Amendment in the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015
February 01, 2023
The Securities Exchange Board of India (“SEBI”) in the exercise of its powers conferred under Section 11, Section 11A (2), and Section 30 of the Securities Exchange Bar of India Act, 1992, Section 31 of the Securities Contracts (Regulation) Act, 1956 has amended the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015(“Regulations”) with effect from 17th January 2023. The key highlights of the amendment are as follows:
- Omission of Explanation 4 of Regulation 15 (1A):
The said Regulation 15 (1A) is applicable to a listed entity that has listed its non-convertible debt securities and has an outstanding value of listed non-convertible debt securities of Rupees Five Hundred Crore and above. Further, ‘Explanation (4)’ stated as follows:
“Explanation (4)-
(a) In case of a 'high-value debt listed entity that is a Real Estate Investment Trust (REIT), the Board of the Manager of the Real Estate Investment Trust (REIT), shall comply with regulation 15 to regulation 27 of these regulations related to corporate governance;
(b) In case of a 'high-value debt listed entity that is an Infrastructure Investment Trust (InvIT), the Board of the Investment Manager of the Infrastructure Investment Trust (InvIT), shall comply with regulation 15 to regulation 27 of these regulations related to corporate governance.]”
As per the amendment, the said explanation has been omitted.
- Insertion of sub-regulation (1B) and (1C) in Regulation 15:
As per the amendment, after sub-regulation (1A) the following sub-regulations shall be inserted:
“(1B) Notwithstanding anything contained in this regulation, in case of an Infrastructure Investment Trust, registered under the provisions of the Securities and Exchange Board of India (Infrastructure Investment Trusts) Regulations, 2014, the governance norms specified under the Securities and Exchange Board of India (Infrastructure Investment Trusts) Regulations, 2014 shall be applicable.”
“(1C) Notwithstanding anything contained in this regulation, in case of a Real Estate Investment Trust, registered under the provisions of Securities and Exchange Board of India (Real Estate Investment Trust) Regulations, 2014, the governance norms specified under the Securities and Exchange Board of India (Real Estate Investment Trust) Regulations, 2014 shall be applicable.”
Impact of the Amendment: In the exercise of the amendment, all Infrastructure Investment Trust and Real Estate Investment Trust registered under the provisions of the Securities and Exchange Board of India (Real Estate Investment Trust) Regulations, 2014 and Securities and Exchange Board of India (Real Estate Investment Trust) Regulations, 2014 shall now be falling under the ambit of the Regulations.
- Amendment in the definition of “Senior Management” under Regulation 16(1)(d):
Pursuant to the said amendment the definition of “Senior Management” has been substituted to state as follows:
“(d) “senior management” shall mean the officers and personnel of the listed entity who are members of its core management team, excluding the Board of Directors, and shall also comprise all the members of the management one level below the Chief Executive Officer or Managing Director or Whole Time Director or Manager (including Chief Executive Officer and Manager, in case they are not part of the Board of Directors) and shall specifically include the functional heads, by whatever name called and the Company Secretary and the Chief Financial Officer.”
Impact of the Amendment: The amendment has expanded the scope of the definition by including the functional heads by whatever name called, and has broadened the pre-amendment scope of only the Company Secretary and chief financial officer.
- Amendments under Regulation 17:
Under Regulation 17 (Board of Directors) the following amendments have been made:
- Insertion of the word “or pre-appointment” in sub-regulation (1C), insertion of a new proviso after sub-regulation (1C), and insertion of the word “further” in the existing first proviso. Thereby, sub-regulation (1C) shall now read as follows:
[(1C) The listed entity shall ensure that approval of shareholders for appointment or re-appointment of a person on the Board of Directors [or as a manager] is taken at the next general meeting or within a time period of three months from the date of appointment, whichever is earlier.]
“Provided that a public sector company shall ensure that the approval of the shareholders for appointment or re-appointment of a person on the Board of Directors or as a Manager is taken at the next general meeting:” (Inserted w.e.f 17th January 2023)
[Provided further that the appointment or a re-appointment of a person, including as a managing director or a whole-time director or a manager, who was earlier rejected by the shareholders at a general meeting, shall be done only with the prior approval of the shareholders:
Provided further that the statement referred to under sub-section (1) of section 102 of the Companies Act, 2013, annexed to the notice to the shareholders, for considering the appointment or re-appointment of such a person earlier rejected by the shareholders shall contain a detailed explanation and justification by the Nomination and Remuneration Committee and the Board of directors for recommending such a person for appointment or re-appointment.]
Impact of the Amendment: the said amendment has specifically provided the inclusion of the word “re-appointment” which would require the approval of shareholders in a listed entity. However, in the case of a Public Sector Company, they are allowed to take the approval of shareholders in their next general meeting, and not levy any specific timeframe of three months as prescribed for non-public sector companies.
- Minor Amendments under Regulation 26, 31A, and Schedule III:
There have been minor amendments in Regulation 26 (heading), Regulation 31A(3)(b)(v), and Schedule III, Part A, in paragraph A, in sub-paragraph 16, in Item (l), in point (ix), wherein the words, “key managerial persons” have been amended to “key managerial personnel”. Hence the said regulations shall now read as follows:
- Regulation 26: “Obligations with respect to employees including senior management, key managerial personnel, directors and promoters”
- Regulation 31A(3)(b)(v): “act as a key managerial personnel in the listed entity”.
- Schedule III, Part A, in paragraph A, in sub-paragraph 16, in Item (l), in point (ix): “Names of the new promoters, key managerial personnel, if any, and their past experience in the business or employment. In cases where promoters are companies, the history of such companies and names of natural persons in control;”
- Amendment in Schedule V:
There has been an amendment in Schedule V, Para C, in sub-para (10), wherein the following clause has been inserted after clause (m):
“(n) Details of material subsidiaries of the listed entity; including the date and place of incorporation and the name and date of appointment of the statutory auditors of such subsidiaries.”
MBG Remarks:
The said amendment has come in the wake of the Government implementing steps to attract investments in India, in the event of which, the laws, rules, and regulations need to be clearer. The step is undoubtedly a welcome step for corporates, individuals, and the authorities themselves.
Last updated: 02/01/2023
Article contributed by:
Senior Associate - Legal
