prpri Explanation of SEBI (LODR) (second amendment) regulations, 2021 Explanation of SEBI (LODR) (second amendment) regulations, 2021

SEBI notifies Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) (Second Amendment) Regulations, 2021 vide Notification No. SEBI/LAD-NRO/GN/2021/18 dated 5th May, 2021 to amend Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018. This article explains amendment vide SEBI (LODR) (second amendment) regulations, 2021

Earlier Now
1. New Clause inserted working days means working days of the stock exchange where the securities of the entity are listed
2. specified securities listed on main board or SME Exchange or institutional trading platform specified securities listed on main board or SME Exchange or Innovators Growth Platform (everywhere)
3. Regulation 3 didn’t have sub regulation Sub regulation (2) The provisions of these regulations which become applicable to listed entities on the basis of market capitalisation criteria shall continue to apply to such entities even if they fall below such thresholds.
4. effective whistle blower mechanism Effective Vigil mechanism\ whistle blower Policy (everywhere)
5. The listed entity shall submit a compliance certificate to the exchange, duly signed by both the compliance officer of the listed entity and the authorised representative of the share transfer agent, wherever applicable, within one month of end of each half of the financial year, certifying compliance with the requirements of sub- regulation (2). (In Regulation 7) The listed entity shall submit a compliance certificate to the exchange, duly signed by both the compliance officer of the listed entity and the authorised representative of the share transfer agent, wherever applicable, within one month 30 days of end of each half of the financial year, certifying compliance with the requirements of sub- regulation (2).
6. New proviso inserted in regulation 15(2) Provided further that once the above regulations become applicable to a listed entity, they shall continue to remain applicable till such time the equity share capital or the net-worth of such entity reduces and remains below the specified threshold for a period of three consecutive financial years.
7. 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.(Inserted as explanation In Regulation 17A) Explanation: For the purpose of this sub-regulation 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.
8. The majority of members of Risk Management Committee shall consist of members of the board of directors 42[and in case of a listed entity having outstanding SR equity shares, at least two thirds of the Risk Management Committee shall comprise of independent directors]. In regulation 21(2) The Risk Management Committee shall have minimum three members with majority of them being members of the board of directors, including at least one independent director and in case of a listed entity having outstanding SR equity shares, at least two thirds of the Risk Management Committee shall comprise independent directors.
9. The risk management committee shall meet at least once in a year. In regulation 21(3A) The risk management committee shall meet at least once twice in a year.
10. New Sub Regulation inserted in Regulation 21 (3B) the quorum for a meeting of the Risk Management Committee shall be either two members or one third of the members of the committee, whichever is higher, including at least one member of the board of directors in attendance.
11. New Sub Regulation inserted in Regulation 21 (3C) The meetings of the risk management committee shall be conducted in such a manner that on a continuous basis not more than one hundred and eighty days shall elapse between any two consecutive meetings.
12. New Proviso inserted in Regulation 21(4) Provided that the role and responsibilities of the Risk Management Committee shall mandatorily include the performance of functions specified in Part D of Schedule II.
13. The provisions of this regulation shall be applicable to top 500 listed entities, determined on the basis of market capitalisation, as at the end of the immediate previous financial year. The provisions of this regulation shall be applicable to top 500 1000 listed entities, determined on the basis of market capitalisation, as at the end of the immediate previous financial year.
14. New Regulation inserted in Regulation 21(6) (6) The Risk Management Committee shall have powers to seek information from any employee, obtain outside legal or other professional advice and secure attendance of outsiders with relevant expertise, if it considers necessary
15. A listed entity shall not dispose of shares in its material subsidiary resulting in reduction of its shareholding (either on its own or together with other subsidiaries) to less than fifty percent or cease the exercise of control over the subsidiary. in Regulation 24(5) A listed entity shall not dispose of shares in its material subsidiary resulting in reduction of its shareholding (either on its own or together with other subsidiaries) to less than or equal to fifty percent or cease the exercise of control over the subsidiary.
16. Regulation 24A, Heading of Regulation Secretarial Audit and Secretarial Compliance Report
(1) Every listed entity and its material unlisted subsidiaries incorporated in India shall undertake secretarial audit and shall annex a secretarial audit report given by a company secretary in practice, in such form as specified, with the annual report of the listed entity.
(2) Every listed entity shall submit a secretarial compliance report in such form as specified, to stock exchanges, within sixty days from end of each financial year.
17. Omitted Regulation 26(4) Non-executive directors shall disclose their shareholding, held either by them or on a beneficial basis for any other persons in the listed entity in which they are proposed to be appointed as directors, in the notice to the general meeting called for appointment of such director.
18. CG Report shall be file within 15 days from the end of quarter in Regulation 27 CG Report shall be file within 21 days from the end of quarter
19. In Regulation 29(1)(f) The proposal for declaration of bonus securities. where such proposal is communicated to the board of directors of the listed entity as part of the agenda papers:
20. In Regulation 30(6) within 30 min substituted with the timelines specified therein. (6) The listed entity shall first disclose to stock exchange(s) of all events, as specified in Part A of Schedule III, or information as soon as reasonably possible and not later than twenty four hours from the occurrence of event or information:

Provided that in case the disclosure is made after twenty four hours of occurrence of the event or information, the listed entity shall, along with such disclosures provide explanation for delay:

Provided further that disclosure with respect to events specified in sub-para 4 of Para A of Part A of Schedule III shall be made within the timelines specified therein.

21. In regulation 31A(3)(a) Provision changed Reclassification of status of a promoter to public shall be permitted by the stock exchanges only upon satisfaction of the following conditions:

(a) an application for reclassification has been made by the listed entity to the stock exchanges within thirty days from the date of approval by shareholders in general meeting after ensuring that the following procedural requirements have been fulfilled:

the promoter(s) seeking reclassification has made a request for reclassification to the listed entity along with a rationale for the same and a description as to how the conditions specified in clause (b) of sub-regulation (3) of this regulation are satisfied;

(i) the board of directors of the listed entity has analyzed such request in the immediately next board meeting or within three months from the date of receipt of the request from its promoter(s), whichever is earlier and has placed the same before the shareholders in a general meeting for approval along with the views of the board of directors on the request:

Provided that there shall be a time gap of at least one month but not exceeding three months between the dates of the board meeting and the shareholders‘ meeting considering the request of the promoter(s) seeking reclassification the request of the promoter(s) seeking reclassification has been approved in the general meeting by an ordinary resolution in which the promoter(s) seeking reclassification and the persons related to him/her/it have not voted to approve such reclassification request:

Provided that the provisions of this sub-clause shall not apply in cases:

(b) where the promoter(s) seeking reclassification and persons related to the promoter(s) seeking reclassification, together, do not hold more than one percent of the total voting rights in the listed entity;

(c) where reclassification is pursuant to a divorce.

22. In regulation 31A (9) Provision changed The provisions of sub-regulations (3), (4) and clauses (a) and (b) of sub-regulation (8) of this regulation shall not apply if reclassification of promoter(s) is as per the resolution plan approved under section 31 of the Insolvency Code or pursuant to an order of a Regulator under any law subject to the condition that such promoter(s) seeking reclassification shall not remain in control of the listed entity.
23. In regulation 31A new sub regulation (10) inserted (10) In case of reclassification pursuant to an open offer or a scheme of arrangement, the provisions of clause (a) of sub-regulation (3) and clauses (a) and (b) of sub-regulation (8) of this regulation shall not apply if the intent of the erstwhile promoter(s) to reclassify has been disclosed in the letter of offer or scheme of arrangement:

Provided that the provisions of clause (c)(i) of sub-regulation (3) of this regulation shall not apply in case of reclassification pursuant to an open offer.”

24. In regulation 32(6) Where the listed entity has appointed a monitoring agency to monitor utilisation of proceeds of a public or rights issue, the listed entity shall submit to the stock exchange(s) any comments or report received from the monitoring agency within 45 days from end of each quarter.
25. In regulation 33(6) Omitted The [Statement on Impact of Audit Qualifications (for audit report with modified opinion)]79 and the accompanying annual audit report submitted in terms of clause (d) of sub-regulation (3) shall be reviewed by the stock exchange(s)
26. In regulation 34(2)(f) substituted for the top 100 listed entities based on market capitalization, a business responsibility report describing the initiatives taken by the listed entity from an environmental, social and governance perspective, in the format as specified by the Board from time to time:

Provided that the requirement of submitting a business responsibility report shall be discontinued after the financial year 2021–22 and thereafter, with effect from the financial year 2022–23, the top 100 listed entities based on market capitalization shall submit a business responsibility and sustainability report in the format as specified by the Board from time to time:

Provided further that even during the financial year 2021–22, the 1000 listed entities may voluntarily submit a business responsibility and sustainability report in place of the mandatory business responsibility report:

Provided further that the remaining listed entities including the entities which have listed their specified securities on the SME Exchange, may voluntarily submit such reports.

Explanation: For the purpose of this clause, market capitalization shall be calculated as on the 31st day of March of every financial year.

27. In regulation 36 (3)(e) Shareholding of non-executive directors in the listed entity, including shareholding as a beneficial owner.
28. In regulation 40 (9) The listed entity shall ensure that the share transfer agent and/or the in-house share transfer facility, as the case may be, produces a certificate from a practicing company secretary within one month 30 days of the end of each half of the financial year, certifying that all certificates have been issued within thirty days of the date of lodgement for transfer, sub-division, consolidation, renewal, exchange or endorsement of calls/allotment monies.
29. In regulation 43A (1) Inserted The top 500 1000 listed entities based on market capitalization (calculated as on March 31 of every financial year) shall formulate a dividend distribution policy which shall be disclosed in their annual reports and on their websites on the website of the listed entity and a web-link shall also be provided in their annual reports.
30. In regulation 44 (3) Inserted The listed entity shall submit to the stock exchange, within forty eight hours 2 Working Day of conclusion of its General Meeting, details regarding the voting results in the format specified by the Board.
31. In regulation 46 (2) (o)(oa)(t)(u)(v)(w)(x)(y)(z) Inserted o) Schedule of analysts or institutional investors meet and presentations made by the listed entity to analysts or institutional investors.

Explanation: For the purpose of this clause ‗meet‘ shall mean group meetings or group conference calls conducted physically or through digital means.

b) after clause (o), a new clause (oa) shall be inserted, namely, –

(oa) Audio or video recordings and transcripts of post earnings/quarterly calls, by whatever name called, conducted physically or through digital means, simultaneously with submission to the recognized stock exchange(s), in the following manner:

(i) the presentation and the audio/video recordings shall be promptly made available on the website and in any case, before the next trading day or within twenty-four hours from the conclusion of such calls, whichever is earlier;

(ii) the transcripts of such calls shall be made available on the website within five working days of the conclusion of such calls:

Provided that—

a. The information under sub-clause (i) 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.

b. The information under sub-clause (ii) shall be hosted on the website of the listed entity and preserved in accordance with clause (a) of regulation 9.

The requirement for disclosure(s) of audio/video recordings and transcript shall be voluntary with effect from April 01, 2021 and mandatory with effect from April 01, 2022.

c) under clause (s) a new proviso shall be inserted, namely, –

Provided that a listed entity, which has a subsidiary incorporated outside India—

(b) where such subsidiary is statutorily required to prepare consolidated financial statement under any law of the country of its incorporation, the requirement of this proviso shall be met if consolidated financial statement of such subsidiary is placed on the website of the listed entity;

(c) where such subsidiary is not required to get its financial statement audited under any law of the country of its incorporation and which does not get such financial statement audited, the holding Indian listed entity may place such unaudited financial statement on its website and where such financial statement is in a language other than English, a translated copy of the financial statement in English shall also be placed on the website.

(d) after the new proviso to clause (s), the following new clauses shall be inserted, namely, –

(t) secretarial compliance report as per sub-regulation (2) of regulation 24A of these regulations;

(u) disclosure of the policy for determination of materiality of events or information required under clause (ii), sub-regulation (4) of regulation 30 of these regulations;

(v)disclosure of contact details of key managerial personnel who are authorized for the purpose of determining materiality of an event or information and for the purpose of making disclosures to stock exchange(s) as required under sub-regulation (5) of regulation 30 of these regulations;

(w) disclosures under sub-regulation (8) of regulation 30 of these regulations;

(x) statements of deviation(s) or variation(s) as specified in regulation 32 of these regulations;

(y) dividend distribution policy by listed entities based on market capitalisation as specified in sub-regulation (1) of regulation 43A;

(z) annual return as provided under section 92 of the Companies Act, 2013 and the rules made thereunder.

32. In regulation 47(1)(a) and (c) (a)notice of meeting of the board of directors where financial results shall be discussed

(c) statements of deviation(s) or variation(s) as specified in sub-regulation (1) of regulation 32 on quarterly basis, after review by audit committee and its explanation in directors report in annual report;

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