Amendment to SEBI (LODR) Regulations,
2018
1. Definitions
1.
Related
Party: Related Party now includes person or
entity belonging to the promoter or promoter group of the listed entity and
holding 20% or more of shareholding in the listed entity.
2.
Independent
Director
1. Independent
Director means a non-executive director, other than a nominee director of the
listed entity:
(ii)
who is or was not a
promoter of the listed entity or its holding, subsidiary or associate company or member of the promoter group of listed
entity; …
(viii) who is not a non-independent Director of
another company on the Board of which any non-independent Director of the
listed entity is an independent Director
3.
Material Subsidiary
Material Subsidiary shall mean a subsidiary, whose
income or net worth exceeds twenty ten
percent of the consolidated income or net worth respectively, of the listed
entity and its subsidiaries in the immediately preceding accounting year.
4.
Senior Management:
Senior management shall mean officers/personnel of the
listed entity who are members of its core management team excluding board of
directors and normally this shall comprise all members of management one level
below the executive directors, including all functional heads. Chief executive officer/managing
director/whole time director/manager (including chief executive
officer/manager, in case they are not part of the board) and shall specifically
include company secretary and chief financial officer”
2. Board of Directors
1.
Top 500
listed entity shall have one independent woman Director by 1 April , 2019 and
the Board of top 1000 listed entity shall have at least 1 independent woman
director by 1 April, 2020;
The Board of top 1000 listed
entities (w.e.f 1 April, 2019) and top 2000 listed entities w.e.f 1 April, 2020
shall comprise of not less than six Directors.
2.
Listed
entity shall not appoint/continue the Directorship of Non-executive Director
above the age of 75 years unless a special resolution is passed and the
explanatory statement indicates the justification of appointing such a person.
3.
W.E.F 1
April, 2020, top 500 listed entity shall ensure that the Chairperson of the
Board shall be
a.
Non-Executive
Director
b.
Not be related
to MD or CEO as per the definition of the term “relative” defined under
Companies Act, 2013.
Not
applicable to listed entities which do not have identifiable promoters.
4.
The quorum
for every meeting of the Board of Director of top 1000 listed entity w.e.f 1 April,
2019 and of Top 2000 listed entity w.e.f 1 April, 2020 shall be 1/3rd
of its total strength or three directors whichever is higher, including at
least one Independent Director.
Participation through VC shall also be counted for the
purposes of such quorum.
5.
Special
resolution is to be passed in the year in which the annual remuneration to a
single NED exceeds 50% of the total remuneration to all NED, giving details of
the remuneration thereof.
6.
Special
resolution shall be required if the fee or compensation payable to Executive
Director who are promoters or members of promoter group if the annual
remuneration exceeds Rupees 5 Crore or 2.5 percent of net profits of the listed
entity, whichever is higher andwhere there is more
than one such director, the aggregate annual remuneration to such directors
exceeds 5 per cent of the net profits of the listed entity.
Approval shall be valid only till the expiry of the
term of such director.
7.
In addition to the
evaluation of the performance of the Independent Director by the entire Board,
the entire Board shall also evaluate the fulfilment of the independence
criteria as specified in the regulations and their independence from the
management. Provided that in the above evaluation, the directors who are
subject to evaluation shall not participate
8.
The explanatory
statement for each special business shall set forth clearly the recommendation
of the board to the shareholders on each of the specific items.
9.
A person shall not be a
director in more than eight listed entities with effect from 1 April, 2019 and in not more than seven
listed entities with effect from 1 April, 2020
10. A
person shall not serve as an independent director in more than seven listed
entities.
11. Any person
who is serving as
a whole time
director managing director in any listed entity shall serve as an
independent director in not more than three listed entities.
12. The
quorum for a meeting of the nomination
and remuneration committee shall be two or
one third of the
members of the
committee, whichever is greater, with at least one independent
director in attendance.
3. Nomination and Remuneration committee(NRC)
1.
The NRC shall meet
atleast once in a year.
4. Stakeholder Relationship Committee
(SRC)
1.
The SRC shall now look
into various aspect of interest of
securities holders and not just “the mechanism of redressal of grievances of
shareholders”
2.
At least three
directors, with at least one being an independent director, shall be members of
the Committee
3.
The Chairman of SRC
shall be present at the Annual general meeting of the Company.
4.
The SRC shall meet
atleast once in a year.
5. Risk Management Committee(RMC)
1.
The RMC shall meet
atleast once in a year.
2.
The role of RMC shall
now specifically cover cyber security.
3.
RMC shall now be
applicable to top 100 500 listed
entities determined on the basis of market capitalization, as at the end of the
immediate previous financial year.
6. Related Party Transactions
1.
The policy on
materiality of related party transaction shall include threshold limits
approved by the Board and the policy shall be reviewed at least once every
three years and updated accordingly.
2.
A transaction involving
payments made to a related party with respect to brand usage or
royalty shall be considered material if the
transaction(s) to be
entered into individually or
taken together with
previous transactions during a financial year, exceed two percent of the
annual consolidated turnover as per the last audited financial statements.
3.
The related parties
shall instead of abstaining from voting on material
related party transaction shall now not vote to approve.
4.
For the purpose of related
party transactions, all related party shall instead of abstaining from voting
on related party shall not vote to approve the relevant transaction.
5.
From half year ending
31 March, 2019, the listed entity shall submit disclosures of related party transactions on a consolidated basis,
in the format specified in the relevant accounting standards for annual results
within 30 days from publication of
standalone and consolidated financial results to the Stock Exchange and publish the same on website.
7. Corporate governance requirements
w.r.t subsidiary of Listed company
1.
One Independent
Director on the Board of the listed entity shall be a director of the unlisted
material subsidiary whether incorporated in India or not (now inserted).
8. Secretarial Audit
1.
For the year ended 31 March,
2019, every listed entity
and its material unlisted
subsidiaries
incorporated in India
shall undertake secretarial audit and annex with its annual report, a
secretarial audit report, given by a
company secretary in
practice.
9.
Obligations with respect to independent directors
1.
From 1 October, 2018,
no person shall be appointed or continue as an alternate director
for an independent director of a
listed entity.
2.
Declaration of
independence and confirmation to be provided by the ID at the first meeting of
the Board in which he participates as Director and at the first meeting in
every financial year or
whenever there is
any change in
the circumstances which
may affect his status as an independent director.
3.
The Board shall take on
record declaration and confirmation submitted by ID after undertaking due
assessment of the veracity of the same.
4.
From 1 October, 2018,
the top 500 listed entities 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.
10. Prior intimation
1.
Prior intimation for
declaration of bonus is now mandatory irrespective of the fact if the same is
part of agenda or not.
11. Statement of Deviations and
variations
1.
Listed entity which has
raised funds through preferential allotment or QIF, shall disclose every year
utilization of such funds during that year in its Annual Report until such
funds are fully utilized.”
12.
Financial results
2.
The listed entity
having subsidiaries, in addition to submission of quarterly and year-to-date
standalone financial results to the stock exchange, may shall
also submit quarterly/year-to-date consolidated financial results.
3.
The Listed entity shall
have the option to submit audited or
limited review financial results in respect of the last quarter along-with
the results for the entire financial year, with a note stating that the figures
of last quarter are the balancing figures between audited figures in respect of
the full financial year and the published year-to-date figures upto the third
quarter of the current financial year.
4.
The listed entity is
now required to submit as part of its standalone and consolidated financial
results for the half year, by way of a note, statement of cash flows for the
half year.
5.
The listed
entity shall ensure that,
for the purposes
of quarterly consolidated financial results, at least
eighty percent of each of the consolidated revenue, assets and profits,
respectively, shall have
been subject to
audit or in case of
unaudited results, subjected to limited review.
6.
The listed entity shall
disclose, in the results for the last quarter in the financial year, by
way of a
note, the aggregate
effect of material
adjustments made in the
results of that quarter which pertain to earlier periods.
7.
The statutory auditor
of a listed entity shall undertake a limited review of the audit of all the
entities/ companies whose accounts are to be consolidated with the listed
entity as per AS 21 in accordance with guidelines issued by the Board.
12. Annual Report
1.
For Annual Report filed
for the year ended 31 March. 2019, the listed entity shall submit a copy of the
annual report along with its notice to the Stock Exchange not later than the
day of commencement of dispatch to its shareholder and in case of any changes
to the Annual Report, the revised copy along with the details and explanation
for the change shall be sent to the Stock Exchange not later than 48 hours
after the Annual General Meeting.
13. Documents and information to
shareholders
1.
The listed entity shall
send the soft copies of the annual report for the year ended 31 March, 2019 to all the shareholders who
have registered their email address (es) for the purpose either with the
listed entity or with any depository.
2.
The disclosures made by
the listed entity to the stock exchange shall now be in XBRL format and in
accordance with the guidelines specified by the Stock Exchange and to the stock
exchange and on its website shall be in a readable format which allows user to
find relevant information easily through searching tool.
The
requirement to make disclosures in searchable formats shall not
apply in case
there is a
statutory requirement to
make such disclosures in
formats which may
not be searchable, such as
copies of scanned documents.
3.
Notice of the Annual
General Meeting wherein the business of appointment/re-appointment of Statutory
Auditors shall be transacted shall have in its explanatory statement the
following details:
a. Proposed
fees payable
b. Terms
of appointment
c. Material
change in fee, in case of new appointment from that paid to the outgoing
auditor along with the rationale for the change.
d. Basis
of recommendation for appointment
e. Credentials
of the statutory auditor proposed to be appointed.
14. Voting by shareholders (Meetings of
Shareholders and Voting)
1.
The Annual General
meeting of the top 100 listed entity shall be held within a period of 5 months
from the date of closing of the financial year.
2.
The top 100 listed
entity shall provide one-way live webcast of the proceedings of the annual
general meeting.
15. Website
1.
The details required to
be disseminated under Regulation 46 (2) shall be hosted “under a separate section on
its website”
2.
The listed entity shall
also disseminate the following information w.e.f 1 October, 2018:
a. All
credit ratings obtained by the entity for all its outstanding instruments,
updated immediately as and when there is any revision in any of the ratings.
b. Separate
audited financial statements of each subsidiary in respect of a relevant
financial year, uploaded at least 21 days prior to the date of the annual
general meeting which has been called to inter alia consider accounts of that
financial year.
16. Role
of Audit Committee and review of information by audit committee
1.
The role of Audit
Committee has been enhanced and shall now also include reviewing the
utilization of loans
and/ or advances
from/investment by the holding company in the subsidiary
exceeding rupees 100 crore or 10% of the asset size of
the subsidiary, whichever
is lower including existing loans/advances/investments existing
as on the date of coming into force of this provision.
17. Role of Nomination and Remuneration
Committee
1.
The role of Nomination
and Remuneration Committee shall now include recommendation to the board, all
remuneration, in whatever form, payable to senior management.
18. Role of Stakeholders Relationship
Committee
1.
The role of
Stakeholders Relationship Committee enhanced and shall now also include
a. Resolving
the grievances of the security holders of the listed entity including
complaints related to transfer/transmission of shares, non-receipt of annual
report, non-receipt of declared dividends, issue of new/duplicate certificates,
general meetings etc.
b. Review
of measures taken for effective exercise of voting rights by shareholders.
c. Review
of adherence to the service standards adopted by the listed entity in respect
of various services being rendered by the Registrar & Share Transfer Agent.
d. Review of
the various measures
and initiatives taken
by the listed entity for reducing the quantum of
unclaimed dividends and ensuring timely receipt of
dividend warrants/annual reports/statutory notices
by the shareholders of the
company.
19. Separate posts of chairperson and
chief executive officer
1.
From 1 April, 2020, the
discretion of the listed entity to appoint separate persons to the post of
chairperson and managing director or chief executive office shall no longer
exist.
20.
Disclosures of Events or Information: Specified
1.
Without any application
of the guidelines for materiality as specified in sub-regulation (4) of
regulation (30), the following events/information upon occurrence shall be
disclosed to the Stock Exchange:
a. In case
of resignation of the
auditor of the
listed entity, detailed
reasons for resignation of
auditor, as given by the said auditor, shall be disclosed by the listed
entities to the stock exchanges as soon as possible but not later than twenty
four hours of receipt of such reasons from the auditor.
b. Resignation
of auditor including reasons for resignation: In case of resignation of an
independent director of the listed entity, within seven days from the date of
resignation, the following disclosures shall be made to the stock exchanges by
the listed entities:
i.
Detailed reasons
for the resignation
of independent directors
as given by
the said director shall be
disclosed by the listed entities to the stock exchanges.
ii.
The independent
director shall, along
with the detailed
reasons, also provide
a confirmation that there is no other material reasons other than those
provided.
iii.
The confirmation
as provided by the independent
director above shall
also be disclosed by the listed
entities to the stock exchanges along with the detailed reasons as specified in
sub-clause (i) above.
21. Disclosures in Financial Results
1.
With respect to the
audit qualification, the management shall mandatorily make an estimate which
the auditor shall review and report.
However, the management
may be permitted to not provide estimate on matters like going concerns or
sub-judice matters; in which case, the management shall provide the reasons and
the auditor shall review the same and report accordingly.
22. Related Party Disclosure
1.
The Annual report shall
contain disclosures of transactions of the listed entity with any person or
entity belonging to the promoter/promoter group which hold(s) 10% or more
shareholding in the listed entity, in the format prescribed in the relevant
accounting standards for annual results.
23. Management Discussion and Analysis
1.
The Management
Discussion and Analysis section of the Annual Report shall include discussion
on
a. details
of significant changes (i.e. change of 25% or more as compared to the
immediately previous financial
year) in key
financial ratios, along
with detailed explanations
therefor, including:
i.
Debtors Turnover
ii.
Inventory Turnover
iii.
Interest Coverage Ratio
iv.
Current Ratio
v.
Debt Equity Ratio
vi.
Operating Profit Margin
(%)
vii.
Net Profit Margin (%)
or sector-specific equivalent
ratios, as applicable
b. details
of any change in Return on Net Worth as compared to the immediately previous
financial year along with a detailed explanation thereof.
24. Corporate Governance Report
1.
With effect from the
Annual Report for the year ended 31 March, 2019, the Annual Report shall
contain along with the number of other board of directors or committees in
which a directors is a member or chairperson shall also include separately the
names of the listed entities where the person is a director and the category of
directorship”.
2.
W.E.F the financial
year ending 31 March, 2019, the section on the Corporate Governance of Annual
Report shall contain a chart or matrix setting out the
skills/expertise/competence specifying the
list of core
skills/expertise/competencies identified
by the board of
directors as required
in the context
of its business(es) and
sector(s) for it
to function effectively
and those actually available with the board; and W.E.F the
financial year ended 31 March, 2020, the
names of
directors who have
such skills/expertise/competence.
3.
The section on the
Corporate Governance of the Annual Report shall also contain a confirmation
that in
the opinion of
the board, the
independent directors fulfil the
conditions specified in these regulations
and are independent of the
management.
4.
The section on the
Corporate Governance of the Annual Report shall also contain detailed reasons
for the resignation of an independent director who resigns before the expiry of
his tenure along with a confirmation by such director that there are no other
material reasons other than those provided.
5.
The section on the
Corporate Governance of the Annual Report shall also contain list of all credit
ratings obtained by the entity along with any revisions thereto during the
relevant financial year, for all debt instruments of such entity or any fixed
deposit programme or any scheme or proposal of the listed entity involving
mobilization of funds, whether in India or abroad.
6.
The section on the
Corporate Governance of the Annual Report shall also contain
a. Details
of utilization of funds raised through preferential allotment or qualified
institutions placement as specified under Regulation 32 (7A).
b. A certificate
from a company
secretary in practice
that none of the
directors on the board of the company have been debarred or disqualified
from being appointed
or continuing as
directors of companies
by the Board/Ministry of
Corporate Affairs or any such statutory authority.
c. where the
board had not
accepted any recommendation of any
committee of the board
which is mandatorily
required, in the
relevant financial year, the same to be disclosed along with reasons
thereof.
Provided that
the clause shall
only apply where
recommendation of / submission by the committee is required for
the approval of the Board of Directors
and shall not apply
where prior approval
of the relevant committee is
required for undertaking
any transaction under
these Regulations.
d. Total
fees for all services paid by the listed entity and its subsidiaries, on a
consolidated basis, to the
statutory auditor and
all entities in the
network firm/network entity of which the statutory auditor is a par
The
Top 100, 500, 1000, 2000 entities for the above purpose shall be determined on
the basis of the market capitalization rate as at the end of the immediate
previous financial year.
