SEBI LODR Amendment, 2023: Changes to Director Re-Appointment, Senior Management, and REIT/InvIT Governance
The Securities and Exchange Board of India (SEBI), exercising powers under Section 11, Section 11A(2), and Section 30 of the SEBI Act, 1992, and Section 31 of the Securities Contracts (Regulation) Act, 1956, amended the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 with effect from 17th January 2023. The amendment touches director re-appointment approval, the definition of senior management, governance treatment of high-value debt-listed REITs and InvITs, and several disclosure schedule updates.
Note: looking for SEBI’s more recent LODR overhaul? See our coverage of the 2024 SEBI LODR amendment regulations.
What Changed: Summary
| Provision | What Changed | Who’s Affected |
| Regulation 15(1A), Explanation 4 | Omitted governance compliance route for REIT/InvIT under high-value debt-listed entity provisions removed | High-value debt-listed REITs and InvITs (outstanding listed non-convertible debt ≥ Rs 500 crore) |
| Regulation 15, new sub-regulations (1B), (1C) | REITs and InvITs now governed by their own SEBI regulations (2014) rather than LODR corporate governance provisions | REITs and InvITs registered under their respective SEBI regulations |
| Regulation 16(1)(d) | “Senior management” definition expanded to explicitly include all functional heads, not just CS and CFO | Listed entities’ HR, governance, and compliance teams classifying senior management for disclosure purposes |
| Regulation 17, sub-regulation (1C) | Shareholder approval now required for re-appointment, not just first appointment, of board members; public sector companies given a different timeline | Boards and company secretarial teams managing director re-appointments |
| Regulation 26, 31A(3)(b)(v), Schedule III | Terminology correction: “key managerial persons” changed to “key managerial personnel” | Minor drafting consistency, no substantive compliance change |
| Schedule V, Para C, sub-para (10) | New disclosure clause (n): details of material subsidiaries, including incorporation details and statutory auditor information | Listed entities with material subsidiaries annual report disclosure |
Detailed Provisions
1. Omission of Explanation 4 to Regulation 15(1A)
Regulation 15(1A) applies to a listed entity that has listed non-convertible debt securities with an outstanding value of Rs 500 crore or more. Prior to the amendment, Explanation 4 to this regulation specified that for a “high-value debt listed entity” that is a Real Estate Investment Trust (REIT), the Board of the Manager of the REIT had to comply with Regulations 15 to 27 (the LODR corporate governance provisions). The equivalent applied to the Investment Manager’s Board for an Infrastructure Investment Trust (InvIT). This explanation has been omitted by the amendment.
2. Insertion of Sub-Regulations (1B) and (1C) in Regulation 15
In place of the omitted Explanation 4, the amendment inserts new sub-regulations stating that an InvIT registered under the SEBI (Infrastructure Investment Trusts) Regulations, 2014, is governed by the governance norms specified in those regulations, not the LODR corporate governance provisions; the same applies to a REIT registered under the SEBI (Real Estate Investment Trusts) Regulations, 2014.
Impact: All REITs and InvITs registered under their respective 2014 regulations now fall under the governance framework specified in those instrument-specific regulations rather than the general LODR corporate governance provisions a clarification of which rulebook governs REIT/InvIT boards going forward.
3. Amendment to the Definition of “Senior Management” under Regulation 16(1)(d)
The amended definition states that “senior management” means the officers and personnel of the listed entity who are members of its core management team, excluding the Board of Directors, and includes all members of management one level below the CEO, Managing Director, Whole-Time Director, or Manager (including the CEO and Manager where they are not part of the Board), specifically including functional heads by whatever name called and the Company Secretary and Chief Financial Officer.
Impact: The amendment broadens the scope of who counts as senior management for LODR disclosure purposes. Previously, the definition’s explicit inclusions were limited to the Company Secretary and CFO; functional heads (however titled) are now explicitly captured as well, which affects related-party disclosure, remuneration disclosure, and other obligations tied to senior management classification.
4. Amendments to Regulation 17 (Board of Directors)
Regulation 17, sub-regulation (1C), as amended, now reads: “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.” A new proviso, inserted with effect from 17th January 2023, states that a public-sector company must ensure shareholder approval for appointment or re-appointment is taken at the next general meeting without the three-month timeline that applies to non-public-sector companies.
A further proviso requires that where a person was earlier rejected by shareholders at a general meeting, their subsequent appointment or re-appointment, including as managing director, full-time director, or manager, requires prior shareholder approval, and the explanatory statement accompanying the notice (under Section 102(1) of the Companies Act, 2013) must include a detailed explanation and justification from the Nomination and Remuneration Committee and the Board for recommending that person again.
Impact: The explicit inclusion of “re-appointment” means shareholder approval is now unambiguously required not just for first-time board appointments but for re-appointments as well. Public sector companies retain a simpler timeline (next general meeting) without the three-month deadline imposed on other listed entities.
5. Terminology Corrections in Regulation 26, 31A(3)(b)(v), and Schedule III
Minor drafting amendments replace “key managerial persons” with “key managerial personnel” in the heading of Regulation 26, in Regulation 31A(3)(b)(v), and in Schedule III, Part A, Paragraph A, sub-paragraph 16, Item (l), point (ix). These are terminology consistency corrections with no substantive change to compliance obligations.
6. New Disclosure Requirement under Schedule V
Schedule V, Para C, sub-para (10) now includes a new clause (n), requiring disclosure of 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.
Impact: Listed entities with material subsidiaries must now include this additional disclosure in the relevant annual report schedule, adding a specific data point (subsidiary statutory auditor details) that wasn’t previously a mandated disclosure item.
What This Means for Listed Entities
For most listed entities, the most operationally relevant changes are the senior management definition expansion (which may bring additional personnel within scope for related-party and remuneration disclosures) and the director re-appointment approval requirement (which company secretarial teams need to build into the board renewal calendar, not just first-time appointments). REITs and InvITs need to confirm which governance rulebook now applies to their structure following the Regulation 15 changes. Entities with material subsidiaries should update their annual report disclosure checklist to capture the new Schedule V requirement.
How MBG Can Help
Operationalizing LODR amendments, updating board approval processes, reclassifying senior management for disclosure purposes, and keeping annual report schedules current are recurring compliance tasks for listed entities as SEBI continues to refine these regulations. MBG’s corporate governance and corporate secretarial services teams help listed entities translate regulatory amendments like this one into updated internal processes, board resolutions, and disclosure templates so compliance keeps pace with each amendment as it’s notified.
Last updated: 02/01/2023
Article contributed by:
Senior Associate – Legal