AMENDMENTS TO SEBI (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENT) REGULATIONS, 2015
AMENDMENTS TO SEBI (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENT) REGULATIONS, 2015
Securities and Exchange Board of India (‘SEBI’ for short), in exercise of its powers conferred by Section 11, Section 11A(2) and Section 30 of Securities and Exchange Board of India Act, 1992 read with Section 31 of Securities Contracts (Regulation) Act, 1956 made the SEBI (Listing Obligations and Disclosure Requirement) Regulations, 2015. The Regulations have been structured to provide ease of reference by consolidating into one single document across various types of securities listed on the Stock exchanges. The main features of these regulations are-
The said regulations have been amended from time to time. Recently the said regulations have been amended vide Notification No. SEBI/LAD-NRO/GN/2022/103, dated 14.11.2022.
SEBI in its Board meeting held on 30.09.2022 discussed several proposals including the agenda to review the process for independent directors, appointment, re-appointment or removal, introducing the monitoring agency for overseeing of the utilization of the issues proceeds from the preferential issue and the Qualified Institutional Placements and requirement of obtaining NoC for scheme of arrangements involving such companies which have listed their non convertible securities and several other changes dealing with disclosures and financial results for NCS listed entities. The said proposals were incorporated in the sixth amendment rules.
Regulation 25 provides certain obligations on the part of independent directors. Regulation 25 (2A) provides that the appointment of independent director of a listed entity, shall be subject to the approval of shareholders by way of a special resolution.
The amendment inserted two new provisos to Regulation 25(2A). The newly inserted first proviso provides that where a special resolution for the appointment of an independent director fails to get the requisite majority of votes but the votes cast in favor of the resolution exceed the votes cast against the resolution and the votes cast by the public shareholders in favor of the resolution exceed the votes cast against the resolution, then the appointment of such an independent director shall be deemed to have been made under sub-regulation (2A).
The second proviso provides that an independent director appointed under the first proviso shall be removed only if the votes cast in favor of the resolution proposing the removal exceed the votes cast against the resolution and the votes cast by the public shareholders in favor of the resolution exceed the votes cast against the resolution.
Comments on reports of monitoring agency
Regulation 32(6) requires that if the listed entity has appointed a monitoring agency to monitor utilization of proceeds of a public or rights issue the listed entity shall submit to the stock exchange(s) any comments or report received from the monitoring agency within 45 days from the end of each quarter.
Regulation 32(7) provides that if the listed entity has appointed a monitoring agency to monitor the utilization of proceeds of a public or rights issue the monitoring report of such agency shall be placed before the audit committee on a quarterly basis, promptly upon its receipt.
The amendment requires to substitute the words ‘public issue or rights issue or preferential issue or qualified institutions placement’ for the words ‘public or rights issue’.
52(1). The listed entity shall prepare and submit un-audited or audited quarterly and year to date standalone financial results on a quarterly basis in the format as specified by the Board within 45 days from the end of the quarter, other than last quarter, to the recognized stock exchange(s):
Provided that for the last quarter of the financial year, the listed entity shall submit un-audited or audited quarterly and year to date standalone financial results within 60 days from the end of the quarter to the recognized stock exchange(s):
Provided further that in case of entities which have listed their debt securities, a copy of the financial results submitted to stock exchanges shall also be provided to Debenture Trustees on the same day.
(2) The listed entity shall comply with following requirements with respect to preparation, approval, authentication and publication of annual and quarterly financial results:
Provided that in case of issuers whose accounts are audited by the Comptroller and Auditor General of India, the report shall be provided by any practising Chartered Accountant
Provided that issuers, which are required to be audited by the Comptroller and Auditor General of India under applicable law, shall submit:
Provided that in case of entities which have listed their equity shares and debt securities, a copy of the financial results submitted to stock exchanges shall be provided to Debenture Trustees on the same day the information is submitted to stock exchanges.
(2A) The listed entity shall submit a statement of assets and liabilities and statement of cash flows as at the end of every half year, by way of a note, along with the financial results.
(3) (a) The annual audited financial results shall be submitted along with the annual audit report and Statement on Impact of Audit Qualifications applicable only for audit report with modified opinion.
Provided that, in case of audit reports with unmodified opinion, the listed entity shall furnish a declaration to that effect to the Stock Exchange(s) while publishing the annual audited financial results.
(b) & (c) - omitted
(d) The applicable format of Statement on Impact of Audit Qualifications (for audit report with modified opinion) shall be in the manner as specified by the Board.
(4) The listed entity, while submitting quarterly and annual financial results, shall disclose the following line items along with the financial results:
Provided that if the information mentioned in sub-regulation (4) above is not applicable to the listed entity, it shall disclose such other ratio/equivalent financial information, as may be required to be maintained under applicable laws, if any.
(6) The listed entity which has listed its non convertible redeemable preference shares shall make the following additional disclosures as notes to financials:
Provided that disclosure on securities premium account balance may be provided only in the year in which non convertible redeemable preference shares are due for redemption;
Provided that in case the dividend has been deferred at any time, then the actual date of payment shall be disclosed;
Provided that in case a listed entity is planning a fresh issuance of shares whose end use is servicing of the non convertible redeemable preference shares (whether dividend or principle redemption), then the same shall be disclosed whenever the listed entity decided on such issuances.
(7) The listed entity shall submit to the stock exchange(s), along with the quarterly financial results, a statement indicating the utilization of the issue proceeds of nonconvertible securities, in such format as may be specified by the Board, till such proceeds of issue have been fully utilized or the purpose for which the proceeds were raised has been achieved.
(7A) The listed entity shall submit to the stock exchange(s), along with the quarterly financial results, a statement disclosing material deviation(s) (if any) in the use of issue proceeds of non-convertible securities from the objects of the issue, in such format as may be specified by the Board, till such proceeds have been fully utilized or the purpose for which the proceeds were raised has been achieved.
(8) The listed entity shall, within two working days of the conclusion of the meeting of the board of directors, publish the financial results and the line items referred to in sub-regulation (4), in at least one English national daily newspaper circulating in the whole or substantially the whole of India:
Provided that if the listed entity has submitted both standalone and consolidated financial results, to the stock exchange(s), it shall publish consolidated financial results along with the line items referred to in sub-regulation (4), in the newspaper.
Draft scheme of arrangement
The requirements as specified Regulation 59A and 94A shall not apply to a restructuring proposal approved as part of a resolution plan by the National Company Law Tribunal under section 31 of the Insolvency Code, subject to the details being disclosed to the recognized stock exchanges within one day of the resolution plan being approved.
Unclaimed non convertible securities
Regulation 61A provides that the listed entity shall not forfeit unclaimed interest/dividend/redemption amount. If the said amount has not been claimed within 30 days from the due date of interest/ dividend / redemption payment, a listed entity shall within 7 days from the date of expiry of the said period of 30 days, transfer the amount to an escrow account to be opened by the listed entity in any scheduled bank. Any amount transferred to the escrow account that remains unclaimed for 7 years shall be transferred to the ‘Investor Education and Protection Fund’ constituted in terms of section 125 of the Companies Act, 2013.
The amendment inserted a proviso to Regulation 61A (3). This proviso provides that the listed entities which do not fall within the definition of ‘company’ under the Companies Act, 2013 and the Rules made there under, any amount in the escrow account that remains unclaimed for 7 years shall be transferred to the Investor Protection and Education Fund created by the Board in terms of section 11 of the Act.
Insertion of Regulation 94A
The amendment inserted a new Regulation 94A dealing with draft scheme of arrangement in case of entities that have listed their non-convertible debt securities or non-convertible redeemable preference shares.
According to Regulation 94A-
The amendment substituted the Schedule XI dealing with the fee payable in respect of draft scheme arrangement. The fee payable is-
An entity with only listed non-convertible debt securities or non-convertible redeemable preference shares, shall remit a fee at the rate of 0.1% of the amount of outstanding debt of the listed/ transferee/ resulting company, whichever is higher, post the sanction of the scheme by the National Company Law Tribunal, subject to the maximum of Rs.5 lakhs.
By: Mr. M. GOVINDARAJAN - November 23, 2022