Recently, the Securities and Exchange Board of India (SEBI) has amended the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 vide its notification No. SEBI/LAD-NRO/GN/2023/131 dated June 14, 2023 which will become applicable on the 30th day from the date of publication in the Official Gazette unless stated otherwise.
New definition of Mainstream Media inserted in Regulation 2(1) as 2(1)(ra)
The “mainstream media” shall include print or electronic mode of the following:
- Newspapers registered with the Registrar of Newspapers for India;
- News channels permitted by Ministry of Information and Broadcasting under Government of India;
- Content published by the publisher of news and current affairs content as defined under the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021; and
- Newspapers or news channels or news and current affairs content similarly registered or permitted or regulated, as the case may be, in jurisdictions outside India;
Filling up the vacancy of the Compliance Officer
In regulation 6, after sub-regulation (1) which says that a listed entity shall appoint a qualified company secretary as the compliance officer, the following sub-regulation shall be inserted:
“(1A) Any vacancy in the office of the Compliance Officer shall be filled by the listed entity at the earliest and in any case not later than three months from the date of such vacancy:
Provided that the listed entity shall not fill such vacancy by appointing a person in interim capacity, unless such appointment is made in accordance with the laws applicable in case of a fresh appointment to such office and the obligations under such laws are made applicable to such person.”
It is important to note here that as per Companies Act, 2013, the company should fill the vacancy of the position of the CS within six months at the board meeting but SEBI now requires that it should be filled in three months.
Relief under Regulation 15 (1A) in case of an entity that has listed its non-convertible debt securities and triggers the specified threshold of Rupees Five Hundred Crore during the course of the year
Under Regulation 15 (1A), the provisions of regulation 15 and regulation 16 to regulation 27 of chapter IV shall apply to a listed entity which has listed its non-convertible debt securities and has an outstanding value of listed non-convertible debt securities of Rupees Five Hundred Crore and above:
Provided that in case an entity that has listed its non-convertible debt securities triggers the specified threshold of Rupees Five Hundred Crore during the course of the year, it shall ensure compliance with these provisions within six months from the date of such trigger:
Provided further that these provisions shall be applicable to a ‘high value debt listed entity’ on a ‘comply or explain’ basis until March 31, 2024 (Earlier it was March 31, 2023) and on a mandatory basis thereafter.
Further, under Explanation (3) – ‘Comply or explain’ for the purpose of the second proviso to sub- regulation (1A) of regulation 15 shall mean that the entity shall endeavour to comply with the provisions and achieve full compliance by March 31, 2024 (Earlier it was March 31, 2023). In case the entity is not able to achieve full compliance with the provisions, till such time, it shall explain the reasons for such non-compliance/ partial compliance and the steps initiated to achieve full compliance in the quarterly compliance report filed under clause (a), sub- regulation (2) of regulation 27 of these regulations.
This amendment has come into force with immediate effect.
Certain directors required to seek Shareholder approval at least once in every five years
A new Regulation 17 (1D) has been inserted which requires that the continuation of a director serving on the board of directors of a listed entity shall be subject to the approval by the shareholders in a general meeting at least once in every five years from the date of their appointment or reappointment, as the case may be with effect from April 1, 2024,:
Provided that the continuation of the director serving on the board of directors of a listed entity as on March 31, 2024, without the approval of the shareholders for the last five years or more shall be subject to the approval of shareholders in the first general meeting to be held after March 31, 2024:
Provided further that the requirement specified in this regulation shall not be applicable to the Whole-Time Director, Managing Director, Manager, Independent Director or a Director retiring as per the sub-section (6) of section 152 of the Companies Act, 2013, if the approval of the shareholders for the reappointment or continuation of the aforesaid directors or Manager is otherwise provided for by the provisions of these regulations or the Companies Act, 2013 and has been complied with:
Provided further that the requirement specified in this regulation shall not be applicable to the director appointed pursuant to the order of a Court or a Tribunal or to a nominee director of the Government on the board of a listed entity, other than a public sector company, or to a nominee director of a financial sector regulator on the board of a listed entity:
Provided further that the requirement specified in this regulation shall not be applicable to a director nominated by a financial institution registered with or regulated by the Reserve Bank of India under a lending arrangement in its normal course of business or nominated by a Debenture Trustee registered with the Board under a subscription agreement for the debentures issued by the listed entity.
Filling up vacancy in the office of a director
A new sub-regulation (1E) has been inserted under regulation 17 which requires that any vacancy in the office of a director shall be filled by the listed entity at the earliest and in any case not later than three months from the date such vacancy,
Provided that if the listed entity becomes non-compliant with the requirement under sub-regulation (1) of this regulation, due to expiration of the term of office of any director, the resulting vacancy shall be filled by the listed entity not later than the date such office is vacated:
Provided further that this sub-regulation shall not apply if the listed entity fulfils the requirement under sub-regulation (1) of this regulation without filling the vacancy.”
Vacancies in respect of certain Key Managerial Personnel
Under regulation 26, the following regulation 26 (A) shall be inserted:
“26A. (1) Any vacancy in the office of Chief Executive Officer, Managing Director, Whole Time Director or Manager shall be filled by the listed entity at the earliest and in any case not later than three months from the date of such vacancy:
Provided that the listed entity shall not fill such vacancy by appointing a person in interim capacity, unless such appointment is made in accordance with the laws applicable in case of a fresh appointment to such office and the obligations under such laws are made applicable to such person.
(2) Any vacancy in the office of the Chief Financial Officer shall be filled by the listed entity at the earliest and in any case not later than three months from the date of such vacancy:
Provided that the listed entity shall not fill such vacancy by appointing a person in interim capacity, unless such appointment is made in accordance with the laws applicable in case of a fresh appointment to such office and the obligations under such laws are made applicable to such person.”
Additional disclosures required under Regulation 27 (2) in respect of cyber security incidents
According to Clause (a) of Regulation 27 (2), 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 recognized stock exchange(s) within twenty one days from the end of each quarter.
According to Clause (b) of Regulation 27 (2), the details of all material transactions with related parties shall be disclosed along with the report mentioned in clause (a) of sub-regulation (2).
Now, in regulation 27, in sub-regulation (2), after clause (b), the following clause shall be inserted, namely,-
“(ba) Details of cyber security incidents or breaches or loss of data or documents shall be disclosed along with the report mentioned in clause (a) of sub-regulation (2), as may be specified.”
Disclosure of events or information under Regulation 30
There are some changes in certain clauses under sub-regulation (4) of Regulation 30 (4) (i) as under:
Chart 1 : Amendment in sub-regulation (4) (i) of Regulation 30
Disclosure of Material Events or Information
Sub-regulation (6) of Regulation 30 and the provisos thereunder shall be substituted by the following sub-regulation and provisos, namely,-
“(6) The listed entity shall first disclose to the stock exchange(s) all events or information which are material in terms of the provisions of this regulation as soon as reasonably possible and in any case not later than the following:
- thirty minutes from the closure of the meeting of the board of directors in which the decision pertaining to the event or information has been taken;
- twelve hours from the occurrence of the event or information, in case the event or information is emanating from within the listed entity;
- twenty four hours from the occurrence of the event or information, in case the event or information is not emanating from within the listed entity:
Provided that disclosure with respect to events for which timelines have been specified in Part A of Schedule III shall be made within such timelines:
Provided further that in case the disclosure is made after the timelines specified under this regulation, the listed entity shall, along with such disclosure provide the explanation for the delay.”
Listed Entities to confirm or deny any reported event or information to stock exchange(s).
According to the sub-regulation 11 of Regulation 30, the listed entity may on its own initiative also, confirm or deny any reported event or information to stock exchange(s). However, after sub-regulation (11), the following provisos and the Explanation shall be inserted, namely,-
“Provided that the top 100 listed entities (with effect from October 1, 2023) and thereafter the top 250 listed entities (with effect from April 1, 2024) shall confirm, deny or clarify any reported event or information in the mainstream media which is not general in nature and which indicates that rumours of an impending specific material event or information in terms of the provisions of this regulation are circulating amongst the investing public, as soon as reasonably possible and not later than twenty four hours from the reporting of the event or information:
Provided further that if the listed entity confirms the reported event or information, it shall also provide the current stage of such event or information.
Explanation – The top 100 and 250 listed entities shall be determined on the basis of market capitalization, as at the end of the immediately preceding financial year.”
Disclosure of any event or information is required pursuant to the receipt of a communication from any regulatory, statutory, enforcement or judicial authority
After sub-regulation (12) of Regulation 30, the following sub-regulation shall be inserted, namely
“(13) In case an event or information is required to be disclosed by the listed entity in terms of the provisions of this regulation, pursuant to the receipt of a communication from any regulatory, statutory, enforcement or judicial authority, the listed entity shall disclose such communication, along with the event or information, unless disclosure of such communication is prohibited by such authority.”
Disclosure requirements for certain types of agreements binding listed entities
After regulation 30, the following regulation shall be inserted, namely,- “Disclosure requirements for certain types of agreements binding listed entities: 30A:
- All the shareholders, promoters, promoter group entities, related parties, directors, key managerial personnel and employees of a listed entity or of its holding, subsidiary and associate company, who are parties to the agreements specified in clause 5A of para A of part A of schedule III to these regulations, shall inform the listed entity about the agreement to which such a listed entity is not a party, within two working days of entering into such agreements or signing an agreement to enter into such agreements: Provided that for the agreements that subsist as on the date of notification of clause 5A to para A of part A of schedule III, the parties to the agreements shall inform the listed entity, about the agreement to which such a listed entity is not a party and the listed entity shall in turn disclose all such subsisting agreements to the Stock Exchanges and on its website within the timelines as specified by the Board.
- The listed entity shall disclose the number of agreements that subsist as on the date of notification of clause 5A to para A of part A of schedule III, their salient features, including the link to the webpage where the complete details of such agreements are available, in the Annual Report for the financial year 2022-23 or for the financial year 2023-24.”
Special rights to shareholders
A new regulation 31(B) is inserted after new regulation 31(A) as under:
31B (1) Any special right granted to the shareholders of a listed entity shall be subject to the approval by the shareholders in a general meeting by way of a special resolution once in every five years starting from the date of grant of such special right:
Provided that the special rights available to the shareholders of a listed entity as on the date of coming into force of this regulation shall be subject to the approval by shareholders by way of a special resolution within a period of five years from the date of coming into force of this regulation:
Provided further that the requirement specified in this regulation shall not be applicable to the special rights made available by a listed entity to a financial institution registered with or regulated by the Reserve Bank of India under a lending arrangement in the normal course of business or to a debenture trustee registered with the Board under a subscription agreement for the debentures issued by the listed entity, if such financial institution or the debenture trustee becomes a shareholder of the listed entity as a consequence of such lending arrangement or subscription agreement for the debentures.”
Disclosure of financial results for listed entities subsequent to listing
In regulation 33, in sub-regulation (3), after clause (i), the following clause shall be inserted namely,-
“(j) The listed entity shall, subsequent to the listing, submit its financial results for the quarter or the financial year immediately succeeding the period for which the financial statements have been disclosed in the offer document for the initial public offer, in accordance with the timeline specified in clause (a) or clause (d) of this sub-regulation, as the case may be, or within 21 days from the date of its listing, whichever is later.”
This amendment shall be applicable to the issuers whose public issues open on or after these regulations come into effect
Disclosures in Annual Report
In regulation 34, in sub-regulation (2), clause (f) shall be substituted with the following clause, namely,-
“(f) for the top one thousand listed entities based on market capitalization, a Business Responsibility and Sustainability Report on the environmental, social and governance disclosures, in the format as may be specified by the Board from time to time:
Provided that the assurance of the Business Responsibility and Sustainability Report Core shall be obtained, with effect from and in the manner as may be specified by the Board from time to time:
Provided further that the listed entities shall also make disclosures and obtain assurance as per the Business Responsibility and Sustainability Report Core for their value chain, with effect from and in the manner as may be specified by the Board from time to time:
Provided further that the remaining listed entities, including the entities which have listed their specified securities on the SME Exchange, may voluntarily disclose the Business Responsibility and Sustainability Report or may voluntarily obtain the assurance of the Business Responsibility and Sustainability Report Core, for themselves or for their value chain, as the case may be.
This amendment has come into force with immediate effect.
Explanation-1: For the purpose of this clause:
- market capitalization shall be calculated as on the 31st day of March of every financial year;
- Business Responsibility and Sustainability Report Core shall comprise of such key performance indicators as may be specified by the Board from time to time;
- “value chain” for the listed entities shall be specified by the Board from time to time
Sale, lease or disposal of an undertaking outside Scheme of Arrangement
After regulation 37, the following regulation shall be inserted, namely,-
“37A. Sale, lease or disposal of an undertaking outside Scheme of Arrangement
A listed entity carrying out sale, lease or otherwise disposal of the whole or substantially the whole of the undertaking of such entity or where it owns more than one undertaking, of the whole or substantially the whole of any of such undertakings, shall –
(a) take prior approval of shareholders by way of special resolution;
(b) disclose the object of and commercial rationale for carrying out such sale, lease or otherwise disposal of the whole or substantially the whole of the undertaking of the entity, and the use of proceeds arising therefrom, in the statement annexed to the notice to be sent to the shareholders:
Provided that such a special resolution shall be acted upon only if the votes cast by the public shareholders in favour of the resolution exceed the votes cast by such public shareholders against the resolution:
Provided further that no public shareholder shall vote on the resolution if he is a party, directly or indirectly, to such sale, lease or otherwise disposal of the whole or substantially the whole of the undertaking of the listed entity.
Explanation. —For the purposes of this regulation, the terms “undertaking” and “substantially the whole of the undertaking” shall have the same meaning as assigned to them under clause (a) of sub- section (1) of section 180 of the Companies Act, 2013.
(2) The requirement as specified in sub-regulation (1) shall not be applicable for sale, lease or otherwise disposal of the whole or substantially the whole of the undertaking by a listed entity to its wholly owned subsidiary whose accounts are consolidated with such listed entity:
Provided that prior to such wholly owned subsidiary selling, leasing or otherwise disposing of the whole or substantially the whole of the undertaking received from a listed entity, whether in whole or in part, to any other entity, such listed entity shall comply with the requirements specified in sub- regulation (1):
Provided further that the listed entity shall comply with the requirements specified in sub-regulation (1) before diluting its shareholding below hundred percent in its wholly owned subsidiary to which the whole or substantially the whole of the undertaking of such listed entity was transferred.
Explanation: The provisions of this regulation shall not be applicable where sale, lease or otherwise disposal of the whole or substantially the whole of the undertaking of a listed entity is by virtue of a covenant covered under an agreement with a financial institution regulated by or registered with the Reserve Bank of India or with a Debenture Trustee registered with the Board.”
This amendment has come into force with immediate effect. Provided that these amendment regulations shall not be applicable to such sale, lease or disposal of undertakings of a listed entity where the notice has already been dispatched to the shareholders of the listed entity.
Dissemination of the information under a separate section on its website
In regulation 46, that relates to the disclosures to be made in the Annual report, in sub-regulation (2), in clause (o), after the words “investors meet” and before the words “and presentations”; the words and symbols “at least two working days in advance (excluding the date of the intimation and the date of the meet)” shall be inserted.
Thus, after the amendment as above, regulation 46 (2) (o) shall be read as under: “Schedule of analysts or institutional investors meet at least two working days in advance (excluding the date of the intimation and the date of the meet and presentations made by the listed entity to analysts or institutional investors.”
Explanation: For the purpose of this clause ‘meet’ shall mean group meetings or group conference calls conducted physically or through digital means;]
For amendments in regulation 57, in Schedule III, in part A and in Schedule V and other changes, if any read the SEBI Notification No. SEBI/LAD-NRO/GN/2023/131 dated June 14, 2023.
Other Amendments
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