SEBI has notified SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations) on September 2, 2015, after following the consultation process. A time period of ninety days has been given for implementing the Regulations.
However, two provisions of the regulations, which are facilitating in nature, are applicable with immediate effect. These pertain to
(i) passing of ordinary resolution instead of special resolution in case of all material related party transactions subject to related parties abstaining from voting on such resolutions, in line with the provisions of the companies Act, 2013, and
(ii) re-classification of promoters as public shareholders under various circumstances.
The Regulations shall be effective from 1st December, 2015.
The Listing regulations would consolidate and streamline the provisions of existing Listing Agreements for different segments of the capital market viz.
- Equity (including convertibles) issued by entities listed on the Main Board of the Stock Exchanges, Small and Medium Enterprises listed on SME Exchange and Institutional Trading Platform,
- Non- Convertible Debt Securities,
- Non Convertible Redeemable Preference Shares,
- Indian Depository Receipts,
- Securitized Debt Instruments and
- Units issued by Mutual Fund Schemes.
The Regulations have thus been structured to provide ease of reference by consolidating into one single document across various types of securities listed on the Stock exchanges.
KEY CHANGES AND OTHER MATERIAL CLAUSES (restricted to Equity Listing Agreement only):
1. Regulation 6- Compliance Officer and his Obligations:
(Corresponds to Clause 47a of the Listing Agreement)
1. A listed entity shall appoint a qualified Company Secretary(CS) as the Compliance Officer.
2. The compliance officer of the listed entity shall be responsible for-
(a) ensuring conformity with the regulatory provisions applicable to the listed entity in letter and spirit.
(b) co-ordination with and reporting to the Board, recognised stock exchange(s) and depositories with respect to compliance with rules, regulations and other directives of these authorities in manner as specified from time to time.
(c) 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.
(d) monitoring email address of grievance redressal division as designated by the listed entity for the purpose of registering complaints by investors:
Provided that the requirements of this regulation shall not be applicable in the case of units issued by mutual funds which are listed on recognised stock exchange(s) but shall be governed by the provisions of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996.
Comments: Only qualified CS, member of ICSI, shall be Compliance Officer.
2. Regulation 13(3)- Grievance Redressal Mechanism: The listed entity shall file with the recognised 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.
Comments: As Regulation13(3) mandates as aforesaid, one more quarterly compliance is in queue, the Listed Company has to file such statement on quarterly basis mandatorily.
3. Regulation 13(4)- Grievance Redressal Mechanism: The statement as specified in sub-regulation (3) shall be placed, on quarterly basis, before the board of directors of the listed entity.
Comments: The agenda and notes to agenda of Board Meeting(quarterly) shall include the above and the Board of Directors shall review and consider the same.
4. Regulation 15- Applicability
(Corresponds to Clause 49 of the Listing Agreement)
1. The compliance with the corporate governance provisions as specified in regulations 17, 18, 19, 20, 21,22, 23, 24, 25, 26, 27 and clauses (b) to (i) of sub-regulation (2) of regulation 46 and para C , D and E of Schedule V shall not apply, in respect of –
(a) the listed entity having paid up equity share capital not exceeding rupees ten crore and net worth not exceeding rupees twenty five crore, as on the last day of the previous financial year:
Provided that where the provisions of the regulations specified in this regulation becomes applicable to a listed entity at a later date, such listed entity shall comply with the requirements those regulations within six months from the date on which the provisions became applicable to the listed entity.
(b) the listed entity which has listed its specified securities on the SME Exchange:
Provided that for other listed entities which are not companies, but body corporate or are subject to regulations under other statues, the provisions of corporate governance provisions as specified in regulation 17, 18, 19, 20, 21,22, 23, 24, 25, 26, 27 and clauses (b) to (i) of sub-regulation (2) of regulation 46 and para C , D and E of Schedule V shall apply to the extent that it does not violate their respective statutes and guidelines or directives issued by the relevant authorities.
2. Notwithstanding with above, the provisions of Companies Act,2013 shall continue to apply, wherever applicable.
5. Regulation 27- Other corporate governance requirements:
(Corresponds to Clause 49 of the Listing Agreement )
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 to the recognised stock exchange(s) within fifteen days from close of the quarter.
2. Details of all material transactions with related parties shall be disclosed along with the Corporate Governance report.
3. The Corporate Governance report shall be signed either by the compliance officer or the chief executive officer of the listed entity.
6. Regulation 31 -Holding of specified securities and shareholding pattern:
(Corresponds to Clause 35 of the Listing Agreement)
1. The listed entity shall submit to the stock exchange(s) a statement showing holding of securities and shareholding pattern separately for each class of securities, in the format specified by the Board from time to time within the following timelines –
(a) one day prior to listing of its securities on the stock exchange(s);
(b) on a quarterly basis, within twenty one days from the end of each quarter; and,
(c) within ten days of any capital restructuring of the listed entity resulting in a change exceeding two per cent of the total paid-up share capital:
Provided that in case of listed entities which have listed their specified securities on SME Exchange, the above statements shall be submitted on a half yearly basis within twenty one days from the end of each half year.
2. The listed entity shall ensure that hundred percent of shareholding of promoter(s) and promoter group is in dematerialized form and the same is maintained on a continuous basis in the manner as specified by the Board.
3. The listed entity shall comply with circulars or directions issued by the Board from time to time with respect to maintenance of shareholding in dematerialized form.
7. Regulation 33- Financial results:
(Corresponds to Clause 41 of the Listing Agreement)
1. While preparing financial results, the listed entity shall comply with the following:
(a) The financial results shall be prepared on the basis of accrual accounting policy and shall be in accordance with uniform accounting practices adopted for all the periods.
(b) The quarterly and year to date results shall be prepared in accordance with the recognition and measurement principles laid down in Accounting Standard 25 or Indian Accounting Standard 31 (AS 25/ Ind AS 34 – Interim Financial Reporting), as applicable, specified in Section 133 of the Companies Act, 2013 read with relevant rules framed thereunder or as specified by the Institute of Chartered Accountants of India, whichever is applicable.
Provided that in addition to the above, the listed entity may also submit the financial results, as per the International Financial Reporting Standards notified by the International Accounting Standards Board.
(d) The listed entity shall ensure that the limited review or audit reports submitted to the stock exchange(s) on a quarterly or annual basis are to be given only by an auditor who has subjected himself to the peer review process of Institute of Chartered Accountants of India and holds a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.
(e) The listed entity shall make the disclosures specified in Part A of Schedule IV.
2. The approval and authentication of the financial results shall be done by listed entity in the following manner:
(a) The quarterly financial results submitted shall be approved by the board of directors:
Provided that while placing the financial results before the board of directors, the chief executive officer and chief financial officer of the listed entity shall certify that the financial results do not contain any false or misleading statement or figures and do not omit any material fact which may make the statements or figures contained therein misleading.
(b) The financial results submitted to the stock exchange shall be signed by the chairperson or managing director, or a whole time director or in the absence of all of them; it shall be signed by any other director of the listed entity who is duly authorized by the board of directors to sign the financial results.
(c) The limited review report shall be placed before the board of directors, at its meeting which approves the financial results, before being submitted to the stock exchange(s).
(d) The annual audited financial results shall be approved by the board of directors of the listed entity and shall be signed in the manner specified in clause (b) of sub-regulation (2).
3. The listed entity shall submit the financial results in the following manner:
(a) 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.
(b) In case the listed entity has subsidiaries, in addition to the requirement at clause (a) of sub-regulation (3), the listed entity may also submit quarterly/year-to-date consolidated financial results subject to following:
(i) the listed entity shall intimate to the stock exchange, whether or not listed entity opts to additionally submit quarterly/year-to-date consolidated financial results in the first quarter of the financial year and this option shall not be changed during the financial year.
Provided that this option shall also be applicable to listed entity that is required to prepare consolidated financial results for the first time at the end of a financial year in respect of the quarter during the financial year in which the listed entity first acquires the subsidiary.
(ii) in case the listed entity changes its option in any subsequent year, it shall furnish comparable figures for the previous year in accordance with the option exercised for the current financial year.
(c) The quarterly and year-to-date financial results may be either audited or unaudited subject to the following:
(i) In case the listed entity opts to submit unaudited financial results, they shall be subject to limited review by the statutory auditors of the listed entity and shall be accompanied by the limited review report.
Provided that in case of public sector undertakings this limited review may be undertaken by any practicing Chartered Accountant.
(ii) In case the listed entity opts to submit audited financial results, they shall be accompanied by the audit report.
(d) The listed entity shall submit audited standalone financial results for the financial year, within sixty days from the end of 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):
Provided that if the listed entity has subsidiaries, it shall, while submitting annual audited standalone financial results also submit annual audited consolidated financial results along with the audit report and either Form A (for audit report with unmodified opinion) or Form B (for audit report with modified opinion).
(e) The listed entity shall also submit the audited financial results in respect of the last quarter along-with the results for the entire financial year, with a note stating that the figures of last quarter are the balancing figures between audited figures in respect of the full financial year and the published year-to-date figures upto the third quarter of the current financial year.
(f) The listed entity shall also submit as part of its standalone or consolidated financial results for the half year, by way of a note, a statement of assets and liabilities as at the end of the half-year.
4. The applicable formats of the financial results and Form A (for audit report with unmodified opinion) & Form B (for audit report with modified opinion) shall be in the manner as specified by the Board from time to time.
5. For the purpose of this regulation, any reference to “quarterly/quarter” in case of listed entity which has listed their specified securities on SME Exchange shall be respectively read as “half yearly/half year” and the requirement of submitting ‘year-to-date’ financial results shall not be applicable for a listed entity which has listed their specified securities on SME Exchange.
6. The Form B and the accompanying annual audit report submitted in terms of clause (d) of sub-regulation (3) shall be reviewed by the stock exchange(s) and Qualified Audit Report Review Committee in manner as specified in Schedule VIII.
7. The listed entity shall on the direction issued by the Board, carry out the necessary steps, for rectification of modified opinion and/or submission of revised pro-forma financial results, in the manner specified in Schedule VIII.
8. Regulation 46- Website:
(Corresponds to Clause 54 of the Listing Agreement)
1. The listed entity shall maintain a functional website containing the basic information about the listed entity.
2. The listed entity shall disseminate the following information on its website:
(a) details of its business;
(b) terms and conditions of appointment of independent directors;
(c) composition of various committees of board of directors;
(d) code of conduct of board of directors and senior management personnel;
(e) details of establishment of vigil mechanism/ Whistle Blower policy;
(f) criteria of making payments to non-executive directors , if the same has not been disclosed in annual report;
(g) policy on dealing with related party transactions;
(h) policy for determining ‘material’ subsidiaries;
(i) details of familiarization programmes imparted to independent directors including the following details:-
(i) number of programmes attended by independent directors (during the year and on a cumulative basis till date),
(ii) number of hours spent by independent directors in such programmes (during the year and on cumulative basis till date), and
(iii) other relevant details
(j) the email address for grievance redressal and other relevant details;
(k) contact information of the designated officials of the listed entity who are responsible for assisting and handling investor grievances;
(l) financial information including:
(i) notice of meeting of the board of directors where financial results shall be discussed;
(ii) financial results, on conclusion of the meeting of the board of directors where the financial results were approved;
(iii) complete copy of the annual report including balance sheet, profit and loss account, directors report, corporate governance report etc;
(m) shareholding pattern;
(n) details of agreements entered into with the media companies and/or their associates, etc;
(o) schedule of analyst or institutional investor meet and presentations made by the listed entity to analysts or institutional investors simultaneously with submission to stock exchange;
(p) new name and the old name of the listed entity for a continuous period of one year, from the date of the last name change;
(q) items in sub-regulation (1) of regulation 47 .
(3) (a) The listed entity shall ensure that the contents of the website are correct.
(b) The listed entity shall update any change in the content of its website within two working days from the date of such change in content.
Source: SEBI Press release dated September 03, 2015 regarding SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations) along with Listing Regulations.
Disclaimer: This article contains comments and personal views of the author are based on such interpretation. Readers are advised either to cross check the views of the author with the Regulations or seek the expert’s views if they want to rely on contents of this article.
About Author: The above has been compiled by CS Varun Kapoor, an Associate Member of ICSI, presently working as a Company Secretary and Compliance Officer. His areas of interest include Corporate and Allied Laws and advisory services vis a vis SEBI, Listing Agreement etc. For any queries or suggestions, he can be approached at firstname.lastname@example.org, Contact No- 9899110705.