DISCLOSURE UNDER REGULATION 30 SEBI LODR
No. SEBI/LAD-NRO/GN/2015-16/013 In exercise of the powers conferred by section 11, sub-section (2) of section 11A and section 30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992) read with section 31 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956), the Securities and Exchange Board of India hereby makes the following Regulations i.e. Regulation 1 to Regulation 103.
However we will understand the disclosure requirements under regulation 30 in this article.
Under Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘SEBI LODR Regulations’) a listed entity shall disclose to stock exchange(s) all events or information, which are material, as soon as reasonably possible and not later than twenty four hours from the occurrence of event or information.
LODR is one of the most important regulation mandated by Securities and Exchange Board of India to enable transparency and fair disclosures by all listed entities in India.
Important Terminologies
Events- The consequence of anything, Anything that -happens or comes to pass as distinguished from a thing that exists. (As per Black’s Law Dictionary)
Information- Anything that -happens or comes to pass as distinguished from a thing that exists (General meaning)
When an event/information can be said to have occurred?
As per Guidance note issued by SEBI-
In certain instances, the answer to above question would depend upon the stage of discussion, negotiation or approval and in other instances where there is no such discussion, negotiation or approval required viz. in case of natural calamities, disruptions etc, the answer to the above question would depend upon the timing when the listed entity became aware of the event/information.
In the former, the events/information can be said to have occurred upon receipt of approval of Board of Directors e.g. further issue of capital by rights issuance and in certain events/information after receipt of approval of both i.e. Board of Directors and Shareholders.
However, considering the price sensitivity involved, for certain events e.g. decision on declaration of dividends etc., disclosure shall be made on receipt of approval of the event by the Board of Directors, pending Shareholder’s approval.
In the latter, the events/information can be said to have occurred when a listed entity becomes aware of the events/information, or as soon as, an officer of the entity has, or ought to have reasonably come into possession of the information in the course of the performance of his duties.
The clauses covered under regulation 30 are as follows:
1. Every listed entity shall make disclosures of any events or information which, in the opinion of the board of directors of the listed company, is material.
2. Events specified in Para A of Part A of Schedule III are deemed to be material events and listed entity shall make disclosure of such events.
Author’s View: Events specified in Para A of Part A of Schedule III are deemed to be material events irrespective of any limit or criteria and same we will discussed in details:
SCHEDULE III
PART A: DISCLOSURES OF EVENTS OR INFORMATION
The following shall be events/information, upon occurrence of which listed entity shall make disclosure to stock exchange(s):
Events which shall be disclosed without any application of the guidelines for materiality as specified in sub-regulation (4) of regulation (30):
1. Acquisition(s) (including agreement to acquire), Scheme of Arrangement (amalgamation/ merger/ demerger/restructuring), or sale or disposal of any unit(s), division(s) or subsidiary of the listed entity or any other restructuring.
Here Acquisition will be considered if listed entity holds shares or voting rights aggregating to five per cent or more of the shares or voting rights in the said company or change (exceeds two per cent) in holding from the last disclosure whether directly or indirectly.
It may also be noted that if Listed Company enter with any agreement along with its subsidiary. In such case disclosure is also required.
2. Any alteration in securities considering forfeiture, split or consolidation, buyback, restriction on transferability, reissue of forfeited securities, calls, redemption etc.
3. Revision in Rating(s) including downward or upward revision.
4. Outcome of Meetings of the board of directors: The listed entity shall disclose to the exchange(s), within 30 minutes of the closure of the meeting, held to consider (decision taken of resolution passed) on the following:
a. dividends and/or cash bonuses recommended
b. any cancellation of dividend with reasons thereof
c. Buyback of securities
d. fund raising proposed to be undertaken
e. capitalization of securities
f. reissue of forfeited shares the creation in any form or manner of new shares or securities or any other rights, privileges or benefits to subscribe to
g. alterations of capital
h. financial results
i. voluntary delisting
Note- The intimation of outcome of the meeting of the BOD shall also contain the time of commencement and conclusion of the meeting.
5. Agreements (viz. shareholder agreement(s), joint venture agreement(s), family settlement agreement(s) (to the extent that it impacts management and control of the listed entity), agreement(s)/treaty(ies)/contract(s) with media companies) which are binding and not in normal course of business, revision(s) or amendment(s) and termination(s) thereof.
6. Fraud/defaults by promoter or key managerial personnel or by listed entity or arrest of key managerial personnel or promoter
7. Change in directors, key managerial personnel (Managing Director, Chief Executive Officer, Chief Financial Officer , Company Secretary etc.), Auditor and Compliance Officer.
a. In case of resignation of the auditor– within 24 hours
b. In case of resignation of an independent director– within 7 days
8. Appointment or discontinuation of share transfer agent.
9. Resolution plan/ Restructuring in relation to loans/borrowings from banks/financial institutions
10. One time settlement with a bank along with reasons.
11. Reference/petition to BIFR and winding-up petition filed by any party / creditors.
12. Issuance of Notices, call letters, resolutions and circulars sent to shareholders, debenture holders or creditors or any class of them or advertised in the media by the listed entity.
13. Proceedings of Annual and extraordinary general meetings.
14. Amendments to memorandum and articles of association
15. Schedule of analysts or institutional investors meet and presentations made by the listed entity to analysts or institutional investors.
a. Audio or video recordings and presentation – next trading day or within twenty-four hours from the conclusion of such calls (earlier)
b. Transcripts – within five working days of the conclusion of such calls
16. The following events in relation to the corporate insolvency resolution process (CIRP) of a listed corporate debtor under the Insolvency Code:
a. initiation of CIRP by the corporate applicant / financial creditors
b. Admission or Rejection of application by the Tribunal
c. Public announcement
d. Appointment/ Replacement of the Resolution Professional
e. Prior or post-facto intimation of the meetings of Committee of Creditors
f. Number of resolution plans received by Resolution Professional
g. Brief particulars of invitation of resolution plans
h. Filing of resolution plan with the Tribunal
j. Approval or rejection of resolution plan by the Tribunal
k. Any other material information not involving commercial secrets
l. Quarterly disclosure of the status of achieving the MPS
m. The details as to the delisting plans, if any approved in the resolution
plan. 17. Initiation of Forensic audit including fact and final report.
3. The listed entity shall make disclosure of events specified in Para B of Part A of Schedule III, based on application of the guidelines for materiality, as specified in sub-regulation (4).
4. criteria for determination of materiality of events/ information:
a. the omission of an event or information, which is likely to result in discontinuity or alteration of event or information already available publicly; or
b. the omission of an event or information is likely to result in significant market reaction if the said omission came to light at a later date
c. if a and b is not applicable then it may be treated as being material if in the opinion of the board of directors.
The listed entity shall frame a policy for determination of materiality, based on criteria specified in this sub-regulation, duly approved by its board of directors, which shall be disclosed on its website.
SCHEDULE III
PART B: Events which shall be disclosed upon application of the guidelines for
materiality referred sub-regulation (4) of regulation (30):
|
Sr N. |
Particulars | Limit prescribed |
| 1 | Commencement or any postponement in the date of commencement of commercial production or commercial operations of any unit/division | Decided by BOD |
| 2 | Change in the general character or nature of business brought about by arrangements for strategic, technical, manufacturing, or marketing tie-up, adoption of new lines of business or closure of operations of any unit/division (entirety or piecemeal). | Decided by BOD |
| 3 | Capacity addition or product launch | Decided by BOD |
| 4 | Awarding, bagging/ receiving, amendment or termination of awarded/bagged orders/contracts not in the normal course of business | Decided by BOD |
| 5 | Agreements (viz. loan agreement(s) (as a borrower) or any other agreement(s) which are binding and not in normal course of business) and revision(s) or amendment(s) or termination(s) thereof. | Decided by BOD |
| 6 | Disruption of operations of any one or more units or division of the listed entity due to natural calamity (earthquake, flood, fire etc.), force majeure or events such as strikes, lockouts etc. | Decided by BOD |
| 7 | Effect(s) arising out of change in the regulatory framework applicable to the listed entity | Decided by BOD |
| 8 | Litigation(s) / dispute(s) / regulatory action(s) with impact. | Decided by BOD |
| 9 | Fraud/defaults etc. by directors (other than key managerial personnel) or employees of listed entity. | Decided by BOD |
| 10 | Options to purchase securities including any ESOP/ESPS Scheme | Decided by BOD |
| 11 | Giving of guarantees or indemnity or becoming a surety for any third party. | Decided by BOD |
| 12 | Granting, withdrawal, surrender , cancellation or suspension of key licenses or regulatory approvals | Decided by BOD |
5. The board of directors shall authorize one or more Key Managerial Personnel (KMP) for the purpose of determining materiality of an event or information and the contact details of such personnel shall be also disclosed to the stock exchange(s) and as well as on the listed entity’s website.
6. The listed entity shall first disclose to stock exchange(s) of all events, as specified in Part A of Schedule III within 24 hours from the occurrence of event or information. If delay happened in disclosure then reason shall be given.
However sub-para 4 of Para A of Part A of Schedule III shall be made within the timelines specified therein i.e. 30 minutes.
7. The listed entity shall, make disclosures updating material developments on a regular basis, till such time the event is resolved/closed, with relevant explanations.
8. Disclosure made by listed entity shall be hosted on the website of the listed entity for a minimum period of five years and thereafter as per the archival policy of the listed entity, as disclosed on its website.
9. The listed entity shall disclose all events or information with respect to subsidiaries which are material for the listed entity.
10. The listed entity shall provide specific and adequate reply to all queries raised by stock exchange(s).
11. The listed entity may on its own initiative also, confirm or deny any reported event or information to stock exchange(s).
12. In case where an event occurs or an information is available with the listed entity, which has not been indicated in Para A or B of Part A of Schedule III, but which may have material effect on it, the listed entity is required to make adequate disclosures in regard thereof.
Conclusion
There is no exhaustive list of disclosures, it is advised that if there is any doubt w.r.t disclosure, the best way is to Disclose. It’s the responsibility of all the listed entities not to just have the disclosures done but the same to be done on a timely basis to maintain the spirit of the law.
Disclaimer –This article is meant for understanding purposes only. Any decisions based on this article would not held me liable for any action whatsoever. Please get in touch with your legal consultant to understand the impact on your industry.
Author Bio
Well written. Good work