Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2024
Foreword:
SEBI vide notification No. SEBI/LAD-NRO/GN/2024/177 came up with the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2024 to further amend the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.
Applicability of amendment:
The SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2024 shall come into force on the date of their publication in the Official Gazette.
The amendments in Regulations 3, 17, 21(5), 25, 30 [omission of the Explanation under sub regulation (11)], 34, 43A and 44 shall come into force with effect from December 31, 2024.
The first list in accordance with clause (a) of sub-regulation (2) of Regulation 3 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 shall be prepared by the recognized stock exchange(s) as on December 31, 2024.
Highlights:
- Applicability: The amendment redefines the applicability criteria under Regulation 3(2) and specifies a defined period for calculating average market capitalisation:
According to the amendment, every recognised stock exchange must prepare a list of entities with listed specified securities, ranking them based on average market capitalisation from July 1 to December 31 of that calendar year.
The relevant provisions shall then become applicable to a listed entity that is required to comply with such requirements for the first time (or, if applicable, required to comply after any interim period) after a period of three months from December 31 (i.e. April 1) or from the beginning of the immediate next financial year, whichever is later.
The listed entity shall continue to comply with relevant provisions that were applicable to it based on the market capitalisation of previous year and continue(s) to remain applicable on the basis of its rank in the list prepared by recognized stock exchanges as Regulation 3(2) (a).
Further, after Regulation 3(2), the following new sub-regulations (2A) and 2(B) shall be inserted, namely-
(2A) The provisions of these regulations, which become applicable to a listed entity on the basis of criteria of market capitalisation, shall continue to apply to such an entity unless its ranking changes in the list prepared in accordance with sub-regulation (2) of this regulation and such change results in the listed entity remaining outside the applicable threshold for a period of three consecutive years.
(2B) For such listed entities which remain outside the applicable threshold for a period of three consecutive years in terms of sub-regulation (2A) of this regulation, the provisions that apply on the basis of criteria of market capitalisation shall cease to apply at the end of the financial year following the 31st December of the third consecutive year:
Provided that for those listed entities that follow January to December as its financial year, the provisions shall cease to apply at the end of three months from 31st December of the third consecutive year (i.e. on 31st March).
- BRSR: A system shall further be put in place for BRSR/ BRSR Core disclosures within the period specified in the said Notification:
The listed entity, which is required to comply for the first time or after a period of cessation, shall put in place systems and processes for compliance with clause (f) of sub-regulation (2) of regulation 34 within a period of three months from December 31 (i.e. on or before April 1) or from the beginning of the immediate next financial year, whichever is later, and further disclose the Business Responsibility and Sustainability Report and/or assurance as per the Business Responsibility and Sustainability Report Core in the Annual Report prepared for the financial year in which systems and processes were required to be put in place in accordance with this proviso.
- Applicability of Regulation 15(1A): The applicability of Regulation 15 and 16 to 27 to a ‘High Value Debt Listed Entity’ has now been extended to 31st March 2025 which earlier was 31st March 2024 and accordingly the entity shall endeavor to comply with the provisions and achieve full compliance by March 31, 2025.
- Composition of Board Director: Consequent to the amendment, the requirement pertaining to the composition of Board of Directors w.r.t. the presence of Independent Woman Director on the Board now is given below:The erstwhile proviso to Regulation 17(1)(a) {i.e., Provided that the Board of directors of the top 500 listed entities shall have at least one independent woman director by April 1, 2019 and the Board of directors of the top 1000 listed entities shall have at least one independent woman director by April 1, 2020} to be read as:
Provided that the Board of Directors of the top 1000 listed entities shall have at least one Independent Woman Director;
Further following Explanation, shall be omitted:
Explanation: The top 500 and 1000 entities shall be determined on the basis of market capitalisation, as at the end of the immediate previous financial year.
- Minimum no. of Director: Consequent to the amendment, the requirement pertaining to the minimum no. of Directors on the Board is given below:
The erstwhile proviso to Regulation 17(1)(c) {i.e., The board of directors of the top 1000 listed entities (with effect from April 1, 2019) and the top 2000 listed entities (with effect from April 1, 2020) shall comprise of not less than six directors.} to be read as:
The Board of Directors of the top 2000 listed entities shall comprise of not less than six Directors.
Further following Explanation, shall be omitted:
Explanation: The top 1000 and 2000 entities shall be determined on the basis of market capitalisation as at the end of the immediate previous financial year.
- Quorum: Consequent to the amendment, the requirement pertaining to the quorum of the Board Meeting is given below:
The erstwhile proviso to Regulation 17(2A) {i.e., The quorum for every meeting of the board of directors of the top 1000 listed entities with effect from April 1, 2019 and of the top 2000 listed entities with effect from April 1, 2020 shall be one-third of its total strength or three directors, whichever is higher, including at least one independent director.} to be read as:
The quorum for every meeting of the Board of Directors of the top 2000 listed entities shall be one-third of its total strength or three Directors, whichever is higher, including at least one Independent Director.
In Explanation I, the numeral “I” shall be omitted. Hence, Explanation to be read as: Explanation I – For removal of doubts, it is clarified that the participation of the directors by video conferencing or by other audio-visual means shall also be counted for the purposes of such quorum.
Further following Explanation, shall be omitted:
Explanation II – The top 1000 and 2000 entities shall be determined on the basis of market capitalisation, as at the end of the immediate previous financial year.
- RMC: The gap between any two consecutive meetings of the Risk Management Committee shall now not more than 210 days as opposed to 180 days, as stated earlier.
Further, in sub-regulation (5), in clause i, the words and symbols “, determined on the basis of market capitalization as at the end of the immediate preceding financial year” shall be omitted. In this regard,
Regulation 23(5) (i) to be read as:
The provisions of this regulation shall be applicable to:
- the top 1000 listed entities,
determined on the basis of market capitalization as at the end of the immediate preceding financial year
- D and O insurance: Consequent to the amendment, Regulation 25(10) to be read as:
The top 1000 listed entities by market capitalization shall undertake Directors and Officers insurance (‘D and O insurance’) for all their Independent Directors of such quantum and for such risks as may be determined by its Board of Directors.
- Vacancies in respect of certain Key Managerial Personnel (Regulation 26A): Where the listed entity is required to obtain approval of a regulatory, government or statutory authorities for filling the vacancy in the office of certain KMP (Chief Executive Officer/ Managing Director/ Whole Time Director/ Manager/ Chief Financial Officer) then such vacancy shall be filled up not later than 6 months from the date of vacancy as opposed to the 3 months’ timeline.
- Timeline for prior intimation of Board Meeting: Amendment w.r.t Regulation 29 brings out a uniformity of timeline of prior intimation i.e. the listed entity shall give prior intimation of at least two working days in advance, excluding the date of the intimation and date of the meeting, to stock exchange about the meeting of the Board of Directors in which any of the following proposals is due to be considered. The intimation required under Regulation 29 (1) shall mention the date of such meeting of Board of Directors.
The following new proviso shall be inserted after proviso to Regulation 29(1) (d), namely
Provided further that intimation for determination of issue price in a qualified institutions placement is not required if such placement is done in accordance with the provisions of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018.
Also, after clause (f) of Regulation 29(1), the following new clauses shall be inserted, namely-
(g) any alteration in the form or nature of any of its securities that are listed on the stock exchange or in the rights or privileges of the holders thereof;
(h) any alteration in the date on which, the interest on debentures or bonds, or the redemption amount of redeemable shares or of debentures or bonds, shall be payable.
- Regulation 30(11): Consequent to the amendment, Regulation 30(11) to be read as:
The listed entity may on its own initiative also, confirm or deny any reported event or information to stock exchange(s):
Provided that the top 100 listed entities and thereafter the top 250 listed entities with effect from the date specified by the Board, shall confirm, deny or clarify , upon the material price movement as may be specified by the stock exchanges, any reported event or information in the mainstream media which is not general in nature and which indicates that rumour of an impendin specific event or information is circulating amongst the investing public, as soon as reasonably possible but in any case not later than twenty four hours from the trigger of material price movement :
Provided further that if the listed entity confirms the reported event or information, it shall also provide the current stage of such event or information:
Provided further that when the listed entity confirms within twenty four hours from the trigger of material price movement, any reported event or information on which pricing norms provided under Chapter V or Chapter VI of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 or pricing norms provided under Regulation 8 or Regulation 9 of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 or pricing norms provided under Regulation 19 or Regulation 22B of the Securities and Exchange Board of India (Buy-back of Securities) Regulations, 2018 or any other pricing norms specified by the Board or the stock exchanges are applicable, then the effect on the price of the equity shares of the listed entity due to the material price movement and confirmation of the reported event or information may be excluded for calculation of the price for that transaction as per the framework as may be specified by the Board.
- Regulation 30 (11A): After sub-regulation (11), the following new sub regulation shall be inserted, namely. –
(11A) The Promoter, Director, Key Managerial Personnel or Senior Management of a Listed Entity shall provide adequate, accurate and timely response to queries raised or explanation sought by the listed entity in order to ensure compliance with the requirements under sub-regulation 11 of this regulation and the listed entity shall disseminate the response received from such individual(s) promptly to the Stock Exchanges.
- Regulation 34 (2): In Explanation-1, clause (i) shall be omitted, i.e.:
Market capitalization shall be calculated as on the 31st day of March of every financial year.
- Regulation 43A: In Regulation 43A (1), the words, symbols and numerals “(calculated as on March 31 of every financial year)” shall be omitted.
- Regulation 44: In Regulation 44,
- in sub-regulation (5), the words, symbols and numerals “, determined as on March 31st of every financial year,” shall be omitted;
- in sub-regulation (6), the following Explanation shall be omitted:
Explanation: The top 100 entities shall be determined on the basis of market capitalisation, as at the end of the immediate previous financial year.
