SEBI (LODR) Regulation, 2015 - Action points which Listed entities need to be observed

CS Nagesh Rudrakanthwar (Manager - Company Secretary & Legal At Reliance Industries Limited) (399 Points)

04 January 2016

With an aim to allaying the provisions of listing agreements with the provisions of Companies Act, 2013 and thereby enforcing the better corporate governance and disclosure requirements, SEBI issued the Securities and Exchange Board of India (Listing Obligation and Disclosure Requirements) Regulations, 2015 on 2nd September, 2015.

Earlier Listing agreement was the agreement between respective stock exchange and listed company where by listed company agrees to comply the provisions of listing agreement therefore it didn’t had any statutory recognition. However the section 21 of the Securities Contract Regulation Act, 1956 provided that – “where securities are listed on the application of any person in any recognized stock exchange, such person shall comply with the conditions of the listing agreement with the stock exchange”. Hence listing agreement got the statutory enforceability but there were no any separate regulation through which the obligations casted by the stock exchange were regulated. Also there were different listing agreements for debt and equity and different regulations for different classes of securities. SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 is the regulation whereby SEBI would directly regulate and obligate the listed entities to comply the provisions of SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015. Here it is called as (Listing Regulation).

This listing regulation would consolidate and streamline the provisions of existing agreements for different securities which are traded on different segments of capital markets via. Equity (including convertible) issued by entities listed on the main board of the stock Exchange, Small & Medium Enterprises Listed on SME Exchange & Institutional Platform, Indian Depository Receipt, Non-Convertible Redeemable Preference Shares, Non-Convertible Debt Instruments & Units Issues by Mutual Fund Schemes.

SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015. Would come into force on the 90th from the date of publication in the official gazette i.e. on 1st December, 2015. However the following provisions of SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 shall applicable from immediate effect.

1. Passing of ordinary resolution for instead of passing special resolution for all material RPT transactions provided that related parties abstain from voting on such resolution.

2. Reclassification of promoters holding as a public share holding under special circumstances.

Following are the action points which listed entities should observe for complying with the SEBI (LODR), 2015:

Heading	Regulation	Provision	Signed By	Time Limit
Appointment of Compliance Officer	6(1)	Listed entity shall appoint qualified company secretary as a compliance officer
RTA	7 (1),(2)	Listed companies shall appoint the share transfer agent or manage the share transfer facility in-house and all activities of physical transfer or electronic share transfer are maintained either in house or by registrar to issue to an issue and STA registered with SEBI.	Compliance officer of listed entity and STA
	7(3)	Submission of compliance certificate to exchange for the compliance of maintenance of physical or electronic share transfer activities in house or by registered to issue and STA registered with SEBI		Within one month of end of each half of the financial year
	7(4) & (5)	Any change or appointment of a new STA then listed company executes tripartite agreement if share transfer activity maintained outside. In case of in-house maintenance then agreement between listed entity and new STA		Intimate to stock exchange within 7 daysof entering into agreement
				Referred agreement in sub (4) shall be placed in subsequent general meeting
Preservation of Documents	9	Framing the policies for the preservation of documents which is duly approved by board of directors and shall classified into: a) Documents whose preservation permanent in nature b) Documents with preservation period not less than eight years after completion of eight years.
Grievance Redressal Mechanism	13(1) & (2)	Listed entity shall ensure that it is registered with SCORE or such other electronic platform or the system of the board so as to handle the grievances of investors in a manner as specified by the board
		Listed entity shall file with recognized stock exchange a statement giving no of complaints: • Pending at the beginning of the quarter • Received during the quarter • Disposed of during the quarter • Remained unresolved at the end of the quarter		Within 21 days from the end of the quarter
Formulating policy on material subsidiary	16(1) (c )	Listed entity shall formulate policy on material subsidiary (Material subsidiary means a subsidiary, whose income or net worth exceeds 20% of the consolidated income or net worth respectively, of the listed entity & its subsidiaries in its immediately preceding accounting year
Code of Conduct	17(5)	Board of directors shall lay down code of conduct for board of directors and senior management
Compliance certificate from CEO & CFO	17(8)	The CEO & CFO shall provide the compliance certificate to the board of directors as specified in part B of Schedule II
Risk Management	17(9)(a)	Listed entity shall lay down procedures to inform members of board of director about risk assessment & minimization procedures.
	17(9)(b)	Board of director shall frame, implement & monitor the risk management plan
Formation of Mandatory committees	18, 19, 20, 21	Every listed company shall constitute following mandatory committees: • Audit committee • Nomination & Remuneration committee • Stakeholder and relationship committee • Risk Management committee
Vigil Mechanism	22	Listed entity shall have vigil mechanism for directors and employees to report genuine concerns
Related Party Transactions	23	Listed entity shall formulate a policy on materiality of RPT and dealing with RPT
Corporate governance requirements with respect to subsidiary of listed entity	24	At least one ID on the board of directors of the listed entity shall be a director on the board of directors of an unlisted subsidiary
Obligation with respect to ID	25	The ID of listed entity shall hold at least one meeting in a year, without the presence of non-independent directors & members of management and all the ID shall strive to present at such meeting
Disclosures and submission to exchange	27(2)(a), 27(2)(b)	Listed entity shall submit a quarterly compliance report on corporate governance	Either by Compliance officer or CEO of listed entity	Within fifteen days from the closure of quarter
		Details of all material transaction with related parties with report as specified in clause 27(2)(a)
Prior intimation	29(1), (2)	Prior intimation of the meeting of the board in which following proposals considered: • Financial results • Buy-back • Voluntary delisting of listed entity • Fund raising by way of further issue, right issue, ADR/GDR, FCCB, QIP, Debt issue, Preferential Issue or any other method and for determination of issue price • Declaration /recommendation of dividend, issue of convertible securities including convertible debentures or of debentures right to subscribe to equity shares or passing over of dividend. • Declaration /recommendation of bonus securities		At least two days in advance excluding date of intimation and meeting
	29(3)	Listed entity shall give intimation to stock exchange before any of the proposal placed before board • Any alteration in the nature of securities, rights, privileges of the holders thereof • Any alteration in date on which date the interest on debenture or bond or the redemption amount.		Before eleven days before placed before the board.
Disclosure of events or information	30 (1),(2) & (3)	Disclose to stock exchange of all events as specified in part A ( It includes Para A and Para B ) of Schedule III		Not later than 24 hrs of occurrence of event or information. In case the intimation is given after 24 hrs of the occurrence of the event or information , listed entity shall provide explanation for delay along with disclosure
	30(4)(ii)	Listed entity shall frame policy for determination of materiality based on the criteria specified in sub regulation , duly approved by the board which shall be disclosed on companies website
	30(5)	Shall authorize one or more KMP for determining materiality of event or information for the purpose of making disclosure to stock exchange and contact details of such personnel shall be disclosed to stock exchange
	30(6)	Outcome of board meeting: Disclosure with respect to events specified in Sub-Para 4 of Para A of Part A of Schedule III		Within 30 minutes from the conclusion of the meeting
	30(8)	All the events and information which has been disclosed to stock exchange shall be placed on companies website for minimum period of 5 years
Holding of Securities & shareholding pattern	31(1)	Submit to stock exchange a statement of holding of securities and shareholding pattern separately for each classes of securities: • in case of listing of securities • quarterly basis • Any capital restructuring which resulting in change exceeding 2 % of paid up capital.		1 day prior to listing of its securities. 21 days from the end of the quarter Within 10 days of capital restructuring
statement of deviation(s) or Variation(s)	32	Statement submits to exchange for public issue, right issue, preferential issue, etc indicating the details as given under sub regulation Statement as specified in sub regulation (1) shall be placed before the audit committee for review and then after submitted to exchange		Quarterly basis to stock exchange till such time the issue proceeds have been fully utilized or the purpose for which there proceeds were raised has been achieved.
Financial results	33	33(2)(b)/(d) – Financial Result shall be signed by the chairperson or managing director, or a whole time director or in the absence of all of them ; it shall be signed by any other director of the listed entity who is duly authorized by the board of directors to sign the financial results. 33(3) (a) the listed entity shall submit quarterly and year to date standalone financial results to the stock exchange - within 45 daysfrom the end of the quarter 33(3) (b) if the listed entity has subsidiaries, in addition to standalone financial results also submit quarterly / year-to- date consolidated financial results. 33 (3) (c) (I) unaudited financial result shall be accompanied by limited review report.	33(2)(b)/(d) – Financial Result shall be signed by the chairperson or managing director, or a whole time director or in the absence of all of them ; it shall be signed by any other director of the listed entity who is duly authorized by the board of directors to sign the financial results.	Within 45 days from the end of the quarter
		33 (3) (d) If the listed entity opts for submission of audited financial results, they shall be accompanies by audit report. In case of having subsidiaries, while submitting annual audited standalone financial results also submit annual audited consolidated financial results along with the audit report.		Within 60 days from the end of the financial year
		33 (3)(e) Audited financial result of last quarter shall be submitted along with the results of entire financial year
		33(3)(f) as a part of standalone statement or consolidated financial results, by way of a note, a statement of assets and liabilities as at the end of the half year.		Submit Half yearly
Publication of Financial results in news paper	47(3)	Financial results shall be published in at least one English language daily circulating in the whole or substantially the whole of India & in one daily newspaper published in the language of the region, where the registered office of the entity is situated also publish the same on company website		Within 48 hrs of conclusion of Board Meeting
Annual report	34	Listed entity submit annual return to stock exchange		Within 21 working days of it being approved and adopted in the AGM
Information Memorandum	35	Listed entity shall submit information memorandum to stock exchange in a manner as specified by the board
Documents and information to shareholders	36(2)	Listed entity shall send annual report to the holders of securities.		Not less than 21 days before the AGM
Record date or Date of closure of transfer books	42	Intimation of record date to all stock exchanges where its securities are listed for the purpose of: • Declaration of dividend • Issue of right or bonus share • Issue of share for conversion of debentures or any other convertible securities • Shares arising out of the rights attached to debentures or any other convertible securities • Corporate actions like merger, de-merger, splits, bonus shares, where stock derivatives available on the stock of listed entity or where listed entities stock form part of an index on which derivatives are available • Such other purposes as may be specified by the stock exchange(s).		At least 7 days in advance excluding the date of intimation & the record date
Voting by shareholders	44(3)	submission of voting results to stock exchange in a format specified by the board		Within 48 hours of the conclusion of General Meeting
Advertisement in newspaper	47	Listed entity shall publish following information in newspaper: a) Notice of board meeting where financial results shall be discussed. b) Financial results as specified by in regulation 33 along with modified opening(s) or reservation(s) if any, of auditor. Provided that if the listed entity has submitted both standalone and consolidated financial results, the listed entity shall publish consolidated financial results along –with (1) Turnover, (2) Profit before tax and (3) Profit after tax, on a stand-alone basis, as a foot note; and a reference to the paces, such as the website of listed entity & stock exchange(s), where the standalone result of the listed entity are available. c) Statements of deviation(s) or variations as specified in sub-regulation its explanation in directors report in annual report; d) Notice given by shareholders by advertisement Published in at least one English language national daily newspaper circulating in the whole or substantially the whole of India & in one daily newspaper published in the language of the region, where the registered office of the listed entity is situated.