April 24, 2009
The Managing Director/ Executive Director/ Administrator of all the Stock Exchanges
Sub.: Amendments to the Equity Listing Agreement
1. In order to enhance disclosures regarding shareholding pattern in a listed company and also to bring more transparency and efficiency in the governance of a listed company, it has been decided to amend certain clauses in the Equity Listing Agreement. Accordingly, this circular is issued, in exercise of powers conferred by sub-section (1) of Section 11 of the Securities and Exchange Board of India Act, 1992, to protect the interest of investors in securities and to promote the development of, and to regulate the securities market.
2The full text of amendments is given at Annexure A and the brief of the amendments are as under:
(A)Uniform procedure for dealing with unclaimed shares – Insertion of clause 5A It has been brought to the notice of the Board that there is a large quantum of shares issued pursuant to the public issues, which remain unclaimed despite the best efforts of the Registrar to Issue or Issuers and that there is no uniform practice for dealing with such shares.
It has been decided to provide a uniform procedure for dealing with unclaimed shares i.e., shares which could not be allotted to the rightful shareholder due to insufficient/incorrect information or any other reason. Accordingly, the new Clause 5A is to be inserted, which, inter alia, provides the following:
(a) The unclaimed shares shall be credited to a demat suspense account opened by the issuer with one of the depository participants.
(b) Any corporate benefit in terms of securities, accruing on unclaimed shares such as bonus shares, split etc., shall also be credited to such account.
(c) Details of shareholding of each individual allottee whose shares have been credited to such suspense account shall be properly maintained by the issuer.
(d) The allottee’s account shall be credited as and when he/she approaches the issuer, after undertaking the proper verification of identity of the al lottee.
(e) The voting rights of these shares will remain frozen till the rightful owner claims the shares.
(f) Details (in aggregate) of shares in the suspense account including freeze on their voting rights, shall be disclosed in the Annual Report as long as there are shares in the suspense account
(B) Notice period for Record Date and Board Meeting – Amendments to clause 16 and clause 19
It has been decided to reduce the timelines for notice period for all corporate actions like dividend, bonus etc, for all scripts whether in demat or physical, whether in F&O segment or not. The notice period for record date has been reduced to 7 working days and for board meeting has been reduced to 2 working days.
(C) Uniformity in dividend declaration – Insertion of clause 20A It has been decided to mandate that listed companies shall declare their dividend on per share basis only. This is expected to bring uniformity in the manner of declaring dividend amongst the listed companies.
(D) Shareholding pattern for each class of shares and voting rights pattern –
Amendment to clause 35 It is clarified that clause 35 of the listing agreement which gives a format for disclosures of shareholding pattern, is required to be given for each class of security separately. Further, it has been decided to amend clause 35 to provide an additional format for disclosures of voting rights pattern in the company.
3. All Stock exchanges are advised to :
(a) give effect to the above mentioned policy amendments and appropriately amend the relevant Clauses of the Equity Listing Agreement in line with the text of the amendments specified in annexure.
(b) communicate to SEBI the status of implementation of the requirements of this circular in the next Monthly Development Report.
All the amendments as specified in Annexure A shall come into force with immediate effect.
5This circular is available on SEBI website at www.sebi.gov.in under the
categories “Legal Framework” and “Issues and Listing”.