The Bombay Stock Exchange (BSE) has taken a significant step towards enhancing transparency and compliance among listed companies with its latest circular, Notice No. 20240209-41, dated February 9, 2024. This initiative is aimed at maintaining an up-to-date repository of corporate groups in India, thereby facilitating a clearer understanding of the corporate structures and affiliations within the Indian market.
Background: Following the Circular No. 20231130-27 from November 30, 2023, which highlighted the importance of keeping an updated record of corporate groups, the BSE has introduced an innovative online facility for reporting changes in corporate groups. This move is in line with the directives from the Securities and Exchange Board of India (SEBI) to ensure better governance and compliance among companies listed on the stock exchange.
The Online Facility: The newly launched online facility allows companies to easily report any changes in their corporate grouping due to events such as mergers, acquisitions, takeovers, demergers, delistings, and corporate restructuring. This facility is accessible through the BSE Listing Centre under the “Corporate Group Repository” section. Companies are required to update the exchange within two working days of any effective change, providing a more streamlined and efficient process for compliance.
Criteria for Corporate Grouping: The BSE has outlined specific criteria for identifying corporate groups. These include ownership patterns, such as majority and significant minority holdings, affiliations stated in annual reports or company websites, related party disclosures, and the structure of joint ventures. These parameters ensure a comprehensive approach to determining the corporate group affiliations, thereby enhancing the accuracy of the repository.
Compliance and Precaution: The circular emphasizes the need for listed entities to exercise caution while identifying and reporting their corporate group affiliations. It is a reminder that the corporate group repository is formulated solely for compliance purposes with SEBI’s regulations and is not to be construed as a legal definition of corporate groupings.
Conclusion: The BSE’s introduction of an online facility for the reporting of changes in corporate groups marks a pivotal advancement in regulatory compliance and corporate governance in India. By simplifying the process and setting clear criteria for corporate grouping, the BSE is ensuring that the Indian financial market remains transparent, well-regulated, and conducive to investor trust. Listed companies are encouraged to adhere to these guidelines diligently, contributing to the overall integrity and efficiency of the market.
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BSE
NOTICES
Notice No. 20240209-41
Notice Date 09 Feb 2024
Category Circulars Listed Companies
Segment General
Subject Corporate Grouping of Listed Companies
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 |
