meeting, if:

i. the annual remuneration payable to such executive director exceeds INR 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.

The approval of the shareholders will be valid only till the expiry of the term of such director.

20. Recommendation of Board [Reg 17(11)]: Explanatory Statement should set forth the recommendation of Board to the shareholders on each special business.

21. Maximum number of Directorships [Reg 17A]: 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.

22. Role of Audit Committee [Sch II, Part C]: Audit committee to review utilisation of loans and/or advances from investment by holding company in subsidiary company exceeding INR 100 crores or 10% of asset size of subsidiary, whichever is low.

23. Quorum of NRC meeting [Reg 19(2A)]: Quorum shall be either 2 members or 1/3rd (whichever is greater) including 1 independent director.

24. NRC meeting [Reg 19(3A)] : Meeting of NRC to be held atleast once in a year.

25. Role of NRC [Sch II, Part D(A)]: NRC to recommend to Board, all remuneration in whatever form, payable to senior management.

26. Stakeholders Relationship Committee [Reg 20]:

  • SRC to look in to various aspects of interest of shareholders and other security holders
  • Atleast 3 directors, with atleast 1 independent director, to be members of SRC.
  • Chairperson of SRC to remain present in annual general meeting to answer queries of security holders.
  • SRC to meet at least once in a year.

27. Risk Management Committee [Reg 21(3A)]:

  • Applicable to top 500 listed entities.
  • Functions of RMC to mandatorily cover cyber security.
  • RMC to meet at least once in a year.

28. Secretarial Audit [Reg 24(A)]: 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.

29. Prior Intimation for Bonus [Reg 29(f)]: Give prior intimation of 2 working days of the board meeting for declaration of bonus.

The exemption is not available for ‘declaration of bonus’ which is not included in the agenda of the board meeting.

30. Use of funds [Reg 32(7A)]: The listed entity shall disclose the utilisation of funds raised through preferential allotment or QIP in its Annual Report every year until such funds are fully utilised.

This is not applicable for public issue or rights issue.

31. Financial Results [Reg 33(3)(b)]: Submission of consolidated quarterly financial results is now mandatory.

32. Financial Results [Reg 33(3)(e)]: Listed entity will now be required to submit audited or limited reviewed financial results of last quarter along with results of entire financial year.

33. Financial Results [Reg 33(3)(g), (h) & (f)]:

  • As part of standalone and consolidated financial results for half year, the statement of cash flow for half year to be submitted.
  • For quarterly audited consolidated financial results, at least 80% of each of consolidated revenue, assets and profits should have been audited or subjected to limited review (in case of unaudited results).
  • Disclose in the results for last quarter, the aggregate effect of material adjustments made in the results of that quarter which pertain to earlier periods.

34. Financial Results [Reg 33(8)]: The auditor of listed entity to undertake limited review of the audit of all entities/companies whose accounts are consolidated with the listed entity.

35. Annual Report [Reg 34(1)]: Annual report to be submitted to stock exchange and published on its website earlier or on the day of commencement of dispatch to the shareholder.

In case of change in annual report, the revised annual report (along with details of and explanation for changes) shall be sent within 48 hours after the AGM.

Applicable to Annual Report for March 31, 2019 and thereafter.

36. Annual Report [Sch V, Part A]: Related Party Disclosure to cover disclosures on transaction with promoter/promoter group person holding 10% or more shareholding.

37. Management Discussion and Analysis [Sch V, Part B]: MDA to cover details of significant changes (25% or more) in key financial ratios along with details explanations.

38. Corporate Governance Report [Sch V, Part C]: Disclosures to cover:

  • Names of other listed entities in which person is director and category of directorship;
  • A chart or matrix of skills/expertise/competence of board of directors;
  • Confirmation from Board that independent director fulfils criteria;
  • Detailed reasons of resignation of independent director
  • Credit ratings and revisions;
  • Details of utilisation of funds raised through preferential allotment or QIP;
  • Certificate of PCS confirming director are not debarred or disqualified by SEBI/MCA or any statutory authority;

39. Documents & Information to Shareholders [Reg 36(4)]:

  • Disclosure to be made in XBRL format and format allowing users to find information through a searchable tool.
  • Explanatory statement for appointment of auditors to include the proposed fees payable to auditor along with terms of appointment and in case of new auditor, any material change in the fee payable to such auditor compared to outgoing auditor along with rationale
  • Basis of recommendation including details and credentials of auditor

40. Meeting of Shareholders and voting [Reg 44(5) & (6):  Top 100 listed companies:

  • To hold AGM within 5 months from the closing of financial year; and
  • Provide one-way live webcast of proceedings of AGM

41. Website [Reg 46(2)]: Listed company to disseminate following additional information on its website:

  • All credit ratings and revision in ratings; and
  • Separate audited financial statements of each subsidiary atleast 21 days prior to the AGM.

42. Disclosures [Sch III, Part A (A)]: Additional disclosures:

  • Resignation of auditor along with detailed reasons within 24 hours of receipt of resignation.
  • In case of resignation of independent director, disclose
  • Detailed reasons of resignation
  • Confirmation that there is no other material reason.

It will be observed that the management of the listed companies will have to plan and schedule all the activities well in advance so that they come out compliant as on the effective dates of the different provisions of the new SEBI LODR Regulations.

Disclaimer: The entire contents of this document have been prepared on the basis of relevant provisions of the SEBI (LODR) Regulations, 2015 and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness and reliability of the information provided, I assume no responsibility therefore. Users of this information are expected to refer to the relevant existing provisions of applicable Laws. The user of the information agrees that the information is not a professional advice and is subject to change without notice. I assume no responsibility for the consequences of use of such information. In no event shall I shall be liable for any direct, indirect, special or incidental damage resulting from arising out of or in connection with the use of the inform.


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  1. Alok says:

    Company A is listed company. It holds 50% shares in Co B which is a 50-50 JV. Co ‘C’ is subsidiary of JV Co B. Whether Results of Mar ’20 quarter is required for Co C in SEBI LODR format for 2019-20 resuults

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