SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 - Specified Securities (PART - 1)

               Obligations of Listed Entity which has listed its specified Securities

S.No.	Particulars	Regulation	Details
1.	Composition of Board of Directors	Regulation 17(1)	1.    At least one woman director; 2. At least 50% of the Board shall comprise of non-executive directors          ·      Where the chairman is a non-executive director, then at least 1/3rd of the board shall have independent director           ·         Where there is no regular non-executive chairman, then at least half of the board shall have independent director. However where the non-executive chairman is a promoter or related to promoter, then at least half of the board shall have independent directors.
2.	Review of Compliance Reports	Regulation 17(3)	The Board of Directors shall periodically review the compliance reports pertaining to all laws applicable to the company.
3.	Code of Conduct for Board and Senior Management	Regulation 17(5)	The board shall lay down a code of conduct for all the members of the Board and the senior management, and must incorporate the duties of independent directors as per Companies Act, 2013
4.	Compliance Certificate	Regulation 17(8)	The CEO & CFO shall provide a compliance certificate to the Board as specified in Part B of Schedule II.
5.	Constitution of Audit Committee	Regulation (18)	There shall be minimum 3 directors, with 2/3rd to be independent directors. All the members to be financially literate and at least one member shall have accounting or financial management related expertise.
6.	Corporate Governance Requirement for Subsidiary	Regulation 24	1.    At least one independent director on the board of listed entity shall be a director on the board of unlisted material subsidiary incorporated in India. 2.    The audit committee of listed entity shall review the financial statements of the unlisted subsidiary. 3.    The minutes of the meeting of board of unlisted subsidiary shall be placed at the meeting of board of listed entity. 4.    The management of unlisted subsidiary shall periodically inform the board of listed entity regarding the transactions or arrangements entered into by the subsidiary. 5.    Disposal of shares by the unlisted company resulting in reduction of shareholding to more than 50 %  shall be approved by passing a special resolution, except in case where the same has been approved by the court / tribunal. 6.    Selling / disposing of assets of more than 20% of the assets of the material subsidiary shall be duly approved by passing a special resolution, except in case where the same has been approved by the court / tribunal.
7.	Obligations of Independent Directors	Regulation 25	· A person not to act as independent director in more than 7 listed companies.       ·  In case independent director is a WTD in any listed company, he shall serve as a independent director in not more than 3 listed companies.
8.	Obligation of Directors and Senior Management	Regulation 26	A director shall not be a member in more than 10 committees or act as a chairperson in more than 5 committees. Private companies, foreign companies and Nidhi companies shall be excluded while determining the limit.
9.	Quarterly Compliance Report on Corporate Governance	Regulation 27(2)	It shall be submitted in 15 days from end of the quarter. It shall be signed by the Compliance Officer or the CEO of the Company.
10.	Prior Intimation to Stock Exchange	Regulation 29	a)    The listed entity shall give at least 5 days advance intimation (excluding date of notice and date of meeting) to the stock exchange with regard to the financial results; quarterly, half yearly or annually, as the case may be. b)    The listed entity shall give at least 2 days advance intimation (excluding date of notice and date of meeting) to the stock exchange with  regard to – 1)Proposal of buy back of securities; 2)Proposal of voluntary de-listing from stock exchange; 3)Fund raised by public offer, right issue, ADR, GDR, FCCB, QIP, debt issue, preferential issue, and others c)    The listed entity shall give at least 11 days advance intimation (excluding date of notice and date of meeting) to the stock exchange with regard to –   1) Alteration in form or nature of securities listed on stock exchange, or rights and privileges of holders; 2) Alteration in date on which interest on debentures or bonds, or redemption of redeemable shares, debentures or bonds, shall be payable.
11.	Submission of shareholding pattern	Regulation 31(1)	The listed entity shall submit to stock exchange a statement on shareholding of the securities as per following guidelines – 1. In 1 day prior to listing of securities on stock exchange.; 2. In 21 days from the end of quarter; 3. In 10 days of capital restructuring resulting in change exceeding 2% of total paid up capital.
12.	Shareholding of Promoter and group	Regulation 31(2)	100% holding of promoter and promoter group shall be in dematerialized form, and must be maintained continuously.
13.	Statement of deviation or variation	Regulation 32	1. The listed enetity shall disclose quarterly, with regard to any deviation related in use of proceeds in public issue, rights issue, preferential issue, 2. Such statement shall be given till the time the proceeds have been fully utilized or the proposal for which the issue was raised is achieved. 3. The statement shall be submitted before the audit committee for review which shall be then submitted to the stock exchange. 4. The variation in the issue shall also be specified in the Board Report. 5. In case the company has appointed a monitoring agency, it shall then submit to the stock exchange the comments received from the agency, if any. 6. The report of the monitoring agency shall also be placed in the audit committee on annual basis.
14.	Preparation of Financial Results	Regulation 33	1)    It shall be on accrual basis as per the accounting standards. 2)    The quarterly and year to date financial results shall be prepared as per principles laid down in AS25 or AS31, as applicable, specified as per Section 133 of Companies Act, 2013 or ICAI. 3)    The standalone and consolidated   financial statements shall be prepared as per GAAP. 4)    In addition to the above, the listed entity can also submit the same as per IFRS notified by Indian Accounting Standards Board. 5)    The auditor shall also give a Limited Review Report on quarterly or annual basis, which shall be placed before the Board which approves the financial results, before being submitted to the stock exchange. 6)    Unaudited financial statements shall be accompanied by Limited Review Report, and audited financial statements shall be accompanied by Audit Report. 7)    In case of PSUs, the Limited Review Report may be undertaken by any PCS. 8)    It shall also make the disclosures   as specified in Part A of Schedule IV. 9)    The financial results shall be signed by Chairperson / MD / WTD, or in absence of all of them, it shall be signed by any other director duly authorized by the board to sign the financial results. 10) The standalone financial results shall be submitted within 45 days from the end of relevant quarter, other than the last quarter, which shall be submitted within 60 days from the end of financial year.

Other regulations applicable on listed entities as per the Listing Obligations and Disclosure Requirement Regulations, 2015 will be continued in the next blog.

References:

SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015

Contact:

CS Divyanshu Bansal

Email ID: divyanshubansal401@gmail.com

SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 - Common Obligations

Applicability: All listed entities.

S.No.	Particulars	Regulation	Details
1.	Appointment of Key Managerial Personnel, Directors, Promoters or any other persons	Regulation 5	They shall comply with the responsibilities, if assigned to them under these regulations.
2.	Appointment of Company Secretary	Regulation 6	The listed entity shall appoint the Company Secretary as a Compliance Officer. However, it does not apply to mutual funds listed on stock exchange.
3.	Appointment of Share Transfer Agent	Regulation 7(1)	The listed entity shall appoint a share transfer agent or manage such facility in-house. However, in case of in-house share transfer facility, where the total number of holder of securities exceeds 1 lakh, the listed entity shall register with the Board as Category II STA, or appoint a RTA.
4.	Submission of Compliance Certificate	Regulation 7(3)	The listed entity shall submit a Compliance Certificate to the stock exchange in 1 month of the end of each half of the financial year, which shall be signed the Compliance Officer of the Company as well as the registered RTA.
5.	Tripartite Agreement in case of change in RTA	Regulation 7(4)	In case of change of RTA, the existing RTA, new RTA and the listed entity shall together enter in to a tripartite agreement in the manner specified by the Board. However in case of in-house RTA, the same agreement shall be entered in to between new RTA and the listed entity.
6.	Intimation of appointment of RTA	Regulation 7(5)	The listed entity shall inform the stock exchange within 7 days of entering in to the agreement.
7.	Cooperation with Intermediaries	Regulation 8	The listed entity shall, where applicable, coordinate and submit correct information to the intermediaries registered with the Board, such as Credit Rating Agencies, RTA, Debenture Trustees, etc. However, it does not apply to mutual funds listed on stock exchange.
8.	Policy on Preservation of Documents	Regulation 9	There shall be a policy of preservation of documents and must classify the same in to 2 categories; a.     documents to be preserved for permanent nature b.     Documents to be preserved for at least 8 years after completion of relevant transactions. However, the documents can also be preserved in electronic form.
9.	Filing of documents electronically	Regulation 10	The listed entity shall file reports, statements, documents, and other information with the stock exchange on electronic platform.
10.	Scheme of Arrangement / Amalgamation	Regulation 11	The scheme of arrangement / amalgamation / merger / reconstruction / reduction of capital to be presented to the Court / Tribunal shall not violate or override the provisions of securities laws or stock exchange. However, it does not apply to mutual funds listed on stock exchange.
11.	Payment of Dividend / Interest / Redemption / Repayment	Regulation 12	It shall be done through electronic mode. However where the same is not possible, it can be done through issue of warrants or cheques. However, where the amount of dividend exceeds Rs.1000/-, the cheques or warrants shall be sent by Speed Post.
12.	Grievance Redressal Mechanism	Regulation 13(2)	The listed entity shall ensure proper steps for addressing the grievance of investors by registering itself on SCORES platform.
13.	Filing of Investor Grievance Redressal Report	Regulation 13(3)	The listed entity shall within 21 days from the end of quarter, file a Investor Grievance Redressal Report, stating the number of complaints pending at the beginning of quarter, received during the quarter, disposed during the quarter, and remaining unsolved at the end of quarter.
14.	Statement on Investor Grievance Redressal Report	Regulation 13(4)	Statement on Investor Grievance Redressal Report to be placed before the Board Quarterly.
15.	Payment of Fees &;other charges to Stock Exchange	Regulation 14	The listed entity shall pay all fees and other charges, as applicable, to the Stock Exchange in the manner specified by the Board or the Stock Exchange.

Requirement of some regulations under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 shall not be applicable in case units of Mutual Funds which are listed on recognized stock exchange, as the same shall be governed by the provisions of SEBI (Mutual Funds) Regulations, 1996.

References:

SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015

Contact:

CS Divyanshu Bansal

Email ID: divyanshubansal401@gmail.com

Section 174 : Quorum for Board Meeting

Section 174 of the Companies Act, 2013 deals with the Quorum for Board Meeting

The quorum for the Board meeting shall be 1/3rd of its total strength or 2 directors, whichever is higher, including the participation of directors by video conferencing or audio visual means.

However the articles of association may provide for higher number of quorum.

In case of Section 8 Companies, quorum shall b minimum 8 members or 25% of total strength, whichever is less.

"Total strength" hereon shall not include directors whose place is vacant.

However, if the no. of continuing directors is less than the required quorum of the meeting then such continuing directors can hold a meeting only for two purposes :- 

      I.        To hold a general meeting of the company;

    II.        To increase the number of directors to that fixed for the quorum.

Interested Directors in the Meeting

Where the number of interested directors is equal to or exceeds 2/3rd of the total strength of the Board, the number of directors not interested and present at the meeting, but not less than 2, shall be the quorum for the meeting.

Eq: In case a company has 12 directors on its Board out of which 10 of them are interested,  in such a case remaining 2 Directors shall form the quorum.

Although requirement of 4 Directors is a requisite quorum being 1/3rd of 12, but 10 directors being interested, the other 2 disinterested directors shall constitute a quorum for the meeting.

Where all the Directors are Interested:

Ø  to increase the strength of the Board by appointing disinterested Directors; or

Ø  to appoint additional Directors who are not interested for the said contract,  if authorized by articles.

If impracticable, the proposed contract to be placed in the annual general meeting for consent.

Interested Director means every director of a company, whether directly or indirectly, concerned or interested in a contract or arrangement or proposed contract or arrangement entered or to be entered into:

1.    In case of a body corporate –

·         If such director or such director in association with any other director, holds more than two per cent. shareholding of that body corporate; or

·         If such director is a promoter, manager, Chief Executive Officer of that body corporate;

2.    In case of a firm or other entity –

·         If such director is a partner, owner or member, as the case may be.

·          

ADJOURNMENT OF THE MEETING

Where the meeting could not be held because of absence of quorum, the meeting shall automatically stand adjourned to to the same day at the same time and place in the next week. or where that day is a  National Holiday, till next succeeding day, which is not a national holiday, at the same time and place.

Any fraction shall be rounded off as one.

APPLICABILITY AS PER SECRETARIAL STANDARDS - I

1.    The quorum shall be present throughout the meeting, also while transacting the business items.

2.    In case a Director is interested on a particular item, he shall not be included for the purpose of the quorum, and shall not be present physically or through electronic mode, during discussions and voting on such item.

3.    With the express permission of Chairman, the interested Director may be allowed to attend the meeting, but shall not be counted for the purpose of quorum and shall not be allowed to vote on it.

4.    The leave of absence shall be granted only if the request for such leave has been received by the CS or Chairman.

5.    The office of director shall become vacant in case he absents himself from all the meetings of the Board during the period of 12 months, with or without seeking permission of leave.

Chairman of the Board Meetings

1.    The Chairman of the Company shall be the Chairman of the Board.

2.    If company does not have a Chairman, Directors may one among themselves to be the Chairman of the Board.

Chairman of the Committee Meetings

1.    The member of the Committee appointed by the Board, or elected by the Committee as Chairman, shall conduct the meeting of such Committees.

2.    In case if no Chairman is elected, or unable to be present, the Committee shall elect one among themselves to act as the Chairman of the Committee, unless provided by the articles.

Quorum for Meeting of Committees

In case of Committee meeting, the presence of all the members of the committee constituted by the Board shall be necessary to form a quorum unless stipulated by Board or articles or under the Act.

Attendance Registers

1.    Every company shall keep separate attendance registers for Board Meeting and also for Committee Meetings.

2.    The pages shall be serially numbered.

3.    It shall be periodically bounded depending upon the size and volume, in case of kept in loose leaf form.

4.    It shall contain the details regarding - 

                          i.        serial number of meeting

                         ii.        date of meeting;

                        iii.        place of meeting;

                       iv.        time of meeting;

                        v.        name of Directors;

                       vi.        signature of each Director;

                      vii.        Name & signature of CS

                     viii.        Persons attending by Invitation.

                                                      QUERIES

Q1. What is the place where Board Meetings can be held?

Ans. A Board Meeting may be held at any place, in India or abroad.

Q2. Why Board meetings cannot be convened on a National Holiday?

Ans. Section 174(4) of the Companies Act, 2013 prohibits holding of Board meetings adjourned for want of Quorum on National Holidays. Even as per Section 96(2) of the Companies Act, 2013, AGM cannot be held on a National Holiday. By inference, it can be understood that the intention of the legislature is to avoid holding Meetings on National Holidays. Therefore, Board Meetings shall not be convened on National Holidays.

Q3. Can participation of a Director in a Meeting telephonically or through teleconferencing be considered as participation of a Director through Electronic mode or Meetings through Electronic mode?

Ans. No. As per SS-1, “Electronic Mode” in relation to Meetings means Meetings through video conferencing or other audio-visual means. Thus, participation of a Director in a Meeting telephonically or Meetings through teleconferencing cannot be considered as participation of a Director through Electronic mode or Meeting through Electronic mode.

Q4. Is it mandatory for companies to provide their directors with the facility of participation in meetings through electronic mode?

Ans. It is not mandatory for companies to provide their directors with the facility of participation in meetings through electronic mode.

Q5. In case companies do not provide the directors with the facility of participation in meetings through electronic mode, can the directors insist on attending the meetings through such mode?

Ans. No, Section 173(2) of the Act is an enabling provision which recognizes presence of directors participating through electronic mode. It is an option with the director to attend the Board Meeting through electronic mode but it is not his right. This option may be exercised by the Director only when this facility is provided by the company to its director(s). If the company has not offered to provide facility of participation through electronic mode and the director insists to attend the meeting through electronic mode, the company may decide whether to provide the same or not.

Q6. Is it mandatory for a company to hold at least one Meeting of the Board physically or all Meetings can be held through Electronic Mode?

Ans. There is no such restriction. However, the company should ensure presence of physical quorum during consideration of any of the restricted items of business.

Q7. Is it mandatory for a Director to attend at least one Meeting of the Board physically?

Ans. No. A Director may attend all the Meetings of the Board through electronic mode, if the company provides such facility. However, physical quorum should be present during consideration of any of the restricted items of business.

Q8. If the original Meeting of the Board was conducted physically, can the adjourned meeting be conducted through electronic mode?

Ans. There is no restriction in SS-1 to hold the adjourned meeting through electronic mode, provided provisions relating to meetings through electronic mode is complied with.

References:
Companies Act, 2013
Secretarial Standards I

Contact:

CS Divyanshu Bansal
Email ID: divyanshubansal401@gmail.com