SEBI vide its Notification No. SEBI/LAD-NRO/GN/2015-16/013 dated 2nd September, 2015 had notified SECURITIES AND EXCHANGE BOARD OF INDIA (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2015 which have become effective from 01st December, 2015. These Regulations prescribe different Disclosure Requirements for different types of listed securities. This Article is an attempt to simplify various regulations and contains ONLY regulations and impact thereon of the entity whose equity shares are listed on the stock exchange. This Article covers:-
1. Broad Features of the Regulations
2. Applicability of the Regulations
3. Common Obligations to Be Performed By Listed Entities
4. Quarterly Compliances Including Time Thereof
5. Events Requiring Prior Intimation
6. Events Requiring Intimation within 24 Hours of Occurrence of Event
7. Composition of Board and Its Committees Thereof
8. Related Party Transaction
9. Agendas of Board Meeting As Per Regulation
10. Agendas of Audit Committee Meetings
11. Agendas to Be Placed At Upcoming General Meeting
BROAD FEATURES
1. Time Limit to comply with other provisions: 90 Days i.e. became effective from 01st December, 2015
2. The Regulations have been structured and designed in such a way so that they are aligned with Companies Act, 2013.
3. In order to avoid any sort of confusion or overlapping, pre-listing as well as post listing requirements have been incorporated in the Listing Regulations.
4. The Listing Regulations have been divided into 2 parts:-
a) Substantive Provisions are contained in main body of Listing Regulations.
b) Procedural requirements in form of Schedules.
APPLICABILITY OF THE REGULATIONS
The regulations are applicable on listed entities who have listed their any of the following designated securities on recognised stock exchange:-
(a) specified securities listed on main board or SME Exchange or institutional trading platform;
(b) Non-convertible debt securities, non-convertible redeemable preference shares, perpetual debt instrument, perpetual non-cumulative preference shares;
(c) Indian depository receipts;
(d) securitised debt instruments;
(e) Units issued by mutual funds;
(f) Any other securities as may be specified by the Board.
COMMON OBLIGATIONS OF LISTED ENTITIES
This part deals with the obligations and responsibilities upon all the listed entities. A responsibility has been cast upon KMP’S, Directors, and Promoters that they shall comply with responsibilities or obligations assigned to them under the regulations. The following are the common obligations on Listed entities:-
| Regulation No. | Nature of Compliance | Compliance |
| 6 | COMPLIANCE OFFICER
|
A listed entity shall appoint a qualified Company Secretary as the Compliance Officer. The Compliance officer so appointed shall be responsible for ensuring conformity with regulatory compliance, co-ordination and reporting to the Board, ensuring that correct procedures have been followed that would result in correctness of information filed by listed entity under the regulations and monitoring email address of grievance redressal division. |
| 7 | SHARE TRANSFER AGENT
|
The listed entity shall appoint a share transfer agent or manage the share transfer facility in house. Where the facility is managed in house then as and when the total number of holders exceeds one lakh, then the listed entity has 2 options:- Either to register with the Board as Category II Share transfer agent OR to appoint Registrar to an Issue and Share Transfer Agent registered with the Board. Compliance Certificate: The Listed entity shall ensure that it submits a Compliance Certificate to the exchange duly signed by the listed entity and authorised representative of the Share Transfer Agent within one (1) month of end of each half Financial Year, certifying that the entity has ensured all activities in relation to both physical and electronic share transfer facility that are maintained either in house or by Registrar to an issue and share transfer agent registered with the Board. Manner of Appointment of New Share Transfer Agent: Incase of any change or appointment of new share transfer agent, the listed entity shall enter into tripartite agreement between the existing share transfer agent , the new transfer agent and the listed entity. Intimation of Appointment of New Share Transfer Agent:- The listed entity shall inform about the appointment of New Share Transfer Agent within Seven (7) days of entering into Agreement. The Agreement referred herein-above shall be placed at the subsequent Board Meeting. |
| 9 | PRESERVATION OF DOCUMENTS. |
The listed entity has to bifurcate and categorise policy into 2 types:- Documents whose preservation shall be permanent in nature Documents whose preservation shall be of not less than 8 years. Provided that listed entity may preserve the documents in electronic mode. |
| 24 | COMPLIANCE WITH RESPECT TO UNLISTED MATERIAL SUBSIDIARY |
Atleast one Independent Director on Board shall be a Director on Board of Unlisted Material Subsidiary. The management of the unlisted subsidiary shall periodically bring to the notice of the board of directors of the listed entity, a statement of all significant transactions and arrangements entered into by the unlisted subsidiary 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 without passing a special resolution in its General Meeting except in cases where such divestment is made under a scheme of arrangement duly approved by a Court/Tribunal. Selling, disposing and leasing of assets amounting to more than twenty percent of the assets of the material subsidiary on an aggregate basis during a financial year shall require prior approval of shareholders by way of special resolution, unless the sale/disposal/lease is made under a scheme of arrangement duly approved by a Court/Tribunal. |
QUARTERLY COMPLIANCES
| Regulation No. | Time Limit | Compliance / Intimation to Stock Exchange about |
| 13(3) | Within 21 days from end of 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 |
| 27(2) | Within 15 days from close of quarter | A listed entity shall submit quarterly compliance report on corporate governance in the format as specified by the Board from time to time to the recognised stock exchange(s) |
| 31(1) |
Within 21 days from end of each quarter; 1 day prior to listing of its securities on the stock exchange(s); within 10 days of any capital restructuring of the listed entity resulting in a change exceeding two per cent of the total paid-up share capital |
A listed entity shall submit a statement showing holding of securities and shareholding pattern separately for each class of securities |
| 33(3) | Within 45 days from end of quarter | The listed entity shall submit quarterly and year-to-date standalone financial results to the stock exchange within forty-five days of end of each quarter, other than the last quarter. |
| 32(1) | A listed entity shall submit to the stock exchange the following statement(s) on a quarterly basis for public issue, rights issue, preferential
issue etc. ,- (a) indicating deviations, if any, in the use of proceeds from the objects stated in the offer document or explanatory statement to the notice for the general meeting, as applicable; (b) indicating category wise variation (capital expenditure, sales and marketing, working capital etc.) between projected utilisation of funds made by it in its offer document or explanatory statement to the notice for the general meeting, as applicable and the actual utilisation of funds |
PRIOR INTIMATION OF BOARD MEETING AT WHICH FOLLOWING AGENDAS WILL / PROPOSED TO BE DISCUSSED / OTHER EVENTS
| Regulation No. | The Board Meeting at which following agendas are to be discussed: | Compliance / Intimation to Stock Exchange about |
| 29(1) | Financial Results | atleast 5 days in advance (excluding date of meeting and date of intimation) |
| 29(2) | proposal for buyback of securities | at least 2 working days in advance, excluding the date of the intimation and date of the meeting: |
| proposal for voluntary delisting by the listed entity from the stock exchange(s); | ||
| fund raising by way of 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 | ||
| 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 | ||
| 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 | ||
| 29(3) | 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 | at least 11 working days in Advance |
| 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 | ||
| 42(2) | A listed entity shall give notice in to stock exchange(s) of record date specifying the purpose of the record date | Advance notice of atleast 7 working days (excluding the date of intimation and the record date) |
| 42(3) | A listed entity shall recommend or declare all dividend and/or cash bonuses | Atleast 5 working days (excluding the date of intimation and the record date) before the record date |
| 46(3) | A listed entity shall update any change in the content of its website | Within 2 working days from the date of such change in content |
ANNUAL / YEARLY COMPLIANCES
| Regulation No. | Time Limit | Compliance / Intimation to Stock Exchange about |
| 33(3) | Within 60 days from end of Financial Year | listed entity shall submit audited standalone financial results for
the financial year, along with the audit report and either Form A (for audit report with unmodified opinion) or Form B (for audit report with modified opinion) |
| 34 | Within 21 working days of it being approved and adopted in the Annual General Meeting as per the provisions of the Companies Act, 2013 | A listed entity shall submit the annual report to the stock exchange
|
| 36(2) | Not less than 21 days before the Annual General Meeting. | A listed entity shall send annual report to the holders of securities |
INTIMATION WITHIN 24 HOURS OF OCCURRENCE OF EVENT
This is further divided into 2 parts:
(i) Disclosures to be given even when materiality does not triggers / guidelines of materiality are not applicable
(ii) Disclosures to be given even when materiality triggers / guidelines of materiality are applicable
The same are detailed in Part A of Schedule III of the regulations.
COMPOSITION OF BOARD AND ITS COMMITTEES
Particulars |
Board |
Audit Committee |
Nomination & Remuneration Committee |
Stakeholder Relationship Committee |
Risk Management |
Applicability |
All Listed Entities |
All Listed Entities |
All Listed Entities |
All Listed Entities |
Top 100 Listed Entities |
Min. No. Of Members |
Atleast 3 |
Atleast 3 |
Atleast 3 |
Atleast 3 |
Atleast 3 |
Kind of Directors (Executive (E) / No-Executive) (NE) |
Both [E & NE] |
Both [ E & NE] |
Only NE |
Both [E& NE] |
Both [E & NE] |
No. of Independent Directors Required |
Depends upon the Chairperson. (C.P.)If C.P. is executive or non-executive but related to promoter then atleast 50% of Members shall be Independent otherwise atleast 1/3rd of Directors shall be Independent. |
Atleast 2/3 rd of Members shall be Independent Directors. |
Atleast 50% of Members shall be Independent Directors. |
No such criteria and condition is essential. |
No such criteria and condition is essential |
Chairperson |
C.P. may be Independent and may not be Independent |
C.P. Shall be Independent. |
C.P. Shall be Independent and also that C.P. of Company shall not chair the Committee. |
C.P. Shall be a non-executive director and may or may not be Independent Director. |
C.P. shall be a member of the board of directors and senior executives of the listed entity may be members of the committee |
Presence at AGM |
All directors shall be present at AGM, if any Director is absent the Chairman shall explain the absence of directors. |
C.P. of ACM shall be present at AGM. |
C.P. may be present at AGM |
No Such criteria or essential condition. |
No Such criteria or essential condition. |
Other Members |
– |
– |
– |
The Board shall decide composition of other members of the Committee |
The Board shall decide composition of other members of the Committee But majority shall be members of the Board |
RELATED PARTY TRANSACTIONS
1. The listed entity shall formulate a policy on materiality of related party and dealing with related party transaction (RPT).
2. ALL RPT shall require prior approval of Audit Committee.
3. The Audit Committee may grant omnibus approval of the transactions and shall satisfy itself of the need and such approval shall be in the interest of the listed entity also that the approval so granted shall be for one year only.
4. All existing material related party contracts and arrangement which extend beyond date of notification shall be required to be approved at First General Meeting after notification of Rules.
AGENDAS OF BOARD MEETING
1. To grant Leave of Absence, if any.
2. To take note of minutes of last Board Meeting.
3. To take note of minutes of Audit Committee meeting.
4. To take note of minutes of Nomination and Remuneration Committee.
5. To take note of minutes of other committee meeting(s).
6. To take note of minutes of meeting of Board of Directors of Subsidiary Company (It must be noted that only for Unlisted Company is mandatory)
7. To take note of significant transactions entered into by Unlisted Subsidiary.
8. To take note of Complaints received during the quarter.
9. To review the Compliance of Applicable Laws on the entity.
10. To consider and approve a Code of Conduct of all Board Members and senior management level.
11. To recommend to members fees payable to Non-executive Directors and the number of Stock Options to be granted except to Independent Directors.
12. To discuss on Annual Operating plans and budgets.
13. Other Agendas specified Under Part A of Schedule II.
AGENDAS of AUDIT COMMITTEE MEETING
1. To grant leave of Absence, if any. (but however it must be noted that as per Secretarial Standard-1 there shall be 100% of attendance of members of Committee of Board)
2. To grant omnibus approval for Related Party Transaction. (It must be noted that approval granted herein shall not exceed for more than 1 year)
3. To review Related Party Transactions of the Company for Quarter ended / Half Yearly ended / FY ended
4. To Consider the Audited / Unaudited Quarterly, Half-Yearly / Annual Financial Statements.
5. To recommend appointment of Auditors of the Company.
6. To approve material related party transaction. (This transactions shall be subject to approval of shareholders of the Company in General Meeting)
7. To review the financial statements, in particular, the investments made by the unlisted subsidiary
8. Other Agendas as specified in PART C of Schedule II of the Regulations.
AGENDA OF UPCOMING GENERAL MEETING
1. To approve related party transactions existing as on date i.e. before.
2. To approve material related party transaction, if any.
(The Author of above article is Mr. Sumit Talreja, Company Secretary and can be contacted at +91-8819016904 and [email protected]. You may also forward your comments, suggestions and queries at above mentioned contact details.)
IS IT NOT MANDATORY TO PRESERVE SHARE TRANSFER FORM WITH SIGNATURE OF TRNSFREE BY REGISTER AND TRANSFEER AGENT PERMANENTLY