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Authored by Aishwarya Lakshmi V.M

SEBI at its action-packed Board Meeting held on 25th March 2021 approved several changes to the securities law regime in India. One of the crucial regulations within the domain of SEBI is the SEBI (Listing Obligation and Disclosure Requirement) Regulations, 2015 [hereinafter, LODR]. With a view to maintain consistency throughout LODR, to harmonize it with the Companies Act, 2013 and to strengthen corporate governance practices in addition to easing compliance burden on listed entities, it approved several amendments to LODR. Some of the key amendments are discussed hereunder.

I. Formulation of Dividend Distribution Policy:

Existing Law: As per Regulation 43A of the existing LODR Regulations, the top 500 listed entities based on market capitalisation are required to formulate a dividend distribution policy inter alia including details about the circumstances when the shareholders may or may not expect dividend, financial parameters, internal and external factors that may be considered at the time of declaring dividend etc. and disclose the same in their annual report and website. The earlier regulation also permitted compliance with this provision on a voluntary basis.

Approved Amendment: This requirement under Regulation 43A is proposed to be extended to the top 1000 listed entities based on market capitalisation.

II. Disclosure of Financial Results:

Existing Law: A conjoint reading of Regulation 30, 33 and Clause 4 of Para A of Part A of Schedule III stipulates that financial results of a listed entity ought to be disclosed to the Stock Exchange within 30 minutes from the closure of the meeting, where such financial results were considered.

Approved Amendment: Considering a scenario that a single Board Meeting is held on more than one day, SEBI has approved the amendment wherein the disclosure requirement with regard to financial results shall be complied with by the listed entity within 30 minutes of end of the board meeting for the day on which the financial results are considered.

III. Continuous Applicability:

Existing Law: The applicability of various provisions of LODR is based on criteria including market capitalization, paid up capital and net-worth thresholds. These are monetary figures that keep varying year-on-year.

Approved Amendment: SEBI has approved an amendment wherein those provisions of LODR which become applicable to a listed entity based on the threshold of market capitalization shall continue to be applicable even if the entity falls below the prescribed threshold. Some provisions that become attracted based on market capitalization include –

a. Formulation of dividend distribution policy.

b. One-way live webcast of proceedings of AGM.

c. Composition of the Board, including Independent Woman Director and Non-executive Chairperson.

d. Quorum for Board Meetings.

e. Risk Management Committee.

Also SEBI has approved an amendment that wherever the provisions become applicable based on Paid up share capital and net-worth thresholds, such provisions shall continue to apply unless the paid-up capital or net-worth falls and continues to remain below the threshold for a consecutive period of 3 years.

IV. Name Change for Listed Entity:

Existing Law: Regulation 45 of the LODR elaborates a detailed procedure where the approval of Stock Exchange has to be obtained for change of name of the listed entity.

Approved Amendment: The requirement to obtain approval of the stock exchange for change of name is dispensed with.

V. Streamlining timelines for submission of periodic reports:

Existing Law: As per Regulation 27(2) of LODR, the report on Corporate Governance has to be filed within 15 days from the end of each quarter, while as per Regulation 13(3) and 31(1), the statement on investor complaints and the shareholding pattern ought to be filed within 21 days from the end of each quarter.

Approved Amendment: SEBI has approved an amendment such that all the aforementioned periodic disclosures / reporting shall be made within 21 days from the end of each quarter.

VI. Frequency of 40(9) Certificate:

Existing Law: As per Regulation 40(9), the listed entity shall ensure that the share transfer agent or the in-house share transfer facility provider, shall produce a certificate from a practicing company secretary within one month of the end of each half of a financial year, certifying that all certificates have been issued within thirty days of the date of lodgment for transfer, sub-division, consolidation, renewal, exchange or endorsement of calls/allotment monies.

Approved Amendment: The Board has approved an amendment wherein this half yearly compliance has now been made as an annual compliance.

VII. Dispensing certain newspaper advertisements:

Existing Law: As per Regulation 47 (1) of LODR, notice of meeting where financial results are to be discussed and quarterly statement on deviation or variation of use of fund ought to be advertised in one English newspaper and one regional language newspaper.

Approved Amendment: This requirement to advertise the notice of the meeting and quarterly statement on deviation has been dispensed with.

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