Alerts & Updates 17th Nov 2022
SEBI has notified amendments to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR Regulations) vide the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Sixth Amendment) Regulations, 2022 (LODR Amendment Regulations).
– Financial statements for the last quarter of the financial year to be submitted within 60 days from the end of the quarter;
– Submission of statement of assets and liabilities and statement of cash flows at the end of every half year, along with the financial results;
– Line items revised which are to be disclosed on submission of quarterly and annual financial results;
– Statement indicating utilization of issue proceeds of non-convertible securities to be submitted along with the quarterly financial results;
– Submission of statement disclosing material deviations in use of proceeds of non-convertible securities from the objects of the issue;
– Publication of consolidated financial results along with line items;
– Procedure prescribed for filing of draft scheme of arrangement and scheme of arrangement for listed entities having listed non-convertible securities
| Amendment | Particulars of amendment |
| Appointment, re-appointment or removal of an independent director (ID) | Deemed appointment in certain cases
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Regulation 25(2A) of the LODR Regulations provides that the appointment, re-appointment or removal of an ID of a listed entity, shall be subject to the approval of shareholders by way of a special resolution. SEBI has now provided for the following conditionalities for appointment/ removal of ID:
Deemed appointment of ID: Where a special resolution for the appointment of an ID fails to get the requisite majority of votes but:
then the appointment of such an ID shall be deemed to have been made. Removal of ID: An ID appointed in the method as provided above shall be removed only if:
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| Submission of report of monitoring agency appointed for preferential issue or qualified institutions placement with stock exchange and audit committee | Presently, under Regulation 32(6) and 32(7) of LODR Regulations, where the listed entity has appointed a monitoring agency to monitor utilisation of proceeds of a public or rights issue, the listed entity is required to submit to the stock exchange any comments or report received from the monitoring agency and the monitoring report is also required to be placed before the audit committee.
SEBI has now provided that even in case of preferential issue or qualified institutions placement, where the listed entity has appointed a monitoring agency to monitor utilisation of proceeds, the listed entity is required to submit to the stock exchange any comments or report received from the monitoring agency and the monitoring report is also required to be placed before the audit committee. Consequently, an amendment has also been introduced in Part C(6) of Schedule II of the LODR Regulations (Role of the Audit Committee and Review of Information by Audit Committee) whereby the role of the audit committee has been provided to inter alia include reviewing, with the management, the statement of uses / application of funds raised through an issue (public issue, rights issue, preferential issue, etc.), the statement of funds utilized for purposes other than those stated in the offer document / prospectus / notice and the report submitted by the monitoring agency monitoring the utilisation of proceeds of a public issue or rights issue or preferential issue or qualified institutions placement, and making appropriate recommendations to the board to take up steps in this matter. |
| Timeline prescribed for submission of financial statements for the last quarter of the financial year | Presently, Regulation 52(1) of the LODR Regulations inter alia requires listed entities having non-convertible securities listed on recognized stock exchanges, to prepare and submit unaudited or audited quarterly and year to date standalone financial results on a quarterly basis within 45 days from the end of the quarter, other than the last quarter, to recognized stock exchange(s).
The LODR Amendment Regulations now clarify that for the last quarter of the financial year, the listed entity shall submit un-audited or audited quarterly and year to date standalone financial results within 60 days from the end of the quarter to the recognised stock exchange(s). |
| Auditing of issuers by Comptroller and Auditor General of India | Presently, Regulation 52(2)(d) of the LODR Regulations provides for two step process for disclosure of the annual audited financial results for issuers being audited by the Comptroller and Auditor General of India, has been done away with.
Now, issuers, which are required to be audited by the Comptroller and Auditor General of India under applicable law, shall submit:
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| Submission of statement of assets and liabilities and statement of cash flows | Listed entities having listed non-convertible securities shall submit a statement of assets and liabilities and statement of cash flows as at the end of every half year, by way of a note, along with the financial results. |
| Line items revised which are to be disclosed on submission of quarterly and annual financial results | Now, a listed entity having listed non-convertible securities, while submitting quarterly and annual financial results, shall disclose the following line items along with the financial results:
If the information mentioned above is not applicable to the listed entity, it shall disclose such other ratio/ equivalent financial information, as may be required to be maintained under applicable laws, if any. |
| Statement indicating utilization of issue proceeds of non-convertible securities to be submitted along with the quarterly financial results | Listed entities having listed non-convertible securities to submit to the stock exchange(s), along with the quarterly financial results, a statement indicating the utilisation of the issue proceeds of non-convertible securities, in such format as may be specified by SEBI, till such proceeds of issue have been fully utilised or the purpose for which the proceeds were raised has been achieved, as opposed to the earlier requirement of submitting such statement within 45 days from the end of every quarter. |
| Statement disclosing material deviations in use of proceeds of non-convertible securities from the objects of the issue to be submitted along with the quarterly financial results | A listed entity having listed non-convertible securities is required to submit to the stock exchange(s), along with the quarterly financial results, a statement disclosing material deviation(s) (if any) in the use of issue proceeds of non-convertible securities from the objects of the issue, in such format as may be specified by SEBI, till such proceeds have been fully utilised or the purpose for which the proceeds were raised has been achieved. |
| Publication of consolidated financial results along with line items in newspaper | Regulation 52(8) of the LODR Regulations inter alia requires a listed entity having listed non-convertible securities to publish the financial results and statement referred to in Regulation 52(4) in at least 1 (one) English national daily newspaper circulating in the whole or substantially the whole of India.
The LODR Amendment Regulations have introduced the following changes in this respect:
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| Procedure for filing of Draft Scheme of Arrangement and Scheme of Arrangement for listed entities having listed non-convertible securities |
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| Duties and obligations of recognized stock exchanges in case of a draft scheme of arrangement & scheme of arrangement
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Following the insertion of Regulation 59A on Draft Scheme of Arrangement and Scheme of Arrangement for listed entities having listed non-convertible securities, the LODR Amendment Regulations has also inserted a new Regulation 94A which lists out the duties and obligations of recognized stock exchanges in case of a draft scheme of arrangement or scheme of arrangement submitted by entities that have listed their non-convertible debt securities or non-convertible redeemable preference shares:
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| Unclaimed amount in escrow account to be transferred to Investor Protection and Education Fund created by SEBI | Regulation 61A of the LODR Regulations inter alia provides for dealing with unclaimed non-convertible securities and benefits accrued thereon whereby it is provided that where the interest/dividend/redemption amount has not been claimed within 30 days from the due date of interest/ dividend / redemption payment, a listed entity shall transfer the same to an escrow account. Where any amount transferred to the escrow account remains unclaimed for 7 years, the same shall be further transferred to the ‘Investor Education and Protection Fund’ constituted in terms of section 125 of CA2013.
The LODR Amendment Regulations has clarified that for listed entities which do not fall within the definition of “company” under the CA2013 and the rules made thereunder, any amount in the escrow account that remains unclaimed for 7 years shall be transferred to the Investor Protection and Education Fund created by SEBI in terms of section 11 of the SEBI Act, 1992. |
| Fees in respect of draft scheme of arrangement |
– For an entity with listed specified securities, or listed specified securities and listed nonconvertible debt securities or non-convertible redeemable preference shares: A fee at the rate of 0.1% of the paid-up share capital of the listed/ transferee/ resulting company, whichever is higher, post the sanction of the scheme by the NCLT. The total amount of fees payable shall not exceed INR 5,00,000. – For an entity with only listed non-convertible debt securities or non-convertible redeemable preference shares: A fee at the rate of 0.1% of the amount of outstanding debt of the listed/ transferee/ resulting company, whichever is higher, post the sanction of the scheme by the NCLT. The total amount of fees payable shall not exceed INR 5,00,000.
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The above amendments have been made to the LODR Regulations vide the LODR Amendment Regulations dated November 14, 2022 (available here).
We trust you will find this an interesting read. For any queries or comments on this update, please feel free to contact us at insights@elp-in.com or write to our authors:
Manendra Singh, Associate Partner –ManendraSingh@elp-in.com ;
Tanvi Goyal, Principal Associate –TanviGoyal@elp-in.com;
Aditi Ladha, Associate- AditiLadhai@elp-in.com
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