SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 Amended

SEBI amended the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“Principal Regulations”) by SEBI (Listing Obligations and Disclosure Requirements) Amendment Regulations dated May 09, 2018, SEBI (Listing Obligations and Disclosure Requirements) Third Amendment Regulations dated May 31, 2018 and SEBI (Listing Obligations and Disclosure Requirements) Fourth Amendment Regulations dated June 08, 2018 (collectively referred as “Amendment Regulations”). The key changes are as follows:

  • The definition of ‘related party’ has been amended to include any person or entity belonging to the promoter or promoter group of the listed entity and holding 20% (Twenty Percent) or more of shareholding in the listed entity in its ambit.
  • It has been made compulsory for the board of directors of the top 500 (Five Hundred) listed entities to have at least one independent woman director by April 1, 2019 and the board of directors of the top 1000 (One Thousand) listed entities to have at least one independent woman director by April 1, 2020.
  • Following provisions regarding maximum number of directorships which can be held by a person are added in the regulations via this amendment.
    • A person shall not be a director in more than 8 (Eight) listed entities with effect from April 1, 2019 and in not more than 7 (Seven) listed entities with effect from April 1, 2020 with a proviso that a person shall not serve as an independent director in more than 7 (Seven) listed entities.
    • Notwithstanding the above, 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 3 (Three) listed entities.

    It is to be noted that for the purpose of this provision, the count for the number of listed entities on which a person is a director / independent director shall be only those whose equity shares are listed on a stock exchange.

  • A provision for “Secretarial Audit” has been added, under which every listed entity and its material unlisted subsidiaries incorporated in India shall undertake secretarial audit and shall annex with its annual report, a secretarial audit report, given by a company secretary in practice.
  • The provisions regarding the composition and working of board of directors as mentioned in the Principal Regulations will not be applicable to a listed entity which is undergoing corporate insolvency resolution process under the Code. Similarly, the provisions regarding audit committee, nomination and remuneration committee, stakeholders and relationship committee and risk management committee will also not be applicable to such entities.
  • Moreover, for the transactions which may amount to related party transactions but which are approved in the resolution plan by the adjudicating authority under the Code, no approval of the shareholders is required to be taken through resolution for such transactions.
  • A listed entity which is undergoing corporate insolvency resolution process under the Code is also exempted from complying with the provisions regarding selling or disposing of shares or assets, replacement of promotor, reclassification of promotors as public shareholders and increase in the level of public shareholding mentioned in the Regulations provided that such changes are pursuant to the resolution plan approved by the adjudicating authority under the Code.
  • A proviso has been added to the regulation dealing with transfer, transmission or transposition of securities. The proviso says that except in case of transmission or transposition of securities, requests for effecting transfer of securities shall not be processed unless the securities are held in dematerialized form with a depository.