Analysis of Chapter IV of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations) related to
OBLIGATIONS OF LISTED ENTITY WHICH HAS LISTED ITS SPECIFIED SECURITIES
Now, Securities and Exchange Board of India took direct regulatory role over the listed entities in India. Securities and Exchange Board of India notified in official gazette its SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 on 2nd September 2015.
Date of Publication in Official Gazette: September 2, 2015
Date of Applicability: December 1, 2015
OBLIGATIONS OF LISTED ENTITY WHICH HAS LISTED ITS SPECIFIED SECURITIES:
REGULATION 15- APPLICABILITY:-
A. The below given provisions shall apply to following Listed Entities, which has listed with any recognize Stock Exchange (s) for its specified securities either on
B. The compliance with the provisions as specified in regulation given below shall not apply to followings:
i. The listed entity having below given limits as on the last day of the previous financial year:
ii. The listed entity which has listed its specified securities on the SME Exchange.
iii. Listed Entities which are not companies, but body Corporate or are subject to regulations under other statues shall not apply to the extent that it does not violate their respective statutes and guidelines or directives issued by the relevant authorities
|S. NO.||No. of
|Particular of Regulation|
|1.||17||Board of Directors|
|3.||19||Nomination and Remuneration Committee|
|4.||20||Stakeholders Relationship Committee|
|5.||21||Risk Management Committee|
|7.||23||Related Party Transactions|
|8.||24||Corporate Governance requirements with respect to subsidiary of listed Company|
|9.||25||Obligations with respect to independent Directors|
|10.||26||Obligations with respect to Directors and Senior Management|
|11.||27||Other Corporate Governance Requirements|
|13.||Schedule V Para C,D,E|
Regulation 17- BOARD OF DIRECTORS:-
(1) The Composition of Board of directors of the listed entity shall be as follows:
(2)_ Frequency of Meeting:
(3) Review of Compliance Report:
(4) (5) Duties of Board of Director:
(6) Fees or Compensation:
Approval of shareholders mentioned in clause (a), shall specify the limits for the maximum number of stock options that may be granted to non-executive directors, in any financial year and in aggregate.
Independent Director not entitled to any Stock Option
(8) Compliance Certificate: The chief executive officer and the chief financial officer shall provide the compliance certificate to the board of directors as specified in Part B of Schedule II.
(9) Risk Management Plan:
(10) Performance evaluation of Independent Director:
COMMITTEES UNDER LISTING REGULATIONS:-
Name of Mandatory Committees:
Regulation 18- AUDIT COMMITTEE: Every listed entity shall constitute a qualified and independent audit committee.
♣ Company Secretary: The Company Secretary shall act as the secretary to the audit committee.
♣ Invitation to attend Meeting of Audit Committee: The audit committee at its discretion shall invite the finance director or head of the finance function, head of internal audit and a representative of the statutory auditor and any other such executives to be present at the meetings of the committee
♣ Frequency of Meetings:
♣ Quorum of Meetings:
♣ Powers of Committee: The audit committee shall have powers to investigate any activity within its terms of reference, seek information from any employee, obtain outside legal or other professional advice and secure attendance of outsiders with relevant expertise, if it considers necessary.
♣ Discretion of the Audit Committee: Its discretion shall invite the finance director or head of the finance function, head of internal audit and a representative of the statutory auditor and any other such executives to be present at the meetings of the committee:
♣ Meeting without executive Director: Occasionally the audit committee may meet without the presence of any executives of the listed entity.
Regulation 19. NOMINATION & REMUNERATION COMMITTEE:
Regulation 20. STAKE HOLDER RELATIONSHIP COMMITTEE:
Regulation 21. RISK MANAGEMENT COMMITTEE:
Regulation 22- VIGIL MECHANISM:
Regulation 25- OBLIGATIONS WITH RESPECT TO INDEPENDENT DIRECTORS:
♠ Agenda for the Meeting of Independent Director:
(Taking into account the views of executive directors and non-executive directors 😉
♠ Liability of Independent Director:
An independent director shall be held liable, ONLY in respect of such acts of omission or commission by the listed entity which had occurred;
♠ Intermittent vacancy of an Independent Director: Any Intermittent Vacancy of an Independent director shall be filled-up by the
Board of Directors at the earliest but not later than
♠ Duties of the Company towards Independent Director: The listed entity shall familiarize the independent directors through various programmes about the listed entity, including the following:
Regulation 26- OBLIGATIONS WITH RESPECT TO DIRECTORS AND SENIOR MANAGEMENT:
♠ Limit of Number of Membership in Committee by Independent Director:
For the purpose of considering the limit of companies Private Company & Foreign Company & Section-8 Company are excluded.
♠ Duty of disclosure at the time of appointment:
Regulation 27- OTHER CORPORATE GOVERNANCE COMPLIANCE REQUIREMENT:
Quarterly Compliance Report on Corporate Governance:
Requirement of Intimation to Stock Exchange as per Regulation No.15 – 27:
|S. No.||Regulation No.||Particular of Regulation||Time Period of filing of Certificate|
|1.||27(1)||The listed entity shall submit a quarterly compliance report on corporate governance in the format as specified by the Board from time to time||within fifteen days from close of the quarter|
Requirement of discussion and placement before Board of Directors as per Regulation No. 15-27:
|S. No.||Regulation No.||Particular of Regulation||Time Period for placement before Board|
|1.||17(3)||The board of directors shall review compliance reports pertaining to all laws applicable to the listed entity||periodically|
|2.||17(3)||The board of directors shall review steps taken by the listed entity to rectify instances of non-compliances||periodically|
|3.||17(5)||The board of directors shall lay down a code of conduct for all members of board of directors and senior management of the listed entity.||N.A.|
|4.||17(7)||The minimum information to be placed before the Board of Directors is specified in Part A of Schedule II (Bare act language given below).||N.A.|
|5.||17(8)||The chief executive officer and the chief financial officer shall provide the compliance certificate to the board of directors as specified in Part B of Schedule II.||N.A.|
|6.||17(9)||The board of directors shall be responsible for framing, implementing and monitoring the risk management plan for the listed entity.
Listed entity will inform before the Board about risk assessment and minimization process
TERMS USE UNDER REGULATION DISCUSSED ABOVE:
“Independent Director” means a non-executive director, other than a nominee director of the listed entity:
(i) who, in the opinion of the board of directors, is a person of integrity and possesses relevant expertise and experience;
(ii) who is or was not a promoter of the listed entity or its holding, subsidiary or associate company;
(iii) who is not related to promoters or directors in the listed entity, its holding, subsidiary or associate company;
(iv) who, apart from receiving director’s remuneration, has or had no material pecuniary relationship with the listed entity, its holding, subsidiary or associate company, or their promoters, or directors, during the two immediately preceding financial years or during the current financial year;
(v) none of whose relatives has or had pecuniary relationship or transaction with the listed entity, its holding, subsidiary or associate company, or their promoters, or directors, amounting to two per cent. or more of its gross turnover or total income or fifty lakh rupees or such higher amount as may be prescribed from time to time, whichever is lower, during the two immediately preceding financial years or during the current financial year;
(vi) who, neither himself, nor whose relative(s) —
(A) holds or has held the position of a key managerial personnel or is or has been an employee of the listed entity or its holding, subsidiary or associate company in any of the three financial years immediately preceding the financial year in which he is proposed to be appointed;
(B) is or has been an employee or proprietor or a partner, in any of the three financial years immediately preceding the financial year in which he is proposed to be appointed, of —
(1) a firm of auditors or company secretaries in practice or cost auditors of the listed entity or its holding, subsidiary or associate company; or
(2) any legal or a consulting firm that has or had any transaction with the listed entity, its holding, subsidiary or associate company amounting to ten per cent or more of the gross turnover of such firm;
(C) holds together with his relatives two per cent or more of the total voting power of the listed entity; or
(D) is a chief executive or director, by whatever name called, of any non-profit organisation that receives twenty-five per cent or more of its receipts or corpus from the listed entity, any of its promoters, directors or its holding, subsidiary or associate company or that holds two per cent or more of the total voting power of the listed entity;
(E) is a material supplier, service provider or customer or a lessor or lessee of the listed entity;
(vii) who is not less than 21 years of age.
It shall have the same meaning as assigned to them respectively in clauses (za) and (zb) of sub-regulation (1) of regulation 2 of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009.
A director or officer of the issuer or a person shall not be deemed as a promoter, if such director or officer or person is acting as such merely in his professional capacity. A financial institution, scheduled bank, foreign portfolio investor other than Category III foreign portfolio investor, and mutual fund shall not be deemed to be a promoter merely by virtue of the fact that ten percent or more of the equity share capacity of the issuer is held by such person. A financial institution, scheduled bank and foreign portfolio investor other than Category III foreign portfolio investor shall be treated as promoter for the subsidiaries or companies promoted by them or for mutual fund sponsored by them.
Related to Any Promoter:
For the purpose of this clause, the expression “related to any promoter” shall have the following meaning:
(i) if the promoter is a listed entity, its directors other than the independent directors, its employees or its nominees shall be deemed to be related to it;
(ii) if the promoter is an unlisted entity, its directors, its employees or its nominees shall be deemed to be related to it.
Senior Management shall 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 executive directors, including all functional heads.
 Non-convertible debt securities, non-convertible redeemable preference shares, perpetual debt instrument, perpetual non-cumulative preference shares, Indian depository receipts, securitized debt instruments, units issued by mutual funds and any other securities as may be specified by the Board. [Regulation 2(1) (h) of SEBI (LODR) Regulations, 2015]
 *“Main Board” means a recognized stock exchange having nationwide trading terminals, other than SME exchange;
 “SME exchange” means a trading platform of a recognised stock exchange having nationwide trading terminals permitted by the Board to list the specified securities issued in accordance with this Chapter and includes a stock exchange granted recognition for this purpose but does not include the Main Board;
 Definition of Executive Director given in Rule 1(K) of Companies (Specification of definition details) Rules, 2014- Executive Director means a whole-time Director as defined in clause (94) of Section 2 of the Act. Clause (94) section 2 of Companies Act, 2013 Whole time director includes a director in the whole-time employment of the Company.
 Define at the end of the Article.
 Define at the end of the Article.
 Define at the end of the Article.
 As per clause 2.1 of Secretarial Standard- 1.
 A Company may pay a sitting fees to a director for attending meeting of the Board or Committees thereof, such sum as may be decided by Board of directors thereof which shall not exceed Rs. 100,000/- per meeting of the Board or Committee thereof; However, for Independent Director and Women Director, the sitting fees shall not be less than the sitting fees payable to other directors.
 Financially Literate shall mean the ability to read and understand basic financial statements i.e. balance sheet, profit and loss account, and statement of cash flows.
 a member shall be considered to have accounting or related financial management expertise if he or she possesses experience in finance or accounting, or requisite professional certification in accounting, or any other comparable experience or background which results in the individual’s financial sophistication, including being or having been a chief executive officer, chief financial officer or other senior officer with financial oversight responsibilities
 Note: where the listed entity fulfils the requirement of independent directors in its board of directors without filling the vacancy created by such resignation or removal, the requirement of replacement by a new independent director shall not apply
 Discussed at the end of the Article.
 The listed entity may, at its discretion, comply with requirements as specified in Part E of Schedule II.