SEBI (LODR) (2ND AMENDMENT) REGULATIONS, 2021

Securities and Exchange Board of India (SEBI) has amended the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR”). SEBI has notified the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Second Amendment) Regulations, 2021 (“Amended LODR”) which come into force from 6th May 2021.

The amendments have been made to the following regulations of LODR:

Further, the following schedules of the LODR have also been amended:

• Schedule II
• Schedule III
• Schedule IV
• Schedule V
• Schedule XI

The gist of the main amendments are as follows:

Reg 7(3) – Compliance certificate signed by compliance officer and the Registrar & Share Transfer Agent, which has to be within one month of end of each half of the financial year, certifying compliance with the requirements of regulation 7 (2) is now to be submitted once a year within 30 days of end of Financial Year.

Reg 21- Risk Management Committee-

• The Risk Management Committee shall have a minimum of three members with the majority of them being members of the board of directors, including at least one independent director and in the case of a listed entity having outstanding SR equity shares, at least two-thirds of the Risk Management Committee shall comprise independent directors.
• The risk management committee shall meet at least twice a year (instead of once before).
• Top 1000 listed entities to form a Risk management committee determined on the basis of market capitalization, as at the end of the immediate previous financial year (instead of top 500 listed Companies)
• The quorum for a meeting of the Risk Management Committee shall be either two members or one-third of the members of the committee, whichever is higher, including at least one member of the board of directors in attendance.
• The meetings of the risk management committee shall be conducted in such a manner that on a continuous basis not more than one hundred and eighty days shall elapse between any two consecutive meetings.
• The Risk Management Committee shall have powers to seek information from any employee, obtain outside legal or other professional advice, and secure attendance of outsiders with relevant expertise if it considers necessary

Reg 24 A – Secretarial Compliance Report

• Every listed entity and its material unlisted subsidiaries incorporated in India shall undertake a secretarial audit and shall annex a secretarial audit report given by a company secretary in practice, in such form as specified, with the annual report of the listed entity
• Every listed entity shall submit a secretarial compliance report in such form as specified, to stock exchanges, within 60 days from the end of each financial year

Reg 27- Corporate Governance report to Stock Exchange: To be submitted within 21 days from the quarter end instead of 15 days with the stock exchange.

Reg 25 – Meeting of Independent Directors: Independent Directors shall meet once in every financial year instead of the previous requirement of once every year

Reg 31 A – Disclosure of Class of shareholders and Conditions for Reclassification:

• Reclassification of the status of a promoter to the public shall be permitted by the stock exchanges only upon satisfaction of the following conditions:
• an application for reclassification has been made by the listed entity to the stock exchanges within thirty days from the date of approval by shareholders in general meeting after ensuring procedural requirements.

Provisions shall not apply in cases:

(a) where the promoter(s) seeking reclassification and persons related to the promoter(s) seeking reclassification, together, do not hold more than 1% of the total voting rights in the listed entity;

(b) where reclassification is pursuant to a divorce.

• This regulation shall not apply if reclassification of promoter(s) is as per the resolution plan approved under section 31 of the Insolvency Code or pursuant to an order of a regulator under any law subject to the condition that such promoter(s) seeking reclassification shall not remain in control of the listed entity
• In case of reclassification pursuant to an open offer or a scheme of arrangement, the certain provisions this regulation shall not apply if the intent of the erstwhile promoter(s) to reclassify has been disclosed in the letter of offer or scheme of arrangement

Reg 32 (6)- Where the listed entity has appointed a monitoring agency to monitor utilisation of proceeds of a public or rights issue, the listed entity shall submit to the stock exchange(s) any comments or report received from the monitoring agency within 45 days from end of each quarter.

Reg 34- Business Responsibility Report (BRR)

• BRR report was applicable to top 1000 listed entities as per SEBI (Listing Obligations and Disclosure Requirements) (Fifth Amendment) Regulations, 2019. However as per the amended LODR, for the top 1000 listed entities based on market capitalization, a business responsibility report describing the initiatives taken by the listed entity from an environmental, social and governance perspective, in the format as specified by the Board from time to time
• The requirement of submitting a business responsibility report shall be discontinued after the financial year 2021–22 and thereafter, with effect from the financial year 2022–23, the top 1000 entities based on market capitalization shall submit a business responsibility and sustainability report in the format as specified by the Board from time to time.
• Even during the financial year 2021–22, the top 1000 listed entities may voluntarily submit a business responsibility and sustainability report in place of the mandatory business responsibility report Provided further that the remaining listed entities including the entities which have listed their specified securities on the SME Exchange, may voluntarily submit such reports. Explanation: For the purpose of this clause, market capitalization shall be calculated as on the 31st day of March of every financial year

Reg 40(9)- Certificate to Stock Exchange now to be submitted once a year within 30 days of end of Financial Year.

Reg 43(A)- Dividend Distribution Policy

Now applicable for top 1000 listed entities (instead of top 500 listed entities) on the website of the listed entity and a web-link shall also be provided in their annual reports

Reg 44 – Voting Results

The listed entity shall submit to the stock exchange, within 2 working days (instead of 45 hours) of the conclusion of its General Meeting, details regarding the voting results in the format specified by the Board.

Reg 46 – Website –In regulation new requirement prescribed

Schedule of analysts or institutional investors meet and presentations made by the listed entity to analysts or institutional investors.

Explanation: For the purpose of this clause meet shall mean group meetings or group conference calls conducted physically or through digital means.

• Audio or video recordings and transcripts of post earnings/quarterly calls, by whatever name called, conducted physically or through digital means, simultaneously with submission to the recognized stock exchange(s), in the following manner:
• the presentation and the audio/video recordings shall be promptly made available on the website and in any case, before the next trading day or within twenty-four hours from the conclusion of such calls, whichever is earlier;
• the transcripts of such calls shall be made available on the website within five working days of the conclusion of such calls:
• The information under sub-clause (i) shall be hosted on the website of the listed entity for a minimum period of five years and thereafter as per the archival policy of the listed entity, as disclosed on its website.
• The information under sub-clause (ii) shall be hosted on the website of the listed entity and preserved in accordance with clause (a) of regulation 9. The requirement for disclosure(s) of audio/video recordings and transcript shall be voluntary with effect from April 01, 2021 and mandatory with effect from April 01, 2022.
• A listed entity, which has a subsidiary incorporated outside India—

(a) where such subsidiary is statutorily required to prepare consolidated financial statement under any law of the country of its incorporation, the requirement of this proviso shall be met if consolidated financial statement of such subsidiary is placed on the website of the listed entity;

(b) where such subsidiary is not required to get its financial statement audited under any law of the country of its incorporation and which does not get such financial statement audited, the holding Indian listed entity may place such unaudited financial statement on its website and where such financial statement is in a language other than English, a translated copy of the financial statement in English shall also be placed on the website.

The below mentioned to also be uploaded on the website) – ―

• secretarial compliance report as per sub-regulation (2) of regulation 24A of these regulations;
• disclosure of the policy for determination of materiality of events or information required under clause (ii), sub-regulation (4) of regulation 30 of these regulations;
• disclosure of contact details of key managerial personnel who are authorized for the purpose of determining materiality of an event or information and for the purpose of making disclosures to stock exchange(s) as required under sub-regulation (5) of regulation 30 of these regulations;
• disclosures under sub-regulation (8) of regulation 30 of these regulations;
• statements of deviation(s) or variation(s) as specified in regulation 32 of these regulations;
• dividend distribution policy by listed entities based on market capitalisation as specified in sub-regulation (1) of regulation 43A;
• annual return as provided under section 92 of the Companies Act, 2013 and the rules made thereunder.

Intimation of the outcome of Board meetings (reg. 30 (6) and schedule III Part A)

In cases where the board meeting in which financial results are considered to continue for more than one day, financial results must be disclosed to the Stock Exchanges within 30 minutes of the end of the meeting for the day on which the same has been considered

Reg 47- Removal of certain Newspaper Publications

Board Meeting notice publication in newspaper removed. Also, statements of deviation(s) or variation(s) as specified in sub-regulation (1) of regulation 32 on a quarterly basis, after reviewing by the audit committee and its explanation in directors report in the annual report that had to be published in a newspaper is now removed.

Disclosures w.r.t resolution plan/restructuring (schedule III Part A)

The words ‘Corporate  debt  restructuring’ have been  substituted with  ‘Resolution  plan

/ restructuring in  relation to loans/borrowings from banks/financial institutions

The following disclosures are to be made:

-Decision to initiate resolution of loans/borrowings

-Signing of Inter-Creditors Agreement by lenders

-Finalization of resolution plan;

-Implementation of resolution plan;

-Salient features of the resolution/restructuring plan (not including commercial secrets)

Corporate Governance Report (schedule V para C) in the Annual Report

Disclosure w.r.t. the Risk Management Committee needs to include the following:

(a) brief description of terms of reference;

(b) composition, name of members and chairperson;

(c) meetings and attendance during the year;

 The aforesaid Amended LODR can be accessed at https://egazette.nic.in/WriteReadData/2021/226859.pdf

 For any queries, you can write us at secretarial@rmpsco.com 

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