SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations)

Presently, a private agreement between Stock Exchange and listed company govern all listing obligation and disclosure requirement. This listing agreement like any other agreement among parties creates civil obligation in case of any violation of the agreement.

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

APPLICABILITY OF THE REGULATIONS:-

Any listed Entity who has following [1]Designated Security Listed on any [2]Recognize Stock Exchange:

a) Specified Securities Listed On:

  • Main Board
  • SME Exchange
  • Institutional Trading Platform

b) Non-convertible debt securities

c) Non-convertible redeemable preference shares

d) Perpetual debt instrument

e) Perpetual non-cumulative preference shares

f) Indian depository receipts

g) Securitized debt instruments

h) Units issued by mutual funds

i) Any other securities as may be specified by the Board

5. COMMON OBLIGATIONS OF LISTED ENTITIES:

The listed entity shall ensure that [3]Key Managerial Personnel, Directors, [4]Promoters or [5]Any Other Person dealing with the listed entity, complies with responsibilities or obligations, if any, assigned to them under these regulations.

6. COMPLIANCE OFFICER AND HIS OBLIGATIONS:-

A listed entity shall appoint a qualified [6]Company Secretary as the Compliance Officer. It is mandatory for listed entity to Appoint Company Secretary as Compliance Officer.

Responsibility of Compliance Officer:

  1. Coordinator: Co-ordination with and Reporting to following below mention with respect to compliance with rules, Regulations and other directives of these authorities in manner as specified from time to time:
  • Board of Directors
  • Recognize Stock Exchange
  1. Ensuring conformity with the regulatory provisions applicable to the Listed Entity in letter and spirit.
  1. Correctness of Information, Statements and Reports filed by the Listed Entity: Ensuring that the correct procedures have been followed that would result in the Correctness, Authenticity and Comprehensiveness of the Information, Statements and Reports filed by the Listed Entity under these regulations.
  1. Grievance Redressal Division: Monitoring email address of Grievance Redressal division as designated by the listed entity for the purpose of registering complaints by investors.

Non-applicability of provision of Compliance Officer:

  • The requirements of this regulation shall not be applicable in the case of units issued by mutual funds which are listed on recognized stock exchange(s).

But same shall be governed by the provisions of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996.

CLARITY:

It is clear that from the SEBI (LODR) responsibility of Company Secretary has been increased. Like: It is responsibility of the company secretary to ensure that the entity is in compliance with all the regulatory provisions applicable on the Company, that correct procedure has been followed for the information, statement and the reports filed by the listed entity under these regulations.

7. SHARE TRANSFER AGENT:-

The listed entity shall appoint a Share Transfer Agent or Manage the Share Transfer Facility In-House. The listed entity shall ensure that all activities in relation to both physical and electronic share transfer facility are maintained either in house or by Registrar to an issue and share transfer agent registered with the Board.

♠ Mandatory Requirement to appoint Share Transfer Agent:

Company can manage in house Share Transfer Facility. But AS AND WHEN THE

TOTAL NUMBER OF HOLDERS OF SECURITIES OF THE LISTED ENTITY EXCEEDS ONE LAC,

the listed entity shall either appoint Registrar to an issue and share transfer agent registered with the Board or register with the Board as a Category II share transfer agent.

♠ Submission a Compliance Certificate to the Exchange:

  • The listed entity shall submit a compliance certificate to the exchange signed by both the Compliance Officer of the listed entity and the Authorized Representative of the share transfer agent.
  • The listed entity shall submit within One Month of end of each half of the financial year, certifying compliance with the requirements of sub- regulation (2).

♠ Alteration in Share Transfer Agent:

In case of any change or appointment of a new share transfer agent, the listed entity shall enter into a TRIPARTITE AGREEMENT between

√ Existing Share Transfer Agent; and

√ New Share Transfer Agent; and

√ Listed Entity

In case the existing share transfer facility is managed in-house, the agreement referred above shall be entered into between

√ Listed Entity; and

√ New share Transfer Agent

♠ Intimation to Board of Director:

The copy of Agreement will be placed before the Board of Directors in subsequent Board Meeting of the Company.

♠ Intimation to Stock Exchange:

The Listed entity shall intimate such appointment, to the Stock Exchange(s) within 7 (Seven) days on entering into agreement.

♠ Non-applicability of provision of Compliance Officer:

  • The requirements of this regulation shall not be applicable in the case of units issued by mutual funds which are listed on recognized stock exchange(s).

8. CO-OPERATION WITH INTERMEDIARIES REGISTERED WITH THE BOARD:

The listed entity, wherever applicable, shall co-operate with and submit correct and adequate information to the intermediaries registered with the Board (such as given below) within timelines and procedures specified under the Act, regulations and circulars issued there under:

  • Credit Rating Agencies;
  • Registrar to an Issue and Share Transfer Agents;
  • Debenture Trustee; etc.

Non-applicability of provision of Compliance Officer:

The requirements of this regulation shall not be applicable in the case of units issued by mutual funds which are listed on recognized stock exchange(s).Exchange Board of India (Mutual Funds)

Regulations, 1996 shall be applicable.

9. PRESERVATION OF DOCUMENTS :

The listed entity shall have a POLICY for preservation of documents, approved by its board of directors. Listed entity may keep documents in electronic mode. Company will classifying them in at least Two categories as follows-

Documents whose preservation shall be PERMANENT IN NATURE ; Documents with preservation period of NOT LESS THAN EIGHT YEARS after completion of the relevant transactions

10. FILING OF INFORMATION:

  • The listed entity shall file the reports, statements, documents, filings and any other information with the recognized stock exchange(s) on the Electronic Platform as specified by the Board or the recognized stock exchange(s).
  • The listed entity shall put in place infrastructure as required for compliance with sub-regulation (1).

11. APPLICABILITY OF SCHEME OF ARRANGEMENT:

The listed entity shall ensure that any scheme of arrangement /amalgamation /merger /reconstruction /reduction of capital etc. to be presented to any Court or Tribunal does not in any way violate, override or limit the provisions of securities laws or requirements of the stock exchange(s).

12. PAYMENT OF DIVIDEND OR INTEREST OR REDEMPTION OR REPAYMENT:-

Modes for Payment:

The listed entity shall use any of the electronic mode of payment facility approved by the Reserve Bank of India, in the manner specified in Schedule I, for the payment of the following:

i. PAYMENT OF DIVIDEND OR INTEREST OR REDEMPTION OR REPAYMENT:-

ii. Dividend

iii. Interest

iv. Redemption or Repayment of amounts

Modes of Payment if Electronic mode is not possible: Where it is not possible to use electronic mode of payment then payment can be made by following:

i. ‘Payable-at-Par’ Warrants

ii. Cheques

Note:

Where the amount payable as dividend exceeds one thousand and five hundred rupees, the ‘payable-at-par’ warrants or cheques shall be sent by Speed Post.

13. GRIEVANCE REDRESSAL MECHANISM

  • The listed entity shall ensure that Adequate Steps Are Taken for expeditious redressal of investor complaints.

Registration of Company: The listed entity shall ensure that it is registered on the SCORES platform or such other electronic platform or system of the Board as shall be mandated from time to time, in order to handle investor complaints electronically in the manner specified by the Board.

Reporting with Stock Exchange:

  • The listed entity shall file with the recognized stock exchange(s) on a QUARTERLY BASIS,
  • within twenty one days from the end of each quarter,
  • a statement giving
    • The number of investor complaints pending at the beginning of the quarter,
    • Those received during the quarter,
    • Disposed of during the quarter and
    • Those remaining unresolved at the end of the quarter.

Reporting to Board of Director: The above mention statement shall be placed, on Quarterly Basis, before the board of directors of the listed entity.

14. FEES AND OTHER CHARGES TO BE PAID TO THE RECOGNIZED STOCK EXCHANGE(S):-

The listed entity shall pay all such fees or charges, as applicable, to the recognized stock exchange(s), in the manner specified by the Board or the recognized stock exchange(s).

CONCLUSION:

Above given are the 10 (Ten) Common Obligation on Listed Companies as per List SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The above given regulation are applicable on each and every security issued by listed entity. Security Specific Obligation on Listed Company will discuss in my Next Article.

Requirement of Intimation to Stock Exchange as per Regulation No. 5 – 14:

S. No. Regulation No. Particular of Regulation Time Period of filing of Certificate
1. 7(3) The listed entity shall submit a compliance certificate to the exchange signed by both the compliance officer of the listed entity and the authorized representative of the share transfer agent The listed entity shall submit within one month of end of each half of the financial year
2. 7(5) In case of any change or appointment of a new share transfer agent, the listed entity shall enter into a TRIPARTITE AGREEMENT. The Listed entity shall intimate such appointment, to the Stock Exchange(s). Intimation within 7 (Seven) days on entering into agreement
3. 10(1) The listed entity shall file the reports, statements, documents, filings and any other information with the recognised stock exchange(s) on the electronic platform as specified by the Board or the recognized stock exchange(s) As specivied with Board and recognized stock exchange.
4. 13(3) The listed entity shall file with the recognized stock exchange(s) on a QUARTERLY BASIS

• statement giving

• The number of investor complaints pending at the beginning of the quarter,

• Those received during the quarter,

• Disposed of during the quarter and

• Those remaining unresolved at the end of the quarter

Within 21 days (Twenty One days) from the end of each quarter

Requirement of Intimation to Board of Directors in Regulation No. 5 – 14:

S. No. Regulation No. Particular of Regulation Time Period of filing of Certificate
1. 7(6) In case of any change or appointment of a new share transfer agent, the listed entity shall enter into a TRIPARTITE AGREEMENT. The copy of same placed before the Board of Directors. In Subsequent Board Meeting of the Company
2. 13(4) The listed entity shall placed before Board of Directors:

• statement giving

• The number of investor complaints pending at the beginning of the quarter,

• Those received during the quarter,

• Disposed of during the quarter and

Those remaining unresolved at the end of the quarter

Place on Quarterly Basis, before the Board of Directors of the listed entity

3Promoter:

“Promoter” includes:

(i) the person or persons who are in control of the issuer;

(ii) the person or persons who are instrumental in the formulation of a plan or programme pursuant to which specified securities are offered to public;

(iii) the person or persons named in the offer document as promoters:

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.

CONCLUSION:

The alignment of the Listing Regulations with the Companies Act 2013 is a step in the right direction by SEBI and will go a long way in removing the ambiguity and confusion with respect to the Listing Regulations. Further, consolidation of different provisions of the listing agreements with respect to different securities is also a positive step and will ensure ease for companies who intend to list themselves on various stock exchanges.

[1] Specified securities, 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]

[2] As per “The Securities Contracts (Regulation) Act, 1956, “Recognized Stock Exchange [Section 2(f)] means a stock exchange which is for the time being recognized by the Central Government under Section 4 of the Act.

[3] Section 2(51) of Companies Act, 2013“key managerial personnel”, in relation to a company, means—

(i) the Chief Executive Officer or the managing director or the manager; (ii) the company secretary; (iii) the whole-time director; (iv) the Chief Financial Officer; and (v) such other officer as may be prescribed;

[4] (w)”promoter” and “promoter group” 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- Define at the end of the Article.

[5] Compliance Officer, Debenture Trustee, Security Holder, Stock Exchange

[6] Company Secretary or secretary means a company secretary as defined in clause (c) of sub-section (1) of section 2 of the Company Secretaries Act, 1980 who is appointed by a company to perform the functions of a Company Secretary under this Act;

As per Company Secretary Act, “Company Secretary” means a person who is a member of the Institute of Company Secretary of INDIA.

CS Divesh Goyal(Author – CS Divesh Goyal, ACS is a Company Secretary in Practice from Delhi and can be contacted at csdiveshgoyal@gmail.com)

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