SEBI (Listing Obligations and Disclosure Requirements) (Fifth Amendment) Regulations, 2021

SECURITIES AND EXCHANGE BOARD OF INDIA
NOTIFICATION
Mumbai, the 7th September, 2021

SECURITIES AND EXCHANGE BOARD OF INDIA (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS) (FIFTH AMENDMENT) REGULATIONS, 2021

No. SEBI/LAD-NRO/GN/2021/47. - In exercise of the powers conferred by section 11, sub-section (2) of section 11A and section 30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992) read with section 31 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956), the Board hereby makes the following regulations to further amend the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, namely:-

1. These regulations may be called the Securities and Exchange Board of India (Listing Obligations and Disclosure  Requirements) (Fifth Amendment) Regulations, 2021.

2. They shall come into force on the date of their publication in the Official Gazette.

3. In the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015,-
I. in regulation 2, in sub-regulation (1), 

a. clause (t), shall be substituted with the following, namely, -

“‘non-convertible debt securities’ means ‘debt securities’ as defined under the Securities and Exchange Board of India (Issue and Listing of Non-Convertible Securities) Regulations, 2021;”

b. clause (u) shall be substituted with the following, namely, -
“‘non-convertible redeemable preference shares’, ‘‘non-convertible securities’, ‘perpetual debt instrument’ and ‘perpetual non-cumulative preference share’ shall have the same meaning asassigned to them in the Securities and Exchange Board of India (Issue and Listing of NonConvertible Securities) Regulations, 2021;” 

c. in clause (v), the words, numbers and symbols “clause (j) of sub-regulation (1) of regulation 2 of the Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008, clause (p) of sub-regulation (1) of regulation 2 of the Securities and Exchange Board of India (Issue and Listing of Non-Convertible Redeemable Preference Shares) Regulations, 2013” shall be substituted with the words, numbers and symbols “clause (y) of sub-regulation (1) of regulation 2 of the Securities and Exchange Board of India (Issue and Listing of NonConvertible Securities) Regulations, 2021”.

II. in regulation 3, 

a. in sub-regulation (1), clause (b) shall be substituted with the following, namely, -

“(b) non-convertible securities;”

b. after sub-regulation (2), the following new sub-regulation shall be inserted, namely, -

“(3) The provisions of these regulations which become applicable to listed entities on the basis of the criterion of the value of outstanding listed debt securities shall continue to apply to such entities even if they fall below such thresholds as mentioned in sub-regulation (1A) of regulation 15.”

III. in Chapter IV, in the heading, the word “A” shall be inserted after the words “OBLIGATIONS OF” and the words “AND NON-CONVERTIBLE DEBT SECURITIES” shall be inserted after the words “SPECIFIED SECURITIES”.
IV. in regulation 15,

a. after sub-regulation (1), the following new sub-regulation shall be inserted, namely, -
“(1A) The provisions of this regulation and regulation 16 to regulation 27 of this chapter shall apply to a listed entity which has listed its non-convertible debt securities and has an outstanding value of listed non-convertible debt securities of Rupees Five Hundred Crore and above: 

Provided that in case an entity that has listed its non-convertible debt securities triggers the specified threshold of Rupees Five Hundred Crore during the course of the year, it shall ensure compliance with these provisions within six months from the date of such trigger:

Provided further that these provisions shall be applicable to a ‘high value debt listed entity’ on a ‘comply or explain’ basis until March 31, 2023 and on a mandatory basis thereafter.

Explanation (1)- The entities referred in the first proviso to sub-regulation (1A) of regulation 15 are referred to as ‘high value debt listed entities’ for the purpose of this chapter.

Explanation (2) – The ‘high value debt listed entities’ on the date of notification of this amendment would be determined on basis of value of principal outstanding of listed debt securities as on March 31, 2021.

Explanation (3) – ‘Comply or explain’ for the purpose of the second proviso to sub-regulation (1A) of regulation 15 shall mean that the entity shall 18ecogniz to comply with the provisions and achieve full compliance by March 31, 2023. In case the entity is not able to achieve full compliance with the provisions, till such time, it shall explain the reasons for such noncompliance/ partial compliance and the steps initiated to achieve full compliance in the quarterly compliance report filed under clause (a), sub-regulation (2) of regulation 27 of these regulations.

Explanation (4) –

(a) In case of a ‘high value debt listed entity’ that is a Real Estate Investment Trust (REIT), the Board of the Manager of the Real Estate Investment Trust (REIT), shall comply with regulation 15 to regulation 27 of these regulations related to corporate governance;

(b) In case of a ‘high value debt listed entity’ that is an Infrastructure Investment Trust (InvIT), the Board of the Investment Manager of the Infrastructure Investment Trust (InvIT), shall comply with regulation 15 to regulation 27 of these regulations related to corporate governance.”

b. in sub-regulation (2A), the words “or a ‘high value debt listed entity’” shall be inserted after the words “listed entity”.
c. in sub-regulation (2B), the words “or a ‘high value debt listed entity’” shall be inserted after the words “listed entity”.

V. in regulation 16, in sub-regulation (1), in clause (b), the following shall be inserted after sub-clause (viii), namely, -

“Explanation- In case of a ‘high value debt listed entity’:

(a) which is a body corporate, mandated to constitute its board of directors in a specific manner in accordance with the law under which it is established, the non- executive directors on its board shall be treated as independent directors; 

(b) which is a Trust, mandated to constitute its ‘board of trustees’ in accordance with the law under which it is established, the non-employee trustees on its board shall be treated as independent directors.”

VI. in regulation 21, sub-regulation (5) shall be substituted with the following, namely, -

“(5) The provisions of this regulation shall be applicable to: 

i. the top 1000 listed entities, determined on the basis of market capitalization as at the end of the immediate preceding financial year; and,

ii. a ‘high value debt listed entity’.”

VII. in regulation 23, in sub-regulation (9), the following proviso shall be inserted, namely, -

“Provided that a ‘high value debt listed entity’ shall submit such disclosures along with its standalone financial results for the half year.”

VIII. in regulation 25, after sub-regulation (11), the following new sub-regulation shall be inserted, namely, -

“(12) A ‘high value debt listed entity’ shall undertake Directors and Officers insurance (D and O insurance) for all its independent directors for such sum assured and for such risks as may be determined by its board of directors.”
IX. in regulation 26, in sub-regulation (1), in clause (a), the words and symbol “, ‘high value debt listed entities’” shall be inserted after the words “foreign companies”.

X. in Chapter V, in the heading, the words “DEBT” and “OR NON-CONVERTIBLE REDEEMABLE PREFERENCE SHARES OR BOTH” shall be omitted.

XI. in regulation 49,
a. sub-regulation (1) shall be substituted with the following, namely, -

“(1) The provisions of this chapter shall apply only to a listed entity which has listed its nonconvertible securities on arecognised stock exchange in accordance with Securities and Exchange Board of India (Issue and Listing of Non-Convertible Securities) Regulations, 2021.”

b. sub-regulation (2) shall be omitted.

c. the existing Explanation (1) shall be substituted with the following, namely,-

“Explanation (1) - For the purpose of this chapter, if the listed entity has listed its non-convertible redeemable preference shares, perpetual non-cumulative preference shares or instruments of nature similar to perpetual non-cumulative preference shares, the reference to “interest” in this chapter shall be read as “dividend”.”

d. the existing Explanation (2) shall be substituted with the following, namely,-
“Explanation (2) – For the purpose of this chapter, “default” shall mean non-payment of interest/dividend or principal amount in full on the pre-agreed date and shall be recognized at the first instance of delay in servicing of any interest/dividend or principal amount.”

XII. in regulation 50,

a. sub-regulation (1) shall be substituted with the following, namely, -
“(1) The listed entity shall give prior intimation to the stock exchange of at least two working days in advance, excluding the date of the intimation and the date of the meeting of the board of directors, about the Board meeting in which any of the following proposals is to be considered: 

(a) an alteration in the form or nature of non-convertible securities that are listed on the stock exchange or in the rights or privileges of the holders thereof;

(b) an alteration in the date of the interest/ dividend/ redemption payment of non-convertible securities;

(c) financial results viz. quarterly or annual, as the case may be; 

(d) fund raising by way of issuance of non-convertible securities; or

(e) any matter affecting the rights or interests of holders of non-convertible securities.”

b. sub-regulation (2) shall be substituted with the following, namely, -

“(2) The listed entity shall also intimate the stock exchange not later than the date of commencement of dispatch of notices, in case of:

(a) any annual general meeting or extraordinary general meeting that is proposed to be held for obtaining shareholder approval for the proposals at clauses (c) and (d) under sub-regulation (1) of this regulation;

(b) any meeting of the holders of non-convertible securities in relation to the proposal at clause (e) of sub-regulation (1) of this regulation.”

c. sub-regulation (3) shall be omitted.

XIII. in regulation 51,

a. in sub-regulation (1), the words “of non-convertible preference shares or redemption of nonconvertible debt securities or redeemable preference shares” shall be substituted with “or redemption of non-convertible securities”.

b. the Explanation in sub-regulation (1) shall be substituted with the following, namely, -

“Explanation – The expression ‘promptly inform’, shall imply that the stock exchange shall be informed as soon as reasonably possible but not later than twenty-four hours from the date of occurrence of the event or receipt of information. In case the disclosure is made after twenty-four hours of the date of occurrence of the event or receipt of information, the listed 
entity shall, along with such disclosures provide an explanation for the delay.”

c. in sub-regulation (2), the words “issued or is issuing non-convertible debt securities and/or non-convertible redeemable preference shares” shall be substituted with the words “listed non-convertible securities”.

d. after sub-regulation (2), the following new sub-regulation shall be inserted, namely, -

“(3) The listed entity shall disclose on its website, all such events or information which have been disclosed to the stock exchange(s) under this regulation and such disclosures shall be hosted on the website of the listed entity for a minimum period of five years and thereafter as per the archival policy of the listed entity, as disclosed on its website.”

XIV. in regulation 52,

a. sub-regulation (1) along with the proviso, shall be substituted with the following, namely, -

“(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 forty- five days from the end of the quarter, other than last quarter, to the 20ecognized stock exchange(s):

Provided 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 the information is submitted to stock exchanges.”

b. in sub-regulation (2), the words “half yearly” shall be substituted with the word “quarterly”.

c. in sub-regulation (2), clause (a) and the proviso under clause (a) shall be substituted with the following, namely, -

“(a) Un-audited financial results on quarterly basis shall be accompanied by limited review report prepared by the statutory auditors of the listed entity, in the format as specified by the Board:

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.”

d. in sub-regulation (2), in clause (b), the words and symbol “Half-yearly” shall be substituted with the words “The quarterly”.

e. in sub-regulation (2), in clause I, the words and symbol “half-yearly” shall be substituted with the word “quarterly”.

f. in sub-regulation (2), clause (d) shall be substituted with the following, namely,-

“(d) The annual audited standalone and consolidated financial results for the financial year shall be submitted to the stock exchange(s) within sixty days from the end of the financial year along with the audit report:

Provided that issuers, who are being audited by the Comptroller and Auditor General of India, shall adopt the following two step process for disclosure of the annual audited financial results:

(i) The first level audit shall be carried out by the auditor appointed by the Comptroller and Auditor General of India, who shall audit the financials of the listed entity and such financial results shall be submitted to the Stock Exchange(s) within sixty days 
from the end of the financial year.

(ii) After the completion of audit by the Comptroller and Auditor General of India, the financial results shall be submitted to the Stock exchange(s)within nine months from the end of the financial year.” 

g. in sub-regulation (2), in clause I, the words and symbols “/limited review reports” shall be inserted after the words “audit reports”.

h. in sub-regulation (2), in clause I, the words “redeemable debentures” shall be substituted with the word “securities”.

i. in sub-regulation (2), after clause I, the following new clause shall be inserted, namely, -

“(f) The listed entity shall also submit as part of its standalone or consolidated financial results for the half year, by way of a note, a statement of assets and liabilities and statement of cash flows as at the end of the half year.”

j. in sub-regulation (4), the words “half yearly” shall be substituted with the word “quarterly”.

k. in sub-regulation (4), the following clauses shall be inserted after clause (l), namely, -

“(m) current ratio;

(n) long term debt to working capital;

(o) bad debts to Account receivable ratio;

(p) current liability ratio;

(q) total debts to total assets;

(r) debtors turnover;

(s) inventory turnover;

(t) operating margin (%);

(u) net profit margin (%);

(v) sector specific equivalent ratios, as applicable.”

l. in sub-regulation (4), in the first proviso, the words “asset cover” shall be omitted and the words and symbols “/housing finance companies” shall be inserted after the words “non banking financial companies”

For full notification please refer to the attached file.