listing obligations and disclosure requirements regulations, 2015 vinod kothari vinod kothari &...

Listing Obligations and Disclosure Requirements

Regulations, 2015Vinod Kothari

Vinod Kothari & Company1006-1009 Krishna Building224 AJC Bose RoadKolkata – 700017Phone 033-22811276/ 22813742/7715

E-mail – [email protected]

601-C, Neelkanth 98 Marine DriveMumbai 400002

Phone 022-22817427E-mail:

[email protected]

www.vinodkothari.comEmail: [email protected]

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Copyright

•The presentation is a property of Vinod Kothari & Company. No part of it can be copied, reproduced or distributed in any manner, without explicit prior permission.

•In case of linking, please do give credit and full link

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About Us• Vinod Kothari &

Company, ▫ Based in Kolkata,

Mumbai

• We are a team of consultants, advisors & qualified professionals having recently completed 25 years of practice.

Our Organization’s Credo:

Focus on capabilities; opportunities follow

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Scope, Applicability etc.

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Highlights

• Quick highlights:▫ Consolidation of listing requirements▫ Consummation of previous discussion papers

Discussion paper on materiality: Sept. 2014

http://www.sebi.gov.in/cms/sebi_data/attachdocs/1408444809721.pdf Discussion paper on promoter and promoter group – onboarding

and offboarding: Jan 2015:

http://www.sebi.gov.in/cms/sebi_data/attachdocs/1419934886654.pdf

• Comes into effect from 90th day from date of publication▫ That is, from 1st Dec 2015

• However, following changes effected immediately▫ Substitution of Ordinary Resolution in place of Special

Resolution for material RPTs▫ Provisions related to disclosure of Promoter shareholding and

conditions for reclassification

http://www.sebi.gov.in/cms/sebi_data/attachdocs/1408444809721.pdf

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Applicability..

• Listed entity, whose any of the following designated securities are listed on recognised stock exchange(s):▫ Specified securities listed on main board or SME

Exchange or institutional trading platform;▫ 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▫ any other securities as may be specified by the

Board.

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Statutory basis• With the LODR Regulations, the listing

agreement gets its own statutory backing▫ Prior to this, the LA was merely an agreement

between the exchange and the company Reference to listing conditions was there in sec

23E of the SCRA• The present regulations are made in

pursuance of statutory powers under SEBI Act and SCRA▫ Sec 11A (2) provides SEBI power to prescribe

conditions of listing▫ Hence, provisions of sec 15HB of SEBI Act are

applicable

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PRINCIPLES GOVERNING DISCLOSURES AND OBLIGATIONS

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Principles applicable to every listed entity

• Implement the prescribed accounting standards in letter and spirit• Refrain from misrepresentation• Adequate and timely information to recognised stock exchange(s) and

investors• Accounting standards to be adhered to:

▫ AS-3/ Ind AS 7 for cash flow statement▫ AS- 5/ Ind AS- 8 for disclosure of change in accounting policies/ net

profit or loss for the period, prior period items ▫ AS -25/ Ind AS-34- Internal Financial reporting▫ AS- 17/ Ind AS for segment reporting▫ AS-18 for related party disclosure▫ May also follow IFRS for submission of financial statements

• Annual audit to be conducted by an independent, competent and qualified auditor

• Equal, timely and cost efficient access of relevant information • Event based or periodic filings, reports, statements etc. shall contain

relevant information These provisions are not imbibed in the present listing agreement

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Overarching principles of listing obligations and disclosure

• Primarily, obligations of listed entities are two:▫ Obligations to comply▫ Obligations pertaining to disclosure

• Reg 4 provides the general principles of disclosure and listing obligations▫ New provision

• By Reg 4 (3), this regulation has an overriding force

• Contents of reg 4 are by and large general▫ Of course, there is a repeated reference to

compliance in letter and spirit

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Principles to be followed by listed entity having its specified securities listed

Reg 4 (2) pertains to specified securities onlyCompliance with corporate governance

provisions to achieve the principles of –

Rights of shareholdersTimely informationEquitable treatment of shareholdersRole of stakeholders in corporate governanceDisclosure and transparencyResponsibilities of the board of directors

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Key functions of board of directors 1/2

• Disclosure of information by directors and KMPs of direct/ indirect material transaction

• Reviewing and guiding ▫ corporate strategy, major plans of action, risk policy, annual budgets and

business plans, setting performance objectives, monitoring implementation and corporate performance, and overseeing major capital expenditures, acquisitions and divestments

• Monitoring the effectiveness governance practices and making changes• Selecting, compensating, monitoring and replacing KMPs and

overseeing succession planning• Aligning remuneration of KMPs and of board with the longer term

interests of the entity and its shareholders• Ensuring a transparent nomination process of directors with the

diversity of thought, experience, knowledge, perspective and gender in the board of directors

• Monitoring and managing potential conflicts of interest of management, members of the board of directors and shareholders, including misuse of corporate assets and abuse in related party transactions

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Key functions of board of directors 2/2

• Ensuring the integrity of accounting and financial reporting systems▫ independent audit▫ appropriate systems of control in place▫ appropriate systems of control are in place▫ financial and operational control▫ compliance with the law and relevant standards

• Overseeing the process of disclosure and communications

• Monitoring and reviewing board of director’s evaluation framework

• provide strategic guidance to ensure effective monitoring of the management

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Chap III-Common Obligations of Listed Entities

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Common Obligations-1/4 KMP/Directors/promoters/any other person dealing with the listed

entity comply with responsibilities or obligations as prescribed under the LODR New provision Burden of compliance is on KMPs, directors and promoters or any other

person If obligations assigned to them – Reg 5 Compliance obligation on the CS Not clear who could be the other person

Compliance Officer and his Obligations- Reg 6 Qualified Company Secretary as the compliance officer Responsible for –

Ensuring conformity with the regulatory provisions Co-ordination with and reporting to the Board, recognised stock

exchange(s) and depositories the compliance with rules, regulations and other directives of these authorities

Ensuring that the correct procedures have been followed in filing monitoring email address of grievance redressal division

Similar to the old provisions provided under Equity Listing Agreement, Debt Listing Agreement, SME Listing Agreement etc.

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Common Obligations-2/4 Appointment of Share Transfer Agent- Reg 7– Mandatory if total number of security holders exceeds one lakh Other wise the listed entity shall have to be registered with the

Board Ensuring all activities in relation share transfer facility are maintained

either in house or by Registrar to an issue and share transfer agent Half yearly Compliance Certificate with regard to compliance of the above with

stock exchange New provision Within 1 month of end of half year

Change of agent only through agreement New appointment to be intimated within 7 days

Submission of information to securities intermediaries – reg 8 New provision Company shall submit regular information to intermediaries Intermediaries include rating agencies

Policy on Preservation of documents - reg 9 New requirement Approved by BoD This is a new policy

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Common Obligations-3/4Filing of information with recognise stock exchange

in electronic platform- Reg 10New provision

Proposed scheme of arrangements etc. not to vilolate, override, limit the provisions of securities laws and requirements of Ses- Reg 11 Not applicable for units issued by listed mutual funds

Electronic payment of dividend /interest /redemption /repayment amounts- Reg 12New provisionRTA to maintain bank details of investors ‘Payable-at-par’ warrants or cheques may be issued If dividend is more than Rs. 1500 to be sent by speed post Obligatory to print bank a/c details on payment warrant

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Common Obligations-4/4

Grievance Redressal Mechanism – Reg 13 Mandatory registration with SCORES platform or other electronic platform or system of the Board

• Filing of quarterly statement with respect to- number of pending investors’ complaints at the

beginning and ending of the quarter Complaints received and disposed and remained

unresolved within 21 days of the end of the quarter

▫ Earlier the same was provided under CG Report in Annual Report and with financial results

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Chap IV-Obligations applicable in case of listing of specified securities

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Obligations applicable for specified securities

Scope

Equity shares and convertible securities Listed on Main Board, SME Exchange or ITP

Similar exemptions as earlier -Listed entities having paid up equity share capital not

exceeding Rs. 10 crore and net worth not exceeding Rs. 25 crore, as on the last day of the previous financial year.

Listed entities which have listed its specified securities on the SME Exchange Body corporates other than companies however is not

exempted although listed in SME Exchange which is a new requirement.

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Exemptions to small and SME listed companies

• Regulations exempted-▫ 17-Composition of BoD▫ 18-Audit Committee▫ 19-NRC▫ 20-SRC▫ 21-Risk Management Committee▫ 22- Vigil Mechanism▫ 23-RPTs▫ 24-CG requirement with respect to subsidiaries▫ 25- Obligations w.r.t to IDs▫ 26-Obligations w.r.t Directors and senior mgmt ▫ 27- other corporate governance requirements

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Definitions pertinent to corporate governance- 1/3

•Definition of control▫Same as SAST

right to appoint majority of the directors, or to control the management or to control policy decisions directly or indirectly by virtue of shareholding or mgmt rights or shareholders agreement or by voting agreements

▫Similar to CA

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• ID means-▫ NED other than nominee director▫ Not a promoter of the entity/Holding/ Sub/Associate▫ Not related to the promoters of aforesaid▫ No material pecuniary relationship with the entity its H/S/A & their promoters/

directors Two immediately preceding FYs and the current Year

▫ No relative has/ had pecuniary relationship/ transaction with the entity/H/S/A/ promoters/directors Amounting 2% or more of gross turnover/total income 50 lacs- lower, during two

immediately preceding FYs and the current Year▫ Neither himself nor his relatives is or has been

KMP or employee of the entity/ H/S/A in 3 immediately preceding FYs Employee/ proprietor/partner in any 3 immediately preceding FY s

of a audit firm, PCS or cost auditor of the listed entities/ H/S/A or legal consulting firm has / had any transaction with the listed entities/ H/S/A

▫ Not holding together with his relatives 2% or more voting powers ▫ Not CEO/Director of non profit org receiving 25% or more of its receipts from the

entity/promoter/ director/H/S/A or who holds 2% or more total voting power of the entity.

▫ Not a material supplier, service provider, customer or lessor or lessee of the entity▫ Not less than 21 years of age

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• Material subsidiaries- Reg 16▫ Definition includes all subsidiaries

Earlier it was only material non- listed Indian subsidiary

▫ whose income or net worth exceeds 20% of the consolidated income or net worth

▫ in the immediately preceding accounting year Confusion in the definition of “material” subsidiary

• SMPs▫ officers/personnel of the listed entity who are▫ member of core Mgmt. team excluding BoD▫ One level below the Board▫ The word ‘officer’ has been inserted newly

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BoD- Reg 17 Optimum combination of executive and non-executive directors

At least one woman director Not less than 50% non-executive directors Independent directors Shall meet at least four times a year

Board meetings to have maximum time gap of 120 days between any two meetings.

Fees and remuneration payable to all NEDs to be approved by shareholders’ resolution However, sitting fees excluded, if within limits as per CA

Shall be responsible for framing, implementing and monitoring the risk management plan for the listed entity

Similar to the earlier requirements Reg 17 (9) provides about the company to formulate risk

assessment and minimisation plan

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Obligations Audit committee

NRC committee

Stakeholders relationship committee

Risk management committee

Composition •minimum 3 directors •Two-thirds independent

•at least three directors •All shall be NED•Atleast 50 % shall be independent

Board shall decide

Majority from Board

Chairperson Independent director

Independent director

NED Member of the Board

Role and responsibility

Part C Schedule II

Part D Schedule II

Part D Schedule II

Board shall define

Other Company secretary to act as secretary to the committee

Applicable to top 100 listed companies

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Minimum information to be placed before the Board

•Part A of Schedule II

▫Similar to the details under clause 49

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Audit committee- Reg 18

• No change as compared to Clause 49• Mandatory review by Audit Committee- Part C

of schedule II ▫ quarterly statement of deviation(s) including

report of monitoring agency, if applicable, submitted to stock exchange(s)

▫ annual statement of funds utilized for purposes other than those stated in the offer document/prospectus/notice

▫ This is a new requirement▫ Appears that the requirement is not limited to

public/rights offers Includes preferential offers as well

29

Nomination and Remuneration Committee- Reg 19

•To see whether to extend or continue the term of appointment of the independent director, on the basis of the report of performance evaluation of independent directors ▫This is new role of NRC

•Other provisions are similar to the earlier provisions.

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Risk Management Committee- Reg 21

•Applicable only to top 100 companies by market capitalisation– reg 21 (5)

•Not necessarily a committee of the board, unless so required by other applicable laws (say, NBFC Directions)▫Majority shall be board members▫Chairperson to be member of Board

•Board to determine the role and responsibility

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Vigil Mechanism- reg 22-For directors and employeesadequate safeguards against victimization of

director(s) or employee(s) or any other persondirect access to the chairperson of the audit

committee

32

Related Party Transactions- Reg 23

Related party transactions (“RPT”)- Formulation of policy on “materiality” and on dealing with RPT Material RPT

Previous +proposed transaction during FY exceeds 10% of annual consolidated turnover

All RPT shall require prior approval of the audit committee Audit committee may grant omnibus approval (reviewed quarterly) Quarterly review of RPTs pursuant to omnibus approval Resolution valid for 1 year

Material RPT shall require approval of shareholders Earlier it was Special Resolution Now ordinary resolution All related party to abstain from voting Existing transactions may be continued only after approval of shareholders at

the general meeting held after these regulations Exceptions

transactions entered into between two government companies; transactions entered into between a holding company and its wholly owned

subsidiary whose accounts are consolidated with such holding company and placed before the shareholders at the general meeting for approval.

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Obligations pertaining to material subsidiaries – reg 24

• Atleast 1 ID to be director of unlisted indian material subsidiary

• Audit committee to review the FS▫ In particular investments by such subsidiary

• minutes of board meetings to be placed before board of the company

• statement of all significant transactions and arrangements entered into by the unlisted subsidiary to be placed before board of the company▫ any individual transaction or arrangement that

exceeds or is likely to exceed 10% of the total revenues or total expenses or total assets or total liabilities, as the case may be, of the unlisted material subsidiary for the immediately preceding accounting year

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Obligations pertaining to material subsidiaries – reg 24

• SR will be required in case of-▫ disposal of shares in its material subsidiary

resulting in reduction of its shareholding to less than 50% or cessation of control over the subsidiary

▫ Selling, disposing and leasing of assets amounting to more than 20% of the assets of the material subsidiary on an aggregate basis during a financial year

• In case of chain subsidiaries, if there is an intermediate listed company. such listed intermediate listed company to also comply with the regulations

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Obligations pertaining to Independent directors – reg 25

•In case of resignation/ removal of ID▫Replacement at the next Board meeting or

3 months, later CA provides for 180 days

▫Other provisions are similar

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• Member in not more than ten committees • Chairperson of not more than five committees

across all listed entities in which he is a director▫ Chairpersonship and membership of the audit committee

and the Stakeholders Relationship Committee shall be considered determination of limit

• Disclosures to the board relating to all material, financial and commercial transactions, where there personal interest

• NEDs to disclose their shareholding held directly or on behalf of others and the same shall be inserted in the notice of general meeting.

• Similar to the earlier provisions

Obligations applicable to directors–Reg 26

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Obligations applicable to senior management –Reg 26

Disclosure to BoD with regard to material, financial and commercial transactions having personal interest that may have a potential conflict with the interest of the listed entity ▫conflict of interest relates to dealing in the

shares of listed entity;▫commercial dealings with bodies, which have

shareholding of management and their relatives etc.

38

Senior Management Personnel

Chairman

Whole Time Director

HoD1 HoD2

Managing Director

HoD3

Whole Time DirectorKMPs

SMPs

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Quarterly Compliance Certificate- Reg 27

Listed entity shall submit a quarterly compliance report on corporate governance within fifteen days from close of the quarter other thanListed entities having paid up equity share capital

not exceeding Rs 10 crore and net worth not exceeding Rs 25 crore, as on the last day of the previous financial year.

Listed entities which have listed its specified securities on the SME ExchangeBody corporates other than companies however is not

exempted even if listed in SME Exchange which is a new requirement

40

In-principle approval – reg 28• Before issuing securities

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

▫ If 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

▫ If 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

• Not required if securities issued pursuant to the scheme of arrangement for which No-Objection Letter from recognised stock exchange(s) already received

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Prior intimations – Reg 29- 1/2• Meeting of Board held for following matters

▫ financial results viz. quarterly, half yearly, or annual 5 days in advance

Earlier it was 7 days▫ proposal for buyback of securities;▫ proposal for voluntary delisting▫ fund raising by way of further public offer, rights issue, IDR,

GDR, FCCB, QIPs, Debt Issue, Preferential issue, 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

▫ declaration of bonus securities if included in agenda• At least 2 working days in advance• AGM / EGM/ postal ballot for approval for further fund

raising indicating type of issuance

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Prior intimations – Reg 29-2/2

•Atleast 11 working days in advance▫New requirement▫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

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Material Events- Reg 30

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Disclosure of material events• Evidently, one of the most important parts of the LODR Regulations• Global view

▫ IOSCO principles on Ongoing Disclosures and Material Developments Reporting by Listed Entities

http://www.iosco.org/library/pubdocs/pdf/IOSCOPD132.pdf▫ Para 202.05 of NYSE Listing guidance

http://nysemanual.nyse.com/LCMTools/PlatformViewer.asp?selectednode=chp_1_3_2_6&manual=%2Flcm%2Fsections%2Flcm-sections%2F

▫ Australian Stock Exchange Guidance note no 8 http://www.asx.com.au/documents/about/guidance-note-8-clean-copy.pdf

▫ FSA UK’s Disclosure and Transparency Rules http://www.fsa.gov.uk/pubs/ukla/disclosure_transparency.pdf

• Are there any quantitative norms available?▫ The key question to be asked is, when is the information material?

Generally, estimated impact of 10% or more is considered material Impact of 5% or less is considered non material ASIC guidance in Para 8.7 of Guidance Note no 8

▫ The 10%/ 5% rules are rules of thumb – regulators have generally denied them but the rule can be practically handy

▫ Also, in Hutchison v. Deutsche Bank Securities Inc., 647 F.3d 479 (2d Cir. 2011), US court held materiality is to be tested based on aggregate assets of issuer, not equity value

http://www.iosco.org/library/pubdocs/pdf/IOSCOPD132.pdf

http://nysemanual.nyse.com/LCMTools/PlatformViewer.asp?selectednode=chp_1_3_2_6&manual=/lcm/sections/lcm-sections/

http://nysemanual.nyse.com/LCMTools/PlatformViewer.asp?selectednode=chp_1_3_2_6&manual=/lcm/sections/lcm-sections/

http://www.asx.com.au/documents/about/guidance-note-8-clean-copy.pdf

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Rulings on meaning of material information

• The question of whether an information disclosed/not disclosed was material has agitated minds of lawmakers/companies all over the world

• Several rulings exist from different parts of the world▫ The canonical rule of materiality in TSC Industries,

Inc. v. Northway, Inc., 426 U.S. 438 (1976). there must be a substantial likelihood that the

disclosure of the omitted fact would have been viewed by the reasonable investor as having significantly altered the ‘total mix’ of information made available”

▫ Australia ruling in Jubilee Mines NL v Riley▫ Australian ruling James Hardie Industries NV v ASIC▫ Singapore ruling in Airocean

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Approaches to disclosure of material information

•Two approaches▫General guidance approach▫Prescriptive approach

Deemed material events Illustrative events, but to be tested on the

benchmark of materiality

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Types of materiality

• Deemed material – Part A of Schedule III• Material based on application of guidelines – Part B of Schedule

III, read with reg 30 (4)▫ Guidance of SEBI vide 9 Sept 2015

• Implications of materiality▫ Intimation to stock exchange within 24 hours

If based on board meeting results, then within 30 min▫ Put material developments on website

Keep the same for 5 years▫ Continue to provide updates of material developments on such

events▫ Question of closure of trading window may also arise

• Formulation of policy on materiality▫ The Board shall authorise one of the KMPs to determine materiality

• Disclosures required for material subsidiaries as well• Response to rumours

▫ Reg 30 (11) allows the company the option to confirm or deny rumours about material developments

48

Material event

Yes

No

Apply significant price sensitivity test or any change/ discontinuance of existing significant price sensitive information earlier disclosed

Yes

No

Disclosure to be made

No disclosure to be made

An event occurred

Whether covered under Part A of

Sch. III

Whether covered under Part B of

Sch. III

Whether the information is

significant

YesNo

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Events- Deemed to be material-1/4• Acquisition(s) (including agreement to acquire)

▫ Even 5% acquisition may amount to material acquisition▫ US 8-K treats an acquisition as material only if the

acquisition involves investment upto 10% of assets of the acquirer

• Scheme of Arrangement (amalgamation/ merger/ demerger/restructuring),

• sale or disposal of any unit(s), division(s) or subsidiary of the Company

• any other restructuring• issuance or forfeiture of securities • split or consolidation of shares• buyback of securities• any restriction on transferability of securities or alteration in

terms• structure of existing securities including forfeiture, reissue of

forfeited securities, alteration of calls, redemption of securities etc.

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Events- Deemed to be material-2/4• Outcome of Meetings of the board of directors held for

discussing-▫ declaration of dividends and/or cash bonuses recommended or

declared or ▫ the decision to pass any dividend and the date on which dividend

shall be paid/dispatched▫ any cancellation of dividend with reasons thereof▫ the decision on buyback of securities▫ the decision with respect to fund raising proposed to be undertaken▫ increase in capital by issue of bonus shares through capitalization

including the date on which such bonus shares shall be credited/dispatched

▫ reissue of forfeited shares or securities, or the issue of shares or securities held in reserve for future issue or the creation in any form or manner of new shares or securities or any other rights, privileges or benefits to subscribe to;

▫ short particulars of any other alterations of capital, including calls;

▫ financial results;• To be disclosed within 30 minutes of conclusion of the meeting

51

Events- Deemed to be material-3/4• Agreements-

• joint venture agreement(s), • family settlement agreement(s) (to the extent that it impacts

management and control of the Company), • agreement(s)/treaty (ies)/contract(s) with media companies) which are

binding and not in normal course of business, revision(s) or amendment(s) and termination(s) thereof.

• Revision in Rating(s)• Fraud/defaults by promoter or key managerial personnel or by

Company or arrest of key managerial personnel or promoter.• Change in directors, key managerial personnel, Auditor and

Compliance Officer.• Appointment or discontinuation of share transfer agent.• Corporate debt restructuring.• One time settlement with a bank• Reference to BIFR and winding-up petition filed by any party /

creditors.

52

Events- Deemed to be material-4/4

• Issuance of Notices, call letters, resolutions and circulars sent to shareholders, debenture holders or creditors or any class of them or advertised in the media by the Company.

• Proceedings of Annual and extraordinary general meetings of the Company.

• Amendments to memorandum and articles of association of Company, in brief.

• Schedule of Analyst or institutional investor meet and presentations on financial results made by the Company to analysts or institutional investors

53

Material events subject to the Guidance prescribed

• the omission of an event or information, which is likely to result in discontinuity or alteration of event or information already available publicly; or

• 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; or

• In case where the criteria specified in sub-clauses

(a) and (b) are not applicable, an event/information may be treated as being material if in the opinion of the board of directors of Company, the event / information is considered material

54

Guidance to consider an event as Material-1/2

• Commencement or any postponement in the date of commencement of commercial production or commercial operations of any unit/division.

• Change in the general character or nature of business brought about either in entirety or piecemeal

• Capacity addition or product launch.• Awarding, bagging/ receiving, amendment or

termination of awarded/bagged orders/contracts not in the normal course of business.

• Agreements (viz. loan agreement(s) (as a borrower) or any other agreement(s) which are binding and not in normal course of business) and revision(s) or amendment(s) or termination(s) thereof.

55

Guidance to consider an event as Material-2/2

• Disruption of operations of any one or more units or division of the Company due to natural calamity (earthquake, flood, fire etc.), force majeure or events such as strikes, lockouts etc.

• Effect(s) arising out of change in the regulatory framework applicable to the Company

• Litigation(s) / dispute(s) / regulatory action(s) with impact.• Fraud/defaults etc. by directors (other than key managerial

personnel) or employees of Company.• Options to purchase securities including any ESOP/ESPS Scheme.• Giving of guarantees or indemnity or becoming a surety for any

third party.• Granting, withdrawal , surrender , cancellation or suspension of

key licenses or regulatory approvals.

Any event likely to affect business

56

Time limit and other administrative measure

Administrative Measures –

• The board of directors to authorize one or more Key Managerial Personnel for the purpose of determining materiality of an event or information.

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

• Policy on determination of materiality is a new requirement

Disclosure to the Stock exchange–

• Not later than twenty four hours from the occurrence of the event or information

• In case Board Meeting held for discussion of prescribed items-▫ Within 30 minutes of conclusion

57

Guidance on when an event/information is deemed to be

occurred• upon receipt of approval of Board of Directors• In certain events/information after receipt of

approval of both i.e. Board of Directors and Shareholders

• The events/ information in the nature of price sensitive nature on receipt of approval of the event by the Board of Directors, pending Shareholder’s approval

• In the events/information such as natural calamities, disruption etc. can be said to have occurred when the Company becomes aware of.

58Filing of shareholding pattern – Reg

31Statement showing holding of securities and

shareholding pattern separately for each class of securities shall be submitted to the Stock exchange –

▫1 day prior to listing of its securities on the stock exchange(s);

▫on a quarterly basis, within 21 days from the end of each quarter; and,

▫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

Exception : Listed entities which have listed their specified securities on SME Exchange, the statements shall be submitted on a half yearly basis within 21 days from the end of each half year

59

Re-classification of Promoter Holdings- Reg 31A

60

Person who are in control

Promoter

Persons instrumental in the formation of a plan/programme/ pursuant to which securities are

offered to public

Persons named in the offer document

Following persons shall not be deemed promoter-1. Persons acting in mere professional capacity2. FIs , FPIs, MFs & Scheduled Banks merely holding atleast 10% of

equity cap of the issuer.

61

Promoter Body Corporate (PBC)

Body corporate which holds atleast 10% equity share capital in PBC

Body corporate in which PBC

holds atleast 10% of equity share

capital

Fellow Associates of

PBC

Subsidiary

Companies

Promoter

Promoter Group

Promoter Individual (“X”)

HUF/Firm where the aggregate holding of “X” is atleast 10%

Holding Companie

s

Body corporate (“Y”) in which “X “/ HUF/Firm (where “X” is a member) holds atleast 10% equity share capital

Body Corporate (“Z”) where “Y” holds atleast 10% equity share capital

Immediate relatives = Parents, Siblings, Spouse and Children (including step children)

Fellow associates = Any body corporate where group of individuals/companies/combination thereof holds 20% or more eq. sh. capital in such body corporate and also the PBC

62

Promoter holdings- Reg 31A•New requirement•Reclassification of promoters pursuant to

▫Transmission/ Inheritance ▫Open Offer ▫Company becoming professionally managed

•Listed entity shall ensure that 100 percent of shareholding of promoter(s) and promoter group is in dematerialized form

•The shareholding shall be maintained on a continuous basis in the manner as specified by the BoardNote –

This was not required earlier in the Listing Agreement.

63

Re-classification of shareholding of Promoters and promoters Group

•Promoters and Promoters group to disclose shareholding separately

•Approval of SE requires before any modification / re-classification

•In case of transmission etc. the successor to be classified as promoter

64

Replacement of outgoing promoter

•Approval of Shareholders•Not more than 10% of the paid up equity

capital shall be held by the outgoing promoter along with PAC & Promoter group

•Shall not continue to have any special rights•All agreements granting shareholders special

rights shall be terminated•The outgoing promoter and his relatives shall

not act as a KMP for more than 3 years from the date of shareholders approval▫Resolution to specifically approve

65

Re- classification of promoter shareholding as public

• In case of professionally managed companies- No group can hold more than 1%.

• Shall not directly or indirectly, exercise control

• Increase in the level of public shareholding pursuant to re-classification shall not be counted for compliance with minimum public shareholding as per SCRA

• The event of re-classification to be disclosed to SE

• Board may relax conditions

66

Deviations from use of proceeds of public issue, rights issue, preferential issue etc.

Reg 32

67

Deviations from use of proceeds of issues- 1/2

•Applicable for public issue, rights issue, preferential issue etc.

•Quarterly submission of report▫indicating deviations 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;

▫indicating category wise variation (capital expenditure, sales and marketing, working capital etc.) between projected and the actual utilization of funds

68

Deviations from use of proceeds of issues- 2/2

• Continue reporting till fully utilized• Statement to be placed before audit committee

before submission• Explanation for the variation in directors’ report• Preparation of annual statement of funds utilized

for purposes other than those stated in the offer document/prospectus/notice▫certified by Statutory auditor▫placing it before the audit committee till such

time the full money utilized• Submission of report of monitoring agency

▫ Placing of such report before audit committee annually

69

Financial Statements- Reg 33

70

Financial statements

• power to approve financial results is only with the board of directors▫ General practice of committee approval before Board

• Limited review report to be place before Board• option for submission of quarterly consolidated

results• intimation shall be given in first quarter of FY.

• disclosures pertaining to investor complaints and explanation of reasons for variations etc. is not required to disclose in financial results

• Audit report with modified opinion and the accompanying annual audit report shall be reviewed ▫ by the stock exchange(s) and▫ Qualified Audit Report Review Committee

71

Interim financial statements – reg 33

•Quarterly financial statements to comply with AS 25 or IndAS 34

•Form A (for unmodified opinion)/ B (for modified opinion) to be submitted along with annual results (standalone as well as consolidated)

•Last quarter figure (audited) are balancing figure between 3rd Y-T-D and Annual results

•The requirement was there in LA as well

72

Miscellaneous provisions

73

Requirements for annual report & AIM – Reg 34 & 35

•Annual report to be submitted ▫within 21 days of adoption at AGM

New requirement▫Similar disclosures as earlier provided

under CA and listing agreement •BRR is applicable to top 100 listed

companies as on March 31 every financial year.

•Annual Information Memorandum to be submitted as specified by SEBI.▫New requirement

74

Disclosures on appointment & re-appointment of directors- Reg 36

•Disclosures to the shareholders ▫brief resume of the director▫nature of his expertise in specific functional

areas▫disclosure of relationships between

directors inter-se▫names of listed entities in which the person

also holds the directorship and the membership of Committees of the board Earlier it was for all companies

▫shareholding of non-executive directors

75

Schemes of arrangement – Reg 37

•Draft schemes to be filed with SEs for observation before filing with court etc.▫Filing with court only after observation

from SEs▫Such letter to be placed before authority▫Validity of observation letter is 6 months

•Submission of documents with SEs after sanction of the scheme

76

Certificate for split/ consolidation of securities- Reg 39

•Issue of certificate within 30 days of lodgment▫Earlier it was 6 weeks

•Compliance of procedural requirements may be delegated to RTA

77

Transfers – Reg 40- 1/2• Detailed procedures with timelines has been prescribed

▫ for transfer/ transmission/ transposition of securities• Board may delegate the power to transfer

▫ to a committee or to compliance officer or to the registrar to an issue and/or share transfer agent

▫ Delegated authority to place report on transfer of securities to the board of directors in each meeting

• Registration of ▫ Transfer within 15 days

Otherwise to compensate the aggrieved party▫ Transmission for securities held in dematerialized mode within 7 days▫ Transmission for physical securities- within 21 days

• Record to be maintained• No registration

▫ in case of any statutory restriction▫ If transferor objects and within 60 days of objection place any prohibitory

order• Indebtedness of transferor is not a valid ground to reject transfer• In case of delay in transfer the company has to compensate to aggrieved

party and any claim / dispute is to be settled by arbitration as per exchange bye-law

78

Transfers – Reg 40- 2/2•Half yearly certificate from PCS

▫Within 1 month of end of half year▫Certificate to be filed with SEs

simultaneously•Provisions are applicable for

▫deletion of name of the deceased holder▫transmission of securities to the legal heir▫transposition of securities

•Schedule VII to be followed

79

Record date- Reg 42 •Annual Book closure requirement is done

away with•Requirement is for fixing record date•Recommendation or declaration of

dividend and/or cash bonuses at least 5 WDs before the record date

•Other provisions are similar

80

Remote e-voting- Reg 44

•All resolutions•In terms of MGT rules•Submission of results within 48 hours of

conclusion of the meeting•Proxy form to all

81

Change of name- Reg 45

Mandatory name change (within 6 months) in case company change its activities which is not reflected in its name.

Prior approval of SE is mandatory before making application to ROC Both are new requirements

Other provisions are same

82

Website of listed company – Reg 46- 1/2

• Shall have a functional website▫ Details of business▫ terms and conditions of appointment of independent directors▫ composition of various committees of board▫ code of conduct of board and SMPs▫ details of establishment of vigil mechanism▫ criteria of making payments to NEDs

If not in annual report▫ RPT policy▫ Material Subsidiary Policy▫ Familiarization programme for IDs

No of programmes attended during the year on cumulative basis No of hours spend during the year on cumulative basis Other relevant details

▫ Policy on determination of material events Contact details of KMPs authorised by the Board for the purpose of

determination of materiality and disclosure thereon

83

Website of listed company – Reg 46-2/2

• the email address for grievance redressal• contact information of the designated officials responsible

for assisting and handling investor grievances• financial information

▫ notice of meeting of the board of directors where financial results shall be discussed

▫ financial results, on conclusion of the meeting of the board of directors where the financial results were approved

▫ complete copy of the annual report• shareholding pattern• details of agreements entered into with the media

companies and/or their associates• schedule of analyst or institutional investor meet and

presentations• new name and the old name for a continuous period of one

year• Advertisements made under regulation 47

84

Newspaper advertisement – Reg 47 • notice of meeting of the board of directors where financial results to be

discussed• financial results along-with the modified opinion(s) or reservation(s), if

any, expressed by the auditor▫ If both standalone & CFS has submitted then CFS to be published

• statements of deviation(s) or variation on quarterly basis, after review by audit committee▫ explanation in directors report in annual report

• notices given to shareholders by advertisement• Reference in newspaper publication shall be on the website• Publication shall be simultaneously with the submission of the same to

SEs▫ FS to be published within 48 hours of conclusion of the meeting of

board of directors• Atleast 1 English language national daily circulating in the whole or

substantially the whole of India• 1 daily newspaper published in the language of the region, where the

registered office is situated• Not applicable to entities whose securities are listed on SME Exchange.• Website link

▫ New requirement

85

Other Corporate Governance Requirements- Reg 27

86

Other Requirement-1/2

• May comply with requirements as specified in Part E of Schedule II.▫ Non discretionary requirements

non-executive chairperson may be entitled to maintain a chairperson's office at the company’s expense

half-yearly declaration of financial performance including summary of the significant events in last six-months to the shareholders

may move towards a regime of financial statements with unmodified audit opinion

Separate posts of chairperson and CEO internal auditor may report directly to the audit

committee

87

Other Requirement-2/2

•Quarterly Compliance Report on corporate governance report within 15 days▫Not applicable small listed entities and

entities listed on SME Exchange Body corporate other than companies even if

listed in SME Exchange▫Detailed material RPTs along with the

above•Report to be singed by Compliance Officer

or CEO

88

Additional disclosures in Annual Report

89

New disclosures in Annual Report

• Schedule V (10) Details of non-compliance, penalties imposed

by SE / SEBI / Regulatory Authority on any matter related to capital marketDuring last 3 years

Web link of material subsidiary policy, RPT policy

Disclosures of commodity price risks & commodity hedging activities

Non-compliance of any requirement of CG along with reason

90

Policies under the Regulations

91

Policies-1/5Reg No.

Name of the policy

Specific Requirements/Contents

Approval

Earlier provisions

Disclosure on the website

9 Preservation of documents Policy

To be classified into two categories:-1. documents whose preservation shall be permanent in nature ; 2. documents with preservation period of not less than eight years after completion of the relevant transactions:

BoD -- Not required

16 (1c) Policy on determining "material subsidiary"

Although Regulation 6 is silent about the contents of this Policy, it is understood that the Policy among other things will contain process for determining such material subsidiaries and also the general obligations of the holding company in this regard.

Regulations, 2015 is silent regarding this. The Board can can such a policy.

Clause 49

Required to be disclosed;

Any changes to be updated within 2 working days of such change

92

Policies-2/5Reg No.

Name of the policy


Approval Corresponding requirements

Website disclosure

17(9)(b)

Risk Management Policy

The policy should lay down procedures to inform members of board of directors about risk assessment and minimization procedures

BoD Clause 49 --

17(5) Code of Conduct

For all members of the Board and SMPs

BoD Clause 49 To be disclosed;


19 (4) and 20(4) with ref to Part D of Schedule II

Remuneration of thedirectors, keymanagerial personnel andother employees

Nomination and remuneration committee shall frame the policy in consonance with the Companies Act, 2013 and other relevant laws

NRC -- --

93

Policies-3/5Reg No.

Name of the policy



Website disclosure

19(4), 20(4), Schedule I part D

Board Diversity Policy

Audit Committee

Clause 49

Not required

23 (1)

Materiality of related party transactions and on dealing withrelated partytransactions

As the very name suggests, the policy has to contain details pertaining to laying down thresholds for determining ‘materiality’ and on dealing with related party transactions.

Regulations, 2015 is silent regarding this. The Board can pass such a policy.

Clause 49

Required to be disclosed;Any changes to be updated within 2 working days of such change

23(3) Criteria for

granting omnibus approval for RPTs

In line with RPT Policy Audit Committee

Clause 49

Not required

94

Policies-4/5Reg No.

Name of the policy



Website disclosure

25(7)

Familirization Programme for IDs

To familiarize the IDs with the industry where the company operates, business model etc.

No specific requirement

Clause 49 To be disclosed;


30

Policy on determination of materiality

To be framed on the basis of Regulation 30 (4) and Schedule III

BoD -- Required to be disclosed;

46

Vigil Mechanism For directors and employees to report genuine concerns

Regulations, 2015 is silent regarding this. The Board can pass such a policy.

Clause 49 To be disclosed;


95

Policies-5/5Reg No.

Name of the policy



46 Criteria for making payment to NEDs

For payment to NEDs including IDs

NRC Clause 49 To be disclosed, if not disclosed in annual report;


Sch II Part D

criteria for evaluation of performance of independentdirectors and the board of directors

For performance evaluation of IDs

NRC Clause 49 Not required

96

Intimations under LODR

97

Prior intimation- 1/2

Reg. No Particulars Time line

29(1)(a) Meeting of Board held for approval financial results viz. quarterly, half yearly, or annual

5 days in advance

29(1)(b) to (f)

Meeting of Board held for –• Buyback• voluntary delisting• further public offer, rights issue, IDR, GDR, FCCB,

QIPs, Debt issue, preferential issue and determination of issue price etc.

• declaration/recommendation of dividend• issue of convertible securities• declaration of bonus securities if included in agenda

2 working days in advance

Proviso to 29(1)(d)

AGM / EGM/ postal ballot for approval for further fund raising indicating type of issuance


29(3)(a) 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


98

Prior intimation- 2/2Reg. No Particulars Time line

29(3)(b) 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) Notice of record date or date of closure of transfer books

At least 7 working days (excluding the date of intimation and the record date)

50 (1) Information of interest on debentures and bonds, and redemption amount of redeemable shares or of debentures and bonds

11 working days before date on and from which they are payable

50 (2) intention to raise funds through new non-convertible debt securities or non-convertible redeemable preference shares proposes to list either through a public issue or on private placement basis,

Prior to meeting of the Board in which it shall be considered

50 (3) recommendation or declaration of issue of non convertible debt securities or any other matter affecting the rights or interests of holders of non convertible debt securities or non convertible redeemable preference shares is proposed to be considered

at least two working days in advance, excluding the date of the intimation and date of the meeting

99

Post event intimation- 1/5Reg. No

Particulars Time line

7(3)

Compliance certificate with regard to maintenance of share transfer facility either in house or through Share transfer agents, RTI

Within 1 month of end of each half of the financial year

7(4) Changes or Appointment of new Share Transfer Agent Within 7 days of entering into the agreement

13(3)

A statement giving the number of investor complaints pending at the beginning of the quarter, those received, disposed off and those remaining unresolved at the end of the quarter.

Within 21 days from the end of each quarter

27(2)(a)

Compliance report on corporate governance, Details of Material RPT

Within 15 days from close of the quarter

100



30 Material events as enumerated under Schedule III Not later than 24 hours of occurrence

30 Outcome of Meetings of the Board of Directors-• dividends and/or cash bonuses recommended or declared or

the decision to pass any dividend and the date on which dividend shall be paid/dispatched;

• any cancellation of dividend with reasons thereof;• the decision on buyback of securities;• the decision with respect to fund raising proposed to be

undertaken;• increase in capital by issue of bonus shares through

capitalization including the date on which such bonus shares shall be credited/dispatched;

• reissue of forfeited shares or securities, or the issue of shares or securities held in reserve for future issue or the creation in any form or manner of new shares or securities or any other rights, privileges or benefits to subscribe to;

• short particulars of any other alterations of capital, including calls;

• financial results; • decision on voluntary delisting by the listed entity from stock

exchange(s).

Within 30 minutes of the Meeting

101



31(1) 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 timeline prescribed

1 day prior to listing of its securities on the stock exchange(s);

within 21 days from the end of each quarter;

within 10 days of any capital restructuring resulting in a change exceeding 2% of the total paid-up share capital;

specified securities being listed on SME Exchange within 21 days from the end of half year

102



32(1) Statements for public issue, rights issue, preferential issue etc.-

(a) indicating deviations in the use of proceeds from the objects stated in the offer document or explanatory statement to the notice for the general meeting;

(b) indicating category wise variation (capital expenditure, sales and marketing, working capital etc.) between projected utilisation of funds and the actual utilisation of funds

• On a quarterly basis till the time of full utilisation;

• specified securities are listed on SME Exchange then on a half-yearly basis

33(3) quarterly and year-to-date standalone financial results and consolidated financial statements ,if any

within 45 days of end of each quarter, other than the last quarter

33(3) audited standalone financial results for the financial year

within sixty days from the end of the financial year;

specified securities are listed on SME Exchange then on a half-yearly basis

103

Post event intimation- 5/5

Reg. No


34(1) Annual Report 21 working days of AGM

37(5) Documents relating to the scheme of arrangement

Upon sanction of the Scheme by the Court or Tribunal

39(3) Information regarding loss of share certificates and issue of the duplicate certificates

Within 2 days of getting information

44(3) details regarding the voting results in the format specified

48 hours of the conclusion of its General Meeting

104

Chap V- Obligation of Debt Listed Entities

105

Applicability•Listed Entity which has listed its:

▫Non-convertible Debt Securities

▫Non-Convertible Redeemable Preference Shares

•Perpetual debt instrument and Perpetual non-cumulative preference shares.

106

Intimation to SEs- Reg 50• Prior intimation before the due date of payment of

interest, redemption etc. at least 11 working days

• Intention to raise funds through new non-convertible debt securities or non-convertible redeemable preference shares. May be given prior to the BM wherein the proposal shall be

considered.[New insertion] Also applicable to entities which has listed its specified securities

and either NCDS or NCRPS or both• At least 2 working days in advance, about the BM , at which

the recommendation/declaration of issue of non convertible debt securities/non convertible

redeemable preference shares or matter affecting their rights/ interests Also applicable to entities which has listed its specified

securities and either NCDS or NCRPS or both

107

Prior intimation for issue of debt securities

• The requirement for prior intimation issue of debt securities was there earlier as well▫ Prior intimation of “board meeting”

• Several questions▫ What if there is no board meeting but

resolution by circulation?▫ What if there is no board meeting but the

power is vested in a committee?• The spirit of the requirement is flow of

information▫ The purpose cannot be scuttled by too strict a

literal intepretation

108

Disclosure of Price Sensitive Information- Reg 51

• Promptly inform SE▫ information affecting performance/operation, ▫ price sensitive information or ▫ any action affecting payment of interest/dividend of

shares or redemption of non convertible debt securities or redeemable preference shares.

• Disclosures as specified in Part-B of Sch-III • Intimation to be provided first to the Exchange(s)

before providing to any third party. [New insertion]

109

Financial Results- 1/2-Reg 52

• Un- audited results-▫ may submit on half yearly basis ▫ within 45 days from the end of the half year▫ accompanied by limited review report

By Statutory Auditor By PCA in case of PSU

• Audited results for last half year ▫ within 60 days from the end of FY▫ advance intimation to SEs

• Half-yearly results shall be taken on record by the board▫ Signed by the MD/ Executive director.

• Modified opinion in audit reports to be addressed by the BoD ▫ At the time of publishing

• Also applicable to entities which has listed its specified securities and either NCDS or NCRPS or both

• Earlier same provision was there under Reg 29 of DLA

110

Financial Results- 2/2

• The annual audited results to be submitted along with the annual audit report and with :

Form A for audit report with unmodified opinion, or

Form B for audit report with modified opinion.

• Review of Form B and the annual audit report by SE and the Qualified Audit Report Review Committee in the manner specified in Schedule VIII.


111

Disclosure in Financial statements• credit rating and change in credit rating• asset cover available, in case of non convertible debt securities

▫ Not applicable for Banks & NBFCs• debt-equity ratio• previous due date for the payment of interest etc. and whether paid

or not• next due date for the payment of interest etc. • debt service coverage ratio

▫ not applicable for Banks & NBFCs• interest service coverage ratio

▫ not applicable for Banks & NBFCs• outstanding redeemable preference shares (quantity and value)• capital redemption reserve/debenture redemption reserve• net worth• net PAT• EPS• Not applicable for unsecured debt issued by regulated financial

sector entities for meeting capital requirements

112

Other provisions w.r.t financial results

• Certificate from debenture trustee to the effect of taking note of the contents of FS aforesaid

• Half yearly results to include a statement of material deviations in the use of proceeds of NCDs

• Financial results and statement refereed to Sub-Reg 4▫ to be published in atleast one national daily ▫ circulating in whole of India ▫ within 2 calendar days of conclusion of BM


113

Annual Report -Reg-53

• Annual report to contain disclosures as specified in Companies Act, 2013 along with the following:

Audited financial statements Cash flow statement Auditors report Directors report Name of the debenture trustees with full contact

details Related party disclosures as specified in Para A of

Schedule V.• Also applicable to entities which has listed its specified

securities and either NCDS or NCRPS or both

114

Asset Cover and Credit Rating- Reg-54 & 55

• Maintain 100% asset cover to discharge the principal amount for the non-convertible debt securities issued.

Except for unsecured debt securities issued by regulated financial sector.

• Disclose to SE for security created and maintained for secured listed non-convertible debt securities.

Quarterly/half-yearly/year-to-date and annual financial statements, as applicable

• Rating obtained for non-convertible debt securities shall be reviewed at least once a year by a credit rating agency registered by the Board.

• [Also applicable to entities which has listed its specified securities and either NCDS or NCRPS or both]

115

Debenture Trustees 1/2Reg-56

• Entity to forward the following t0 DT promptly: Annual report Certificate from auditors in respect of utilisation of funds

during the implementation period of the project for which the funds have been raised. [New provision]

Copy of all notices, resolutions and circulars relating to-▫ new issue of non convertible debt securities ▫ the meetings of holders of non-convertible debt securities

Intimation regarding- [New provision]▫ any revision in the rating▫ any default in timely payment of interest or redemption or both▫ failure to create charge on the assets;

116

Debenture Trustees- 2/2

• Half-yearly certificate of maintenance of 100% asset cover along with half yearly financial results for listed non convertible debt securities either by:

practicing company secretary or a practicing chartered accountant

• Not applicable to banks or NBFC or where bonds are secured by a Government guarantee.

• With the consent of DT, information can be sent in electronic form/fax.


117

Other submission to SE- Reg 57 Submit a certificate to the SE regarding timely

payment of interests or principal within 2 days of the interest or principal or both becoming due.

File an undertaking on annual basis stating compliance of terms of Trust Deed and SEBI (Issue and Listing of Debt Securities) Regulations, 2008.

Any other information as specified by the Board from time to time.

[Also applicable to entities which has listed its specified securities and either NCDS or NCRPS or both]

118

Documents and information to Security holders, Reg- 58

•Entities are required to provide the following:

Hard copies of annual reports Half yearly communications as specified in Reg

52(4)&(5)• Notice of meetings of NCD holders stating provisions for

appointment of proxy.• Send proxy forms to security holders.


119

Structure of NCDs- Reg 59•No material modification to the structure of the debenture in terms of coupon, conversion, redemption, or otherwise without approval of

▫BoD▫Debenture Trustee in case of NCDs▫Prior approval of SEs ▫requisite majority of holders of that class

•Provisions of CA to be complied with▫[Also applicable to entities which has

listed its specified securities and either NCDS or NCRPS or both]

120

Record date- Reg 60

•Record the for the purpose of payment of interest, redemption or repayment amount etc.

•Minimum 7 working days advance notice to SE

•Also applicable to entities which has listed its specified securities and either NCDS or NCRPS or both

121

Terms of NCDs Reg 61 • Ensure timely payment of interest• shall not declare or distribute any dividend in case of

default payment of interest on debt securities or redemption thereof or in creation of security as per the terms of the issue of debt securities

▫ Not applicable for unsecured debt securities issued by regulated financial sector entities eligible for meeting capital requirements

• shall not forfeit unclaimed interest/dividend-▫ To be transferred to IEPF in terms of CA

• Redemption only on pro rata or by lot unless terms of issue provide otherwise

• Reg 40 and schedule VII to be followed for transfer of securities


122

Website disclosure- Reg 62 • Shall maintain a functional website having-

▫ details of its business▫ financial information including complete copy of the annual

report including balance sheet, profit and loss account, directors report etc.

▫ contact information of the designated officials responsible for assisting and handling investor grievances

▫ email address for grievance redressal and other relevant details

▫ name of the debenture trustees with full contact details▫ the information, report, notices, call letters, circulars,

proceedings, etc. concerning NCRPS or NCDs▫ all information and reports including compliance reports filed

by the listed entity▫ information with respect to the following events:

default by issuer to pay interest on or redemption amount failure to create a charge on the assets revision of rating assigned to the non convertible debt securities

123

Intimation to Stock Exchange

124

Prior Intimation to Stock Exchange-1Reg Particulars Timeline

50(1) Interest on debentures/bonds, and redemption amount of shares /debentures/bonds becomes payable

At least 11 working days before the amount becomes due.

50(2) Intention to raise funds through the non convertible debt securities/redeemable pref. shares

Prior to the issuance. or Prior to the BM

50(3) For recommendation or declaration of issue of non convertible debt securities or any other matter affecting the rights of security holders

At least 2 working days of the BM(excluding the date of intimation and the date of meeting)

60 Notice of the record date At least 7 working days in advance (excluding the date of intimation and the record date), or as per SE discretion.

125

Post Intimation To Stock Exchange-1/3

Reg Particulars Timeline

51(1) Information affecting performance/operation, price sensitive information or any action affecting payment of interest/dividend of shares or redemption of non convertible debt securities or redeemable preference shares.

Promptly

52(1) Un-audited results to be submitted Within 45 days from the end of the half year.

52(2) Audited results to be submitted Within 60 days from the end of last half year

If, unaudited results submitted for last half year Audited results for the entire year to be submitted as soon as they are approved by BOD.

126



52(7) Submit a statement of material deviation, if any in use of issue proceeds

On half yearly basis along with the financial results

54(2) ASSET COVER: The extent and nature of security created and maintained with respect to its secured listed non-convertible debt securities

Quarterly, half-yearly, year-to-date and annually .

57(1) A certificate certifying timely payment of interests or principal obligations or both in respect of the non convertible debt securities.

Within 2 days of the interest or principal or both becoming due

127



57(2) Undertaking stating all documents and intimations required to be submitted to Debenture Trustees in terms of Trust Deed and SEBI (Issue and Listing of Debt Securities) Regulations, 2008 have been complied with.

Annual basis

128

Intimation to Debenture Trustees1/2


56(1)(a) Copy of Annual Report along with the copy of certificate of utilisation of fund issued by auditor

*In case the debentures or preference shares issued for financing working capital.

Promptly as a certificate of utilisation issued by the Auditor of the Company

*The auditor's certificate may be submitted at the end of each financial year till said purpose of fund raising is achieved.

56(1)(b) a copy of all notices, resolutions and circulars relating to-(i) new issue of non convertible debt securities

(ii) the meetings of holders of non-convertible debt securities

Promptly:(i) as they are sent to shareholders/ holders of non convertible debt securities (ii) as they are sent to the holders of non convertible debt securities or advertised in the media including those relating to proceedings of the meetings

129

Intimation to Debenture Trustees-2/2


56(1)(d)` Certificate from PCA/PCS regarding maintenance of 100% asset cover and half yearly financial results

Half-yearly

Exception: Banks, NBFC registered with Bank

130

Comparative AnalysisLODR

DLA Broad Head Particulars

Reg 56

-- Documents and Intimation to Debenture Trustees.

Along with the Annual Report, certificate from auditors in respect of utilisation of funds

Intimation regarding revision in rating, default in timely payment of interest etc, failure to create charge.

Reg 54 (2)

Reg 16 A

Extent and nature of security created andmaintained

Disclose to SE

LODR-Quarterly, Half yearly or year to date, as applicable

DLA: Half yearly basis only.

131

Comparative AnalysisLODR DLA Broad Head Particulars

-- Reg-7 ECS, Direct Credit, RTGS or NEFT to be used for payment of interest etc

No such requirement in LODR.

Reg 52 (8)

Reg 29

Publication of financial results

LODR: Within 2 calendar days of the conclusion of the BM.

DLA: 48 hours.

-- Reg 19A

Publication in newspaper the statement of material deviation in the use of issue proceeds

No such requirement in LODR.

Reg 50 (2)

-- Intention to raise funds LODR: Intimation may be given to SE prior to the Board meeting.

DLA: Intimation to be given only before the issuance.

132


Reg 50 (3)

-- Intimation of BM to SE

2 working days in advance wherein issue of securities or matter affecting the rights or interests of security holders is to be considered.

Reg 59 (2)

-- Material modification to the structure of NCDS or NCRPS

-To comply CA, 2013-Approval by majority of that class.

Earlier these 2 conditions were not there.

-- Reg 21A

Deposit with SE 1% of amount of debt securities before the opening of subscription

No such requirement in LODR

133


Reg 58

-- Documents to Security holders.

● Proxy form to be given

-- Reg 28 A

RPT disclosure Loans and advances in the nature of loans if (i) no repayment schedule or repayment beyond seven years; or(ii) no interest or interest below sec 372A of CA by name and amount.

Above disclosure is not required under LODR.

Sch V -- RPT disclosure Not applicable to listed Banks.

134


Reg 52 (2)

Reg 29 A

To take note of Half-yearly results

DLA: By the BoD or its Sub-committee.

LODR: Shall be done by BoD only.

Reg 52 (2)

Reg 29 C

Modified opinion in Audit report

DLA: States Qualified opinion.

LODR: States Modified opinion.

Reg 52 (3)

-- Form A & Form B to SE

● Form A for audit report with unmodified opinion, ● Form B for audit report with modified opinion.

135


Reg 50

-- Intimation to SE before due date of payment

Prior intimation before the due date of payment of interest, redemption etc.at least 11 working days

Reg 52 (6)

-- NCRPS Additional disclosures as notes to financial statement has been prescribed for NCRPS.

Reg 55

-- Credit Rating Review of each rating once in a year by a credit rating agency.

136


Reg 57

-- Submission to SE

A certificate for timely payment of interests or principal within 2 days of the interest or principal or both becoming due.

File an undertaking on annual basis stating compliance of terms of Trust Deed and SEBI (Issue and Listing of Debt Securities) Regulations, 2008.

Reg 61

-- Terms of NCDS or NCRPS

No dividend in case of default payment of interest etc.

Not applicable for unsecured debt securities issued by regulated financial sector entities eligible for meeting capital requirements.

137


Reg 62

-- Press release with respect to the events

Entity may issue press release w.r.t website disclosures.

138

Business Responsibility Report

139

BRR- Regulation 34

•Applicable for top 100 listed entities•Along with Annual Report•Within 21 working days of adoption at

AGM•Format yet to be prescribed

140

Contents of BRR in existing format

141

Existing format

• General information about the company including▫3 key products/services▫Number of international & national locations

of business activity▫Market served i.e. local, state etc.

• Financial details ▫Paid up capital▫Total turnover▫PAT▫Spending on CSR ▫List of activities of CSR

142

Existing format

• Other details▫ Number of subsidiaries▫ Number of subsidiaries and percentage of other

entities participating in the BR initiatives • BR information

▫ Details of directors responsible for BR policy▫ Principle wise BR policy and explanation thereon

• Governance related to BR▫ Frequency of assessment of BR performance by BoD,

Committee or CEO▫ Whether company publish BR or any Sustainability

Report, link for viewing the same and frequency of such publication

• Other Principles

143

Principles under BRR

144

Principle 1

•Does the policy relating to ethics, bribery and corruption cover only the company?

•Does it extend to the Group/Joint Ventures/Suppliers/Contractors/NGOs/Others?

•How many stakeholder complaints have been received in the past financial year and what percentage was satisfactorily resolved by the management?

145

Principle 2- 1/2• List of 3 products or services whose design has

incorporated social or environmental concerns, risks and/or opportunities.

• For each such product, provide the following details in respect of resource use (energy, water, raw material etc.) per unit of product(optional):

▫ reduction during sourcing/production/ distribution achieved since the previous year throughout the value chain?

▫ Reduction during usage by consumers (energy, water) has been achieved since the previous year?

• Does the company have procedures in place for sustainable sourcing (including transportation)?

▫ If yes, what percentage of your inputs was sourced sustainably?

146

Principle 2- 2/2• Has the company taken any steps to

procure goods and services from local & small producers, including communities surrounding their place of work? ▫ If yes, what steps have been taken to

improve their capacity and capability of local and small vendors?

• Does the company have a mechanism to recycle products and waste? ▫ If yes, what is the percentage of recycling of

products and waste (separately as <5%, 5-10%, >10%).

147

Principle 3- 1/5•Total number of employees•Total number of employees hired on

temporary/contractual/casual basis • Number of permanent women employees. •Number of permanent employees with

disabilities •employee association that is recognized

by management. •What percentage of your permanent

employees is members of this recognized employee association?

148

Principle 3- 2/5•Number of complaints relating to child

labour, forced labour, involuntary labour, sexual harassment in the last financial year and pending, as on the end of the financial year in the following format

Category No of complaints filed during the financial year

No of complaints pending as on end of the financial year

Child labour/forced labour/ involuntary labour

Sexual harassment

Discriminatory employment

149

Principle 3- 3/5•What percentage of the under mentioned

employees were given safety & skill up-gradation training in the last year? ▫Permanent Employees ▫Permanent Women Employees ▫Casual/Temporary/Contractual Employees ▫Employees with Disabilities

150

Principle 4- 4/5

•Has the company mapped its internal and external stakeholders?

•Out of the above, has the company identified the disadvantaged, vulnerable & marginalized stakeholders?

•Are there any special initiatives taken by the company to engage with the disadvantaged, vulnerable and marginalized stakeholders?

151

Principle 5- 5/5

•Does the policy of the company on human rights cover only the company or extend to the Group/Joint ventures/ suppliers/ Contractors/NGOs/Others?

•How many stakeholder complaints have been received in the past financial year and what percent was satisfactorily resolved by the management?

152

Principle 6

• Does the policy related to Principle 6 cover only the company or extends to the Group/Joint Ventures/Suppliers/Contractors/NGOs/others

• Does the company have strategies/ initiatives to address global environmental issues such as climate change, global warming, etc?

• Does the company identify and assess potential environmental risks?

• Does the company have any project related to Clean Development Mechanism and details thereof?

• Has the company undertaken any other initiatives on - clean technology, energy efficiency, renewable energy, etc.

• Are the Emissions/Waste generated by the company within the permissible limits given by CPCB/SPCB for the financial year being reported?

• Number of show cause/ legal notices received from CPCB/SPCB which are pending (i.e. not resolved to satisfaction) as on end of Financial Year

153

Principle 7•Is the company a member of any trade

and chamber or association and name of the major ones that the business deals with.

•Has the company advocated/lobbied through above associations for the advancement or improvement of public good? ▫if yes, specify the broad areas

154

Principle 8• Does the company have specified

programmes/initiatives/projects in pursuit of the policy related to Principle 8?

▫ If yes details thereof • Are the programmes/projects undertaken through in-house

team/own foundation/external NGO/government structures/any other organization?

• Have the company done any impact assessment of its initiative?

• What is the company's direct contribution to community development projects-

▫ Amount in INR and the details of the projects undertaken.• Have the company taken steps to ensure that this

community development initiative is successfully adopted by the community?

155

Principle 9

• What percentage of customer complaints/consumer cases are pending as on the end of financial year?

• Does the company display product information on the product label, over and above what is mandated as per local laws?

• Is there any case filed by any stakeholder against the company regarding unfair trade practices, irresponsible advertising and/or anti-competitive behaviour during the last five years and pending as on end of financial year.

▫ If so, details thereof.• Did the company carry out any consumer survey/

consumer satisfaction trends?

156

Queries that may arise

157

Regulation 24(4)-significant transaction by material subsidiary

• Whether regulation 24(4) is applicable to all subsidiaries or only material subsidiary?▫The Explanation below the aforesaid Regulation

has made it very clear that sub- regulation (4) is applicable with regard to the Material Unlisted Subsidiary companies only. Hence, the statement of significant transaction or arrangement entered into by an unlisted material subsidiary shall have to be placed before the Board of a listed entity.

158

Regulation 29(3)-alteration of nature/ form of securities

• What form or nature of securities include for the said Regulation?

▫ Regulation 29 is applicable to those entities whose specified securities are listed. The terms “Specified Security” has been defined to mean equity shares and convertible securities which include convertible debt instrument and convertible preference shares.

▫ Further, in terms of Regulation 63, the aforesaid Regulation

is also applicable to those entities whose specified securities as well as non- convertible debenture or non- convertible preference or both are listed.

▫ On a combined reading of the aforesaid provisions, the term

‘securities’ shall include the specified securities as well as NCDs/ NCRPS if they are listed by virtue of clause (a).

159

Regulation 30(8)- website disclosure of material events

• Is the listed entity required to adopt a separate Archival Policy?▫ The aforesaid Regulation does not prescribe

for formulation of a separate archival policy. ▫ Regulation 9, which requires listed entities to

frame a policy of preservation of documents, the archival policy may form part of the said policy.

▫ The policy for determination of material events may also contain a clause to the effect that the preservation of the documents after five years shall be in terms of archival policy/ preservation of documents policy of the entity.

160

Regulation 30(9)- events/information w.r.t material

subsidiary • The events or information referred to is

concerned for material subsidiary or information of a subsidiary which will be material to the Holding Company?▫Since the Regulation is concerned about

disclosing of those events/ information which are material for a listed entity, apparently, the intention of the said Regulation seems to be for disclosure of events/ information with respect to all subsidiaries which are or may be material for the listed entity.

161

Regulation 50(1)-intimation of due date of payment of interest etc.

• If the dates are mentioned in the offer document/Information Document, whether separate intimation has to be given to SE?▫ The aforesaid Regulation is very specific about

giving of 11 working days prior intimation with regard to the due date for payment of interest/ redemption amount etc. Hence, even if the offer document/ information document already contains the due date of payment of interest etc., it apparently seems that the said Regulation has not provided any exemption and accordingly, the listed entity shall have to make such prior intimation.

162

Regulation 54(2)-quarterly/half yearly/annual disclosure

• How shall an NCD listed entity comply with quarterly and year-to-date disclosure of information w.r.t extent & nature of security created and maintained for secured listed NCDs?

▫ Sub- regulations (1) & (2) of Regulations 52 are applicable to those entities whose NCDs or NCRPS are only listed. However, if the specified securities of such entities are also listed then the provisions related to financial statements as provided under Regulation 33 will be applicable whereby preparation and submission of quarterly, half yearly and annual financial statements have been provided. Therefore, if only NCDs are listed then the entity is required to comply with provisions of Regulation 52(1) & (2) but not Regulation 33.

▫ Therefore, it is clear that listed entity shall have to make the

disclosures in the quarterly/half yearly/year to date/ annual financial statements as may be applicable to the listed entity, and if the entity is only required to follow Regulation 52, then the disclosure shall be in half yearly and annual financial statements.

163

Regulation 56(1)-certificate of Statutory Auditor w.r.t utilisation of issue proceeds

• What kind of certificate by the auditors is required and when shall the same be given?▫ Apparently, it may be construed that if the fund is

raised for a particular project, the certificate shall have to be provided at the end of each of the financial years till the completion of the project along with the annual report.

▫ Further, the proviso clearly states that if funds

are raised for working capital, general corporate purpose etc. then the aforesaid certificate shall have to be provided for each financial year till it is fully utilized or the purpose has been achieved

164

Regulation 62(2)-press release & Para A of part A of sch III

• The word ‘may’ shall have mandatory implication or not mandatory?▫Issuing a press release is a non- mandatory

requirement. • Whether intimation to SE about

investors/analyst meet should be accompanied by investors’ presentation in terms of point 15 of Para A of Part A of Schedule III?▫It seems the presentation is also required

to be submitted

listing obligations and disclosure requirements regulations, 2015 vinod kothari vinod kothari &...

Documents

listing agreement

listing obligations

specified securities

listed entityimplement

lodr regulations

hb of sebi act

disclosure of change

sebi power