SEBI circular for Disclosure of reasons for delay in submission of financial results by listed entities

Regulation  33 of the Securities  and  Exchange  Board  of  India  (Listing Obligations  and  Disclosure  Requirements)  Regulations, 2015  (“Listing Regulations”), inter-alia, specifies  timelines  for  submission  of  financial results by listed  entities.

Accordingly, the quarterly and annual  financial results  are  to  be  submitted by listed  entities to stock  exchanges within forty-five/sixty days from  the end  of the quarter/financial  year, as the case may be.   In case of non-compliance of various provisions of the Listing Regulations including non-submission / delayed submission of financial results, SEBI has  prescribed a  standard operating procedure (providing for levy  of penalties,  freezing  of  promoter  shareholding,  suspension  of  trading, etc.) through certain circulars, the latest being the circular dated May 3, 2018.

Now, SEBI has issued another Circular in this regard dated November 19,  2018, in view of the fact that whenever there were delays in submission of financial results by certain listed entities to the stock exchanges in the past, the fact of delay was intimated but the reason for the delay was not disclosed or not brought out clearly. Due to this investors were often left unaware as to the reasons for such delay.

Now, as per this Circular:

a. If any listed entity does not submit its financial results in accordance with the timelines specified in Regulation 33 ofthe Listing Regulations, the listed entity shall disclose detailed reasons for such delay to the stock exchange within one working day of the due date of submission of results as required under Regulation 33.

b. If the decision to delay the result was taken by listed entity prior to due date, the listed entity shall disclose the detailed reasons for such delay to the stock exchange to the stock exchanges within one working day of such decision.

The said circular can be downloaded from the following link:

https://www.sebi.gov.in/legal/circulars/nov-2018/disclosure-of-reasons-for-delay-in-submission-of-financial-results-by-listed-entities_41040.html

Proposed Amendments in the Companies Act, 2013

To strengthen the corporate governance & enforcement framework, the Ministry of Corporate Affairs (MCA) has proposed amendments in the Companies Act, 2013 and invited comments on it.  The key highlights of the proposed amendment are as follows:

1. Provision for conversion of section 8 Company into any other kind is omitted
2. Only intimation is required Instead of approval from Registrar (ROC) for prospectus
3. Company is now required to take all necessary steps to find out individual who is Significant Beneficial Owner (SBO) and if there is any, make such SBO comply with the provisions
4. A Company who has not completed 3 financial years since inception, is now required spend as per Corporate Social Responsibility(CSR) policy
5. Any amount remaining unspent on CSR is required to be transferred to special account within 30 days from the date of end of that financial year and such amount is required to be spent by the company in pursuance of CSR policy within a period of 3 financials years from the date of such transfer 
6. The sitting fees and expenses incurred for participation in the meetings of Board and Committees shall not be considered for the purpose of assessing pecuniary relationship of an Independent Director (ID)
7. Pecuniary relationship of an ID is restricted to 25 % of total income of ID out of which professional or any other services rendered by an ID shall not account for more than 10% of the total income
8. ID is required to file return with ROC containing particulars of Declaration of Independence u/s 149
9. ID is mandatorily required to file DIR-11 with ROC u/s 168
10. The effective date of resignation of ID will be 30th day from the date of receipt of such notice by the company or any other date as specified in the notice whichever is latter
11. Central Government may prescribe rules for merger or amalgamation between two or more small companies or between a holding company and its wholly-owned subsidiary company or such other companies as may be prescribed.   
12. In case of oppression and mismanagement (fraud, misfeasance, breach of trust etc.), if tribunal passes order specifying that the respondent is not a fit and proper person, he will be disqualified to act as director in that company and other companies for a period of 5 years from the date of said order
13. In case of struck off Companies, all the property and rights held by such Company  or held in trust for such Company before the date of strike off, shall vest absolutely in the Central Govt., which shall be free from all encumbrances for the Central Govt

The link of  Notice inviting comments is:

http://www.mca.gov.in/Ministry/pdf/NoticeAmendmentsCA2013_05112018.pdf

Property to vest with Central Government in case of struck off

Ministry of Corporate Affairs (MCA) by way the Companies Amendment (Ordinance), 2018 (Ordinance) has made amendments in the various provisions of the Companies Act, 2013 (the Act). Further, MCA has proposed certain Amendment in the Companies Act, 2013. With the combined reading of said amendments, the Registrar may strike off the company on the following grounds:

1. The Company which has not obtained the status of dormant company and

1. Company is not carrying on any business or operation for a period of two immediately preceding financial years  OR

2.  Company is not filing financial statements and annual returns during the last two financial years; OR

3. Company is not having significant accounting transaction during the last two financial years

2. Subscribers have not paid the subscription money at the time of incorporation and a declaration to that is not be filed with the registrar within 180 days from the date of incorporation (Ordinance)

3. Company is not carrying on any business or operation on the physical verification of registered office by the ROC u/s 12(9) (Ordinance)

As per proposed amendment of the all the property and rights held by the Company or held in trust for the Company before the date of strike off, shall vest absolutely in the Central Government., which shall be free from all encumbrances for the Central Government.