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SEBI’s New Listing Regulations-Old Wine in New Bottle!!

The discipline of writing something down is the first step toward making it happen. Lee Iacocca

SEBI with the objective of bringing the basic framework governing the regime of Listed Entities

in line with the Companies Act, 2013 and at the same time compiling all the mandates of varied

SEBI Regulations/Circulars governing Equity as well as Debt segments of capital market under

the ambit of a single document, has notified SEBI (Listing Obligations and Disclosure

Requirements) Regulations (hereinafter referred as “LODR” or “Listing Regulations”) on

September 02, 2015, thereby giving all the listed entities and Stock Exchanges, a time span of

90 days to implement the said Listing Regulations.

However, following two provisions of the LODR have become applicable with immediate effect:

1. Passing of an ordinary resolution instead of special resolution in case of all material

related party transactions subject to related parties abstaining from voting on such

resolutions in terms of Regulation 23 (4);

2. Reclassification of Promoters as public shareholders under special circumstances

prescribed in Regulation 31A.

In the Regulations, while many of the existing provisions of the Listing Agreements have

been retained, but at the same time, many new obligations have also been cast on the Listed

Companies and their Boards/ KMPs.

The broad framework of Listing Regulations are outlined as follows:

Chapter I: Preliminary Section prescribing the scope of the Listing Regulations;

Chapter II: Guiding Principles Governing Disclosures & Obligations of Listed Entity

Chapter III: Common Obligations of Listed Entities

Chapter IV: Applicability on such entities whose specified securities are listed on the Stock

Exchanges

Chapter V & VI: Applicability on such entities whose Non-Convertible Debt Securities or Non-

Convertible Redeemable Preference Shares are listed on the Stock Exchanges

Chapter VII: Applicability on such entities whose Indian Depository Receipts are listed on the

Stock Exchanges

Chapter VIII: Applicability on such entities whose Securitised Debt Instruments are listed on

the Stock Exchanges

Specified Securities means equity shares and convertible securities;

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Chapter IX: Applicability on such entities whose Mutual Fund Units are listed on the Stock

Exchanges

Chapter X & XI: Duties & Obligations of the Recognized Stock Exchange(s) and provisions for

action in case of default

Chapter XII: Miscellaneous Provisions

In this Newswire, a gist of some important provisions of LODR vis-à-vis erstwhile Equity

Listing Agreement, in respect of Specified Securities (i.e. Chapters I to IV) are chalked

down as follows:

Regulations as

per SEBI Listing

Regulations, 2015

Premise of the said Regulation Remarks

CHAPTER I

Regulation 2 Contains various definitions, in

the context of listed entities &

listed securities

-

CHAPTER III

Regulation 7:

Share Transfer

Agent

Listed entities are required to submit

a compliance certificate duly certified

by both the Compliance Officer and

the authorized representative of

Share Transfer Agent to the Stock

Exchanges where their specified

securities are listed within 1 (one)

month of end of each half of the

financial year.

This Regulation is a

substitution of Clause 47 (c) of

the erstwhile Listing

Agreement. Earlier, this

Certificate was required to be

obtained from a PCS but as

per LODR, the same is

required to be certified by the

Compliance Officer of the

Listed Entity and authorized

representative of Share

Transfer Agent.

Regulation 9:

Preservation of

Documents

The listed company is required to

formulate a policy for preservation

of documents duly approved by the

Board of Directors, classifying them

in at least two categories as follows-

(a) documents whose

preservation shall be

permanent in nature;

(b) documents with

preservation period of not

less than eight years after

completion of the relevant

transactions.

This Regulation is, to some

extent, in line with the

provisions of Companies Act,

2013 and would ensure better

governance in the operations

of the company.

On combined reading of this

Regulation and Regulation 30

(8) of LODR, it is construed

that the policy is required to be

updated on the functional

website of the Company.

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(Maintenance of documents in

electronic mode will be deemed to be

complying with the aforesaid

regulation.)

Regulation 12:

Payment of

dividend, interest,

redemption or

repayment.

Every listed entity is required to

make use of E-payment facility as

approved by RBI for the purpose of

making payment of the following:

a. Dividends;

b. Interest;

c. Redemption or Repayment

Amounts.

In this regard, where it is not possible

to use e-payment facility then

‘payable-at-par warrants’ or cheques

may be issued.

If the amount of Dividend is Rs

1,500/- or more, the ‘payable-at-par

warrants’ or cheques shall be sent by

speed post

To ensure transparency on

one hand and on the other, in

the interest of shareholders at

large, this Regulation

facilitates extension of e-

payment facility in respect of

payment of dividend, interest,

Redemption or Repayment

Amounts.

Regulation 13:

Grievance

Redressal

Mechanism

Every listed company is required to

comply with the following:

a. To get itself registered on the

SCORES platform or any

other similar platform to

electronically handle the

investor complaints as

specified by the Board.

b. To file a Statement within 21

days from the end of the

relevant quarter to the stock

exchange pertaining to the

status of investors complaints

detailing the following

information:

No. of Complaints

Pending:

pending at the

beginning,

Received and

disposed of during

the quarter,

To ensure timely redressal of

investors’ complaints and

accountability to the

stakeholders at large, a new

provision pertaining to

submission of Pending

Investor Complaints Report to

the Stock Exchanges has

been inserted.

In the erstwhile Listing

Agreement, the information

pertaining to pending

investors complaints were

being submitted on a quarterly

basis only along with the

Financial Results required to

be filed with the stock

exchange within 45/60 days

(as the case may be) from the

end of the relevant quarter.

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Unresolved at the

end of the quarter;

c. The said statement is also

required to be placed before

the Board of Directors on a

quarterly basis.

CHAPTER IV

Regulation 16 to 27:

Corporate

Governance

The main highlights of the Corporate

Governance are outlined as follows:

(1) Provisions of Corporate

Governance are not applicable

on:

a. the listed entity having paid

up equity share capital not

exceeding Rs 10 Cr and

Networth not exceeding Rs

25 Cr , as on the last day of

the previous financial year;

b. the listed entity which has

listed its specified securities

on the SME Exchange.

(2) The Listed entities other than

mentioned in Para (1) above, are

required to:

a. Formulate a Policy on

material related party

transactions and dealing with

related parties.

b. Seek approval from

shareholders in General

Meeting by passing an

ordinary resolution for

approving material related

party transactions subject

to the stipulation that such

related parties shall be

abstained from voting on

such resolution.

With the intent to harmonize

the provisions with the

Companies Act, 2013, the

requirement of shareholder

approval for material related

party transaction has been

relaxed from Special

Resolution to Ordinary

Resolution.

The provisions of Cl 49 of

erstwhile Listing Agreement

have by and large been

replicated in the LODR as

well.

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Regulation 28:

Prior In Principle

approval

The Listed company, prior to

issuance of securities is needed to

obtain an In Principle approval

This provision is in line with Cl

24(a) of erstwhile Listing

Agreement.

Regulation 29:

Prior Intimations

The listed company is required to

give prior intimation to Stock

Exchange about the Board Meeting

held, from time to time, in the

following manner:

a. For Financial Results: At

least 5 days advance notice

(excluding the date of

intimation and date of

meeting) before

consideration of Financial

Results of the company.

b. For Corporate Actions: At

least 2 working days advance

notice (excluding the date

of intimation and date of

meeting) for considering the

proposals related to buyback

of securities, voluntary

delisting, fund raising

including determination of

issue price.

c. For alteration in the date of

payment of interest or

nomenclature of the

specified securities: At

least 11 working days’

advance notice for

considering the proposals

pertaining to:

(i) Change in

nomenclature of any

of the securities listed

on the Stock

Exchange;

(ii) Alteration in the date

on which,

The New Regulations,

have introduced some

additional business(es)

pertaining to which prior

intimation of Board Meeting is

required to be forwarded to the

Stock Exchanges and have

also prescribed the

computation of requisite

timeframe for sending the

afore stated prior intimation.

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the interest is

required to be paid

on debentures or

bonds;

the redemption

amount is required to

be paid on

redeemable shares

or debentures or

bonds.

Regulation 30:

Disclosure of

Events or

Information.

The main highlights of the Regulation

are outlined as follows:

a. The responsibility is cast on

the Board of listed entities, to

authorize one or more KMPs

for the purpose of

determining materiality of an

event or information and

making disclosures to the

stock exchange.

b. The details of above stated

authorized KMPs is required

to be disclosed to the Stock

Exchange(s) as well as on

the Company’s website.

c. Every Listed Company is

required to update material

developments on a regular

basis pertaining to the

disclosures made till the

event is resolved/closed and

host the said events along

with all updated information

on its website at least for a

period of 5 years.

d. Post 5 years, the requirement

of disclosure of such events

is as per the archival policy of

the Listed Company.

e. All events or information of

material subsidiaries are to

The provisions of this

Regulation have removed all

the ambiguities of Clause 36

of the erstwhile Listing

Agreement and addition of

provisions related to

explanation for delay in

disclosure would surely bring

more transparency in the

business affairs of the

Company.

Further, SEBI vide its Circular

dated September 09, 2015

clearly prescribed the

information needed to be

disclosed pertaining to

material transactions as

prescribed in Regulation 30 of

LODR. This circular brings in

more clarity of what to disclose

and will ensure uniformity in

disclosures made by listed

entities and shall come into

force after 90 days from the

date of issuance of LODR

Regulations.

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be disclosed by such listed

entity.

f. Material event/ information

are needed to be disclosed

as per the following timeline:

Within 24 hours from

the occurrence of the

events as specified in

Part - A of Schedule III

of the said regulations.

Within 30 minutes of

the conclusion of the

Board Meeting

regarding events

specified in sub-para 4

of Para A of Part A of

Schedule III of the said

regulations.

g. Any delay in filing disclosures

beyond the timeframe of 24

hours shall be accompanied

by an explanation for delay.

Regulation 31:

Holding of Specified

Securities and

Shareholding

pattern

(1) The listed entity shall submit

to the stock exchange(s) a

statement showing holding of

securities and shareholding

pattern separately for each

class of securities within 21

days from the end of

respective quarter.

(2) If the entity is listed on SME

Exchange, the above

statement is to be filed on a

half yearly basis within 21

days from the end of each

half year.

Regulation 31 has duly

replaced Clause 35 of the

erstwhile Listing Agreement.

Regulation 31(A):

Disclosures of

Class of

Shareholders and

Conditions For

Reclassification

The Stock Exchange may allow for

reclassification upon receipt of a

request from the listed company or

the concerned shareholder, along

with requisite evidence. The

reclassification will be allowed

To resolve the ambiguities as

to re classification, SEBI has

inserted this regulation to

place a regulatory framework

for re-classification of

promoters in listed companies

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subject to compliance of specified

conditions.

I. Reclassification of Promoter as

Public Shareholder

A. In case of change in Promoter:

When a new promoter replaces the

previous promoter subsequent to an

open offer or in any other manner, re-

classification shall be permitted

subject to approval of

shareholders in the general

meeting.

Shareholders need to specifically

approve whether the outgoing

promoter can hold any KMP position

in the company. In any case, the

outgoing promoter cannot act as

KMP for a period of more than 3

years from the date of

shareholders’ approval.

The outgoing promoter along with

the promoter group and persons

acting in concert cannot hold more

than 10% of the paid-up equity

share capital of the company and

shall not have any special rights

through any formal or informal

arrangements.

B. In case of Inheritance:

In case of

transmission/succession/inheritance

, the inheritor shall be classified as

promoter.

as public shareholders under

various circumstances.

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C. In case of Company not having

any identifiable promoter:

Existing promoters may be re-

classified as public in case the

company becomes professionally

managed and does not have any

identifiable promoter subject to the

approval of shareholders in a

general meeting. A company will be

considered as professionally

managed for this purpose, if:

i. No person or group along with

Persons Acting in Concert (PACs)

taken together holds more than

1% of the paid-up equity share

capital of the company (including

any convertibles/outstanding

warrants/ADR/GDR Holding).

ii.Mutual Funds/Banks/Insurance

Companies/ Financial

Institutions/FPIs can each hold up to

10% of the paid-up equity share

capital of the company (including any

convertibles/outstanding

warrants/ADR/GDR Holding).

iii. Erstwhile promoters and their

relatives may hold KMP position in

the company only subject to

shareholders’ approval and for a

period not exceeding 3 years from

the date of shareholders’ approval.

iv. The outgoing promoter shall not

have any special rights through any

formal or informal arrangements.

D. Other Conditions:

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(i)The outgoing promoter shall not,

directly or indirectly, exercise control

over the affairs of the company.

(ii) Increase in public

shareholding pursuant to re-

classification of promoters shall not

be counted towards achieving

compliance with minimum public

shareholding (MPS) requirement

under clause 40A of equity listing

agreement. (iii) The event of re-

classification may be disclosed as a

material event in accordance with the

listing agreement/regulations.

E. Power to relax the provisions

on a case to case basis:

SEBI may relax any condition for

reclassification in specific cases, if it

is satisfied about non-exercise of

control by the outgoing promoter or

its person acting in concert.

II. Reclassification of Public

Shareholder as a Promoter:

Then Public shareholder is required

to make an open offer in accordance

with the provisions of SEBI (SAST)

Regulations, 2011.

Regulation 32:

Statement of

deviation(s) or

variation(s)

(1) The listed entity shall

submit to the stock exchange the

following statement(s) on a

quarterly basis for public issue,

rights issue, preferential issue

etc. ,-

This Regulation has duly

replaced the provisions of

Clause 43A and Clause

49(VII)(I) of the erstwhile

Listing Agreement.

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(a) indicating deviations, if

any, in the

use of proceeds from the

objects stated;

(b) indicating category wise

variation between

projected utilisation of

funds and the actual

utilisation of funds.

(2) The above statement is

required to be reviewed by the Audit

Committee prior to its submission

and to be given till the issue

proceeds have been fully utilised

or the purpose for which these

proceeds were raised, has been

achieved ;

(3) The variation is required to be

furnished in the Directors Report as

well on an annual basis;

(4) If the listed company has

appointed any monitory agency

then the report/comments of such

agency is required to be

submitted

In case of SME listed entities, the

said Deviations statement is

required to be furnished on semi-

annual basis.

Regulation 33:

Financial Results

The listed company shall submit to

the stock exchange the following:

a. Audited or unaudited

quarterly and year-to-date

standalone financial results

to the stock exchange within

45 days from the end of

relevant quarter.

Regulation 33 has duly

replaced Clause 41 of the

erstwhile Listing Agreement.

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b. In case the listed company

has subsidiaries, then it may

submit also quarterly/ year-

to-date consolidated financial

results of its subsidiary.

c. Audited standalone financial

results along with the audit

report for the financial year,

within 60 days from the

relevant financial year.

In respect of companies listed on

SME Exchange, the quarterly results

needed to be submitted on a half

yearly basis and ‘year-to-date’

financial results are not required to

be filed to the stock exchanges.

Regulation 34:

Annual Report

1. The listed company is required to

submit the Annual Report to the

Stock Exchange within 21

working days of it being approved

and adopted in the Annual

General Meeting.

2. The disclosures as sought in the

Regulation are needed to be

incorporated in the Annual

Report.

While the erstwhile Listing

Agreement cast the obligation

for submission of Annual

reports to the Stock

Exchanges, as soon as they

were issued. However, this

Regulation mandates for filing

of Annual Reports within 21

working days of the AGM.

Regulation 35:

Annual Information

Memorandum

The annual Information

Memorandum is needed to be

submitted by the listed entities to the

stock exchange, in the manner as

may be specified by SEBI from time

to time.

The Regulations ensure

disclosure of updated

information to the

stakeholders at large on a

regular basis to facilitate them

to take well informed decision

pertaining to making

investment in the Company or

not.

Regulation 36:

Documents &

Information to

Shareholders

The listed company is required to

submit its Annual Report to the

shareholders in the following

manner:

For shareholders, who have their

Ids registered with the Company,

soft copy of the full Annual

Report;

The Annual Reports are

needed to be send to the

shareholders at least 21 days

before the AGM.

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For the ones who don’t have their

Ids registered, hard copy of the

statement containing salient

features, in terms of Sec 136 of

Companies Act 2013;

Hard copies of full Annual

reports, to the shareholders who

request for the same.

Regulation 37:

Draft Scheme of

Arrangement

Any listed company desirous of

undertaking a Scheme of

Arrangement shall prior to filing it

with High Court/ Tribunal, file the

same with the Stock Exchanges

and obtain a NOC/ Observation

Letter from the Exchange(s).

The Observation Letter or No-

objection Letter granted by the

stock exchange prior to

presenting scheme before the

Court or the Tribunal will be valid

for the period of 6 months from

the date of its issuance.

The Regulation prescribes

provisions in line with the

Circulars issued by SEBI on

February 4, 2013 and May 21,

2013 pertaining to No-

Objection for the draft scheme

of arrangement.

Regulation 38:

Minimum Public

Shareholding

All listed companies have to comply

with Minimum Public Shareholding

norms, as laid down in Rule 19(2)

and 19A of SCRR, in the manner

specified by SEBI from time to time.

While the erstwhile Cl 40A of

Listing Agreement even

mandated for the modes of

complying with MPS norms,

this Regulation, presently is

silent on the same.

Regulation 39:

Issuance of

Certificates or

Receipts/Letters/Ad

vices for securities

and dealing with

unclaimed

securities

(1) The listed company would be

required to issue certificates

or receipts or advices

pursuant to subdivision, split,

consolidation, renewal,

exchanges, endorsements,

issuance of duplicates

thereof or new certificates or

receipts or advices, as

applicable, in cases of loss or

old decrepit or worn out

certificates or receipts or

advices, as applicable within

a period of thirty days from

the date of such

lodgement.

The time period of 15 days for

issuance of certificates or

receipts on prescribed events

has been enhanced to 30

days.

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(2) The listed company is

required to submit the

information regarding loss of

share certificate and issue of

the duplicate certificate, to

the stock exchange within

two days of its getting

information.

Regulation 40:

Transfer or

transmission or

transposition of

securities.

The main highlights are outlined as

follows:

a. The Board of Directors of a

listed company may delegate

the power of transfer of

securities to a committee or

to compliance officer or to the

registrar to an issue and/or

share transfer agent.

b. The delegated authority is

required to review the

formalities relating to transfer

of securities atleast once on a

fortnightly basis and shall

report to the Board on

transfer of securities in each

meeting.

c. The listed company shall not

effect the transfer in

securities if the transferor

serves prohibitory order of a

competent court within 60

working of raising the

objection.

The Clause 12(c) of the

erstwhile listing agreement

doesn’t specify the time limit

for serving the prohibitory

order of the court which is

being clearly specified in this

regulation.

Further, the delegation of

authority will simplify the

provisions for the Company as

well.

Regulation 42:

Record Date or Date

of Closure of

Transfer Books

a. The listed entity is required to

intimate the record date/ book

closure date to all the concerned

Stock Exchanges at least 7

working days (excluding the date

of intimation and the record date)

before the record date/ closure of

transfer books.

b. The listed entity is required to

declare dividend/ cash bonuses

at least 5 working days (excluding

In the Regulations, it is

clarified that the requirement

of maintaining time lag of 30

days is between 2 Record

Dates or between 2 Book

Closures.

Accordingly, it is inferred that if

the Record date and Book

closure are needed to be

fixed, then the requirement of

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the date of intimation and the

record date) before the record

date fixed for that purpose.

c. There must be gap of minimum

30 days between two record

dates or two transfer book closure

dates.

maintaining 30 days’ time lag

would not be applicable.

Regulation 45:

Change in name of

the listed entity

(1) The listed company desirous to

change its name is required to file

an application for change in name

with ROC subject to the

compliance with the following

conditions:

i. One year must have been

elapsed from its last

name change.

ii. Aleast 50% of the total

revenue in the preceding

one year has been

generated from the

activity suggested by the

new name.

iii. The amount invested in

the new activity must be

at least 50% of the assets

of the company.

(2) The line of business undertaken

by the company must be in line

with its name. However, if there is

any deviation between the same,

then the company is required to

comply with the relevant

provisions of the Companies Act,

2013 for change in name, within 6

months from the date of change

in line of business.

(3) The listed company shall file an

application for name availability

with ROCs upon satisfying the

conditions laid down in Para (1)

above.

Under the erstwhile Cl 32 of

the Listing Agreement, this

condition of not even being

able to make an application to

ROC was not there.

Furthermore, on a collective

reading of all the sub

regulations of this Regulation,

there appears to be a

technical issue. Proviso to

Sub Regulation (1) says that if

a new line of activity has been

started, which is not reflected

in the company’s name, it

must change its name within a

period of 6 months. On the

contrary, Sub Regulation

(1)(b) mandates that at least

50% of the revenue in

preceding 1 year must have

been accounted for from the

new activity.

This provision might need a

relook.

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(4) After receipt of confirmation

regarding name availability from

the ROC, the listed company is

also required to obtain the

approval from the concerned

stock exchange for the change in

name prior to filing the request for

change of name to ROC.

Regulation 46:

Website

The listed company is required to

update any change in the content of

its website within 2 working days

from the date of such change in the

content.

This regulation provides clarity

as the erstwhile listing

agreement was silent

regarding updation of contents

on the website of the

company.

Regulation 47:

Advertisements in

Newspapers

(1) The listed entity shall publish the

following information in atleast 1

English newspaper, circulating in

whole or substantially whole of

India and in 1 daily newspaper in

the vernacular language, where

the registered office of the

company is situated: :

(a) Notice of meeting of the

Board of Directors where

financial results would be

considered;

(b) Financial results along with

the opinion(s) or

reservation(s), if any,

expressed by the Auditor

within 48 hours of conclusion

of the meeting of Board of

Directors;

(c) Statements of deviations/

variations

(d) Notices given to

shareholders by

advertisement

(2) The above provisions are not

applicable on the entities listed

on SME Exchange.

This Regulation has provided

an ease of reference by

summarizing the provisions of

Newspaper publications which

in erstwhile Listing Agreement

was mentioned in separate

clauses.

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CP’s Viewpoint:

In our view, the introduction of LODR is a welcoming move of SEBI that aims at streamlining

the existing listing agreements for varied instruments of the capital market into one single

document across various types of securities listed on the stock exchanges. However, there are

two major concerns arising from the Regulations that need to be addressed. One is pertaining

to the provisions for filing of Annual Report with the Stock Exchanges post AGM and another

is pertaining to change in name of the listed entities.

For any clarifications or Professional Advisory, feel free to contact:

Ms. Anjali Aggarwal Partner & Head: Capital Markets & Stock Exchange Services M: +91 9971673336 Ph: 011-40622230 Email: anjali@indiacp.com

Disclaimer: - The entire contents of this document have been developed on the basis of relevant statutory provisions and the information available at the time of the preparation. Though the author has made utmost efforts to provide authentic information however, assumes no responsibility for any errors which despite all precautions, may be found herein. The material contained in this document does not constitute/substitute professional advice that may be required before acting on any matter. The author and the company expressly disclaim all and any liability to any person who has read this document, or otherwise, in respect of anything, and of consequences of anything done, or omitted to be done by any such person in reliance upon the contents of this document.