Analysis of Regulation 28 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations) related to In-principle approval of recognized stock exchange(s).

SEBI LISTING REGULATIONS- IN-PRINCIPLE APPROVAL OF RECOGNIZED STOCK EXCHANGE

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

28. IN-PRINCIPLE APPROVAL OF RECOGNIZED STOCK EXCHANGE(s). The listed entity, BEFORE ISSUING [1]SECURITIES, shall obtain an ‘in-principle’ approval from Recognized stock exchange(s) in the following manner:

  • where the securities are listed only on recognised stock exchange (s) having nationwide trading terminals,
    • -from all such stock exchange (s);
  • where the securities are not listed on any recognised stock exchange having nationwide trading terminals,
    • -from all the stock exchange(s) in which the securities of the issuer are proposed to be listed
  • where the securities are listed on recognised stock exchange(s) having nationwide trading terminals as well as on the recognised stock exchange(s) not having nationwide trading terminals,
    • – from all recognised stock exchange(s) having nationwide trading terminals

Non Applicability:

This regulation shall not be applicable for securities issued pursuant to the Scheme of Arrangement for which the listed entity has already obtained No-Objection Letter from [2]recognized stock exchange(s) in accordance with regulation 37. {Regulation 37 Draft Scheme of Arrangement & Scheme of Arrangement}.

29. PRIOR INTIMATION:

The listed entity shall give prior intimation to stock exchange about the meeting of the Board of Directors:

Time Period for Intimation:

[3]At least 5 (Five) days in advance
(Excluding the date of the intimation and date of the meeting and such intimation shall include the date of such meeting of board of Directors.)
Intimation about the Meeting in which Financial Results viz. quarterly, half yearly, or annual, as the case may be due for consideration.
At least 2 (Two) working days in advance Intimation about the Meeting in which following matters are due to consideration:

§ Proposal for Buyback of Securities

§ Proposal for voluntary delisting of Listing entity from the Stock Exchange(s)

§ Fund raising by following ways

– Further Public Offer, Rights Issue, American Depository Receipts/Global Depository Receipts/Foreign Currency Convertible Bonds, qualified institutions placement, debt issue, preferential issue or any other method and for determination of issue price:

§ [4]Declaration/Recommendation of Dividend

§ Issue of Convertible Securities including convertible debentures or of debentures carrying a right to subscribe to equity shares or the passing over of dividend

§ Proposal for declaration of Bonus Securities.

(Only if parts of Agenda Paper)

At least 11 (Eleven) working days in advance § Any Alteration in the form or nature of any of its securities that are listed on the stock exchange or in the rights or privileges of the holders thereof.

§ Any Alteration in the date on which, the interest on debentures or bonds, or the redemption amount of redeemable shares or of debentures or bonds, shall be payable.

General Meeting Intimation:
– Intimation shall also be given in case of any Annual General Meeting or Extraordinary General Meeting or Postal Ballot that is proposed to be held for obtaining shareholder approval for further fund raising indicating type of issuance.

DISCLOSURE OF EVENTS OR INFORMATION:

i. Disclosure of Material Event:

Every [5]Listed Entity shall make disclosures of any events or information which, in the opinion of the board of directors of the listed company, is [6]material.

ii. What is Materiality:

  • Events specified in Para A of Part A of Schedule III are deemed to be Material Event required to disclose. (Given in detailed below)
  • Events specified in Para B of Part A of Schedule III are deemed to be Material Event, if guidelines of materiality APPLICABLE, guidelines given in sub-regulation 4 of regulation 30.

iii. 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) an event/information may be treated as being material if in the opinion of the board of directors of listed entity, the event / information is considered material

iv. Policy of Materiality:

  • Board of Directors: The Board of Directors shall frame a policy for determination of materiality, based upon the criteria given above duly [7]approved by its board of directors.
  • Website: Such policy shall be disclosed on its website.

v. Authorization to KMP:

The board of directors of the listed entity shall authorize one or more Key Managerial Personnel for the purpose of:

  • Determining materiality of an event; or
  • Determining materiality of an information; or
  • Making disclosure to Stock Exchange(s)

Note:

The contact details of such person shall be also disclosed to the stock exchange(s) and as well as on the listed entity’s website

vi. Intimation to Stock Exchange:

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.

If disclosure made after 24 Hours: The listed entity shall, along with such disclosures provide explanation for delay

Note:

  • The listed entity shall provide specific and adequate reply to all queries raised by stock exchange(s) with respect to any events or information:
  • The listed entity may on its own initiative also, confirm or deny any reported event or information to stock exchange(s).

vii. Continuation of Disclosure to Stock Exchange:

The listed entity shall, with respect to disclosures referred to in this regulation, make disclosures updating material developments on a regular basis, till such time the event is resolved/closed, with relevant explanations.

viii. Disclosure on Website:

All such events or information which has been disclosed to stock exchange(s) under this regulation, and such disclosures shall be hosted on the website of the listed entity.

Continuation of Disclosure

A minimum period of five years and thereafter as per the archival policy of the listed entity, as disclosed on its website.

ix. Disclosure relating to Materiality of Subsidiary:

The listed entity shall disclose all events or information with respect to subsidiaries which are material for the listed entity to both Stock Exchange and on Website.

Note:

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.

Requirement of Intimation to Stock Exchange as per Regulation No.28 – 30:

S. No. Regulation No. Particular of Regulation Time Period of filing of Certificate
1. 30(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
2. That disclosure with respect to events specified in

sub-para 4 of Para A of Part A of Schedule III

Made within 30 Minutes (thirty minutes) of the conclusion of the board meeting

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]

Recognized stock exchange:

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.

For Better understanding we are reproducing below the extract of Regulation 28 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations)

In-principle approval of recognized stock exchange(s).

28. (1) The listed entity, before issuing securities, shall obtain an ‘in-principle’ approval from recognised stock exchange(s) in the following manner:

(a) where the securities are listed only on recognised stock exchange(s) having nationwide trading terminals, from all such stock exchange(s);

(b) where the securities are not listed on any recognised stock exchange having nationwide trading terminals, from all the stock exchange(s) in which the securities of the issuer are proposed to be listed;

(c) where the securities are listed on recognised stock exchange(s) having nationwide trading terminals as well as on the recognised stock exchange(s) not having nationwide trading terminals, from all recognised stock exchange(s) having nationwide trading terminals:

(2) The requirement of obtaining in-principle approval from recognised stock exchange(s), shall not be applicable for securities issued pursuant to the scheme of arrangement for which the listed entity has already obtained No-Objection Letter from recognised stock exchange(s) in accordance with regulation 37.

————–

[1] Discussed at the end of the Article.

[2] Discussed at the end of the Article.

[3] Excluding the date of the intimation and date of the meeting.

[4] Condition: in case the declaration of bonus by the listed entity is not on the agenda of the meeting of board of directors, prior intimation is not required to be given to the stock exchange(s).

[5] “Listed entity”2(P)

Listed entity means an entity which has listed, on a recognized stock exchange(s), the designated securities issued by it or designated securities issued under schemes managed by it, in accordance with the listing agreement entered into between the entity and the recognized stock exchange(s);

[6] Events specified in Para A of Part A of Schedule III are deemed to be Material Event and criteria for determination of materiality given in point no. iii.

[7] Approval by passing of Board Resolution by Board of Directors.

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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