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OBLIGATIONS OF AN NSE PRIME COMPANY

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OBLIGATIONS OF AN NSE PRIME COMPANY
Mr. M. GOVINDARAJAN By: Mr. M. GOVINDARAJAN
September 23, 2022
All Articles by: Mr. M. GOVINDARAJAN       View Profile
  • Contents

Obligations

The National Stock Exchange of India Limited Prime Registered Norms, 2021 (‘Norm’ for short) prescribes that an NSE Prime Company (‘Company’ for short) shall ensure that each of its Promoters, Promoter Group entities, Directors and Key Managerial Personnel complies with the responsibilities or obligations.

Compliance Officer

The Company shall appoint a qualified Company Secretary as the Compliance Officer with respect to the norm and NSE Prime Registration Agreement (‘Agreement’ for short).   The Compliance Officer shall ensure that all the obligations are complied with.  The Compliance Officer is to co-ordinate with and reporting to NSE with respect to these compliances in the manner specified from time to time.  The Compliance Officer shall also to ensure that the correct procedures have been followed and they are adequate, accurate, explicit, timely and presented in simple language.

General Obligations

Every Company shall file all reports, statements, documents, filings and other information on the electronic platform as specified by NSE from time to time, and also publish copies of the same on a clearly marked section of such Company’s official website.   NSE may publish on its website copies of any reports, statements, documents, filings and other information provided by a Company in accordance with these Norms and the NSE Prime Registration Agreement.

Special obligations

Minimum Public shareholding

Every Company shall maintain Public Shareholding of at least 40%.

Board of Directors

The composition of Board of Directors shall be as follows-

  • The Board of Directors shall consist of a minimum of 8 Directors and a maximum of 15 Directors.
  • The Chairperson of the Board of Directors shall be a Non-Executive Director.
  • The Chairperson of the Board of Directors shall not be a relative of the Managing Director or Chief Executive Officer of the company.
  • If the public shareholding is in excess of 50% more than half of the Board of Directors shall comprise Independent Directors and in case of any fractions, the same shall be rounded to the higher number.
  • If the public shareholding is 50 % or less, at least half of the Board of Directors shall comprise Independent Directors and in case of any fractions, the same shall be rounded to the higher number.
  • With effect from 01.07.2025, at least 2 Directors shall be women, with at least 1 such woman Director also being an Independent Director.

Quorum

The quorum for meetings of the Board of Directors shall be at least half of the total strength of the Board of Directors, and shall include at least half of the Independent Directors who are members of the Board of Directors.  

Meeting at a shorter notice

In case a meeting of the Board of Directors called at shorter notice to transact urgent business, in case of absence of at least half of the total number of Independent Directors from such a meeting of the Board of Directors, decisions taken at such a meeting shall be circulated to all the Directors and shall be final only on ratification thereof by at least 2 of the Independent Directors who are members of the Board of Directors.

Casual vacancy

If the office of any Director is vacated prior to the expiry of the term of office in the normal course, the resulting casual vacancy may be filled by the Board of Directors at a meeting of the Board, subject to the conditions stipulated in these Norms and the NSE Prime Registration Agreement, and the person so appointed shall hold office only up to the date up to which the director in whose place he/she is appointed would have held office if it had not been vacated or the date of the next general meeting of the Company, whichever is earlier.

Audit Committee

At least three-fourth of the members of the Audit Committee shall be Independent Directors.   The Chairperson of the Board of Directors shall not be eligible to be the Chairperson of the Audit Committee.  The quorum for the Audit Committee meeting shall be at least half of the strength of the Audit Committee.  In a year one Audit Committee meeting shall dedicate to deal with the issues other than financial accounts.

Internal Audit

The Company shall appoint one of its employees as the person in-charge of internal audit, which shall have a direct reporting line to the Audit Committee, with a dotted reporting line to the Managing Director for administrative matters only.  The person in-charge of internal audit shall not be dismissed or suspended or removed without the consent of the Audit Committee.

Nomination and Remuneration Committee

This Committee shall have at least one woman member.  The quorum for this Committee meeting is at least half of the strength of the Committee and shall include at least half of the independent directors.

Stakeholders Relationship committee                                           

An independent director shall be the Chairman of this Committee.  The meeting shall be held between 45 to 60 days prior to the date of the annual general meeting of the Company, at which meeting the Significant Shareholders or their nominees shall be entitled to participate and communicate their concerns and suggestions to this Committee.  The quorum for this Committee meeting is at least half of the strength of the Committee and shall include at least half of the independent directors.

The Committee may, at its option, invite the Senior Management of the Company to attend the meeting.  The proceedings of the meeting shall be published in the website of the Company within 7 days of the meeting. 

Independent Directors Committee

The Company shall constitute a Committee of Independent Directors containing only independent directors.  The members of the Committee may select a Chairperson among themselves.  The Committee shall have one meeting every half year.  The meeting shall be conducted on the same day, when the meeting of Board of Directors is convened.  No non independent director and senior management shall participate in the said meeting.  The Committee shall communicate the concerns and suggestions to the Board at the next Board meeting either verbally or in writing.

Risk Management Committee.

The Chairperson of the Board of Directors shall not be eligible to be a Member of this Committee.  The Chairperson of this Committee shall be an independent director.  Any member of Managing Committee, Executive Committee, Credit Committee and Investment Committee shall not be the member of this Committee.

The quorum for this Committee meeting is at least half of the strength of the Committee and shall include at least half of the independent directors.

Obligations with respect to Directors

The Board of Directors shall, within 24 hours of nominating a Director, disclose the reasons for such nomination, particularly in relation to how the skill-set of the proposed Director shall-

  • complement the overall skill sets of the Board of Directors; and
  •  advance the Company’s overall objectives, by uploading such information on its website and by intimating the same to all Exchanges where the Company is listed, as an announcement.

The Company shall ensure that it shall not appoint or reappoint as Director any person who is then serving as a Director in more than 4 public limited companies, whether incorporated in India or elsewhere, that are not Affiliates of such Company.

A Director of the Company shall not serve as a Director at the same time in more than 5 public limited companies.

The Company shall not appoint or reappoint any person who is then serving as a member of more than 10 Committees across all public limited companies, in which he is a director.  With effect from 01.07.2028, a Director of a Company shall not serve as member of more than 10 Committees or act as chairperson of more than 5 Committees across all public limited companies, in which he is a Director.

Executive Director

The company shall not appoint or reappoint any person who is then serving as an Executive Director of any other company, as Executive Director. 

With effect from 01.07.2028, an Executive Director of  a Company  shall not serve as an Executive Director of any other company and a Director in more than 1 (one) other public limited company which is not affiliate of the Company.

Independent director

The Company shall not appoint or reappoint as Independent Director any person who has held such office in that Company for an aggregate period of more than 10 years.  With effect from 01.07.2028, no Independent Director of that Company shall have held such office for an aggregate period of more than 10 years.

Obligations with respect to statutory auditors

Every Company shall disclose on its official website its policy for the appointment of statutory auditors.  Every Company shall specify in the terms of engagement with its statutory auditors that neither the statutory auditor nor any of its Affiliates shall appoint any of the Directors or employees of the Company who are in financial reporting oversight roles to any position, such prohibition extending for a period of 3 years from the date of termination of the last engagement of the relevant firm as statutory auditors of the NSE Prime Company.

Breach of obligations

In the event that NSE is of the view that a Company and/or any of its Promoters, Promoter Group entities, Directors or Key Managerial Personnel, as the case may be, has breached any of the obligations contained in these Norms and/or the NSE Prime Registration Agreement, NSE shall seek an explanation / clarification from the Company alleged to have committed such breach in accordance with the Standard Operating Procedure (SOP) to be published by NSE.

Voluntary exit

The Company may voluntarily exit from the NSE Prime Group.  For this purpose the Compliance Officer an undertaking is to be given stating that-

  • the Company has complied with all requirements and has discharged all obligations arising out of these Norms and the NSE Prime Registration Agreement until the day on which such written request is made; and
  • the Company shall comply with all requirements and shall discharge all obligations arising out of these Norms and the NSE Prime Registration Agreement, until the day on which NSE excludes the NSE Prime Company from the NSE Prime group.

Exemption

The Prime Committee may, for reasons recorded in writing, upon an application made by one or more Company on behalf of themselves or their industry, grant exemption from compliance of any of the obligations under these Norms or the NSE Prime Agreement, subject to such conditions as the Prime Committee deems fit to impose in the interests of investors in securities of the NSE Prime group.

Reference to Arbitration

All claims, differences or disputes between an Applicant / Company and the NSE arising out of or in relation to these Norms or the NSE Prime Registration Agreement or with reference to anything incidental thereto or in pursuance thereof or relating to their validity, construction, interpretation, fulfillment of the rights, obligations and liabilities of such an Applicant / Company and/or NSE that have not been resolved within a period of 45 (forty-five) days from the date of a written notice raising such claim, difference or dispute, shall be submitted to arbitration in accordance with the provisions of the Arbitration and Conciliation Act, 1996

 

By: Mr. M. GOVINDARAJAN - September 23, 2022

 

 

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