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The Securities and Exchange Board of India (SEBI), via its notification dated 27 March 2025, introduced significant amendments to the Securities and Exchange Board of India...
The Securities and Exchange Board of India (SEBI), via its
notification dated 27 March 2025, introduced significant amendments
to the Securities and Exchange Board of India (Listing Obligations
and Disclosure Requirements) Regulations, 2015 (LODR Regulations).
These changes aim to reinforce corporate governance, enhance
transparency, and impose stricter compliance requirements on
entities listed on SME Exchanges and those classified as High-Value
Debt Listed Entities (HVDLEs).
A gist of the important amendments to the Listing Regulations is
summarized in below table:
SEBI (Listing Obligations and Disclosure Requirements)
(Amendment) Regulations, 2025
Sr. No.
Particulars
Amendment
1
Revised thresholds and governance norms for
HVDLEs
The threshold for the applicability of corporate governance
norms (Regulations 15 to 27) to entities with listed
non-convertible debt securities has been increased from INR 500
crore to INR 1,000 crore.
Entities exceeding this threshold during a financial year will
be required to comply within six months, with disclosures
commencing from the third quarter post-trigger.
HVDLEs with listed specified securities must comply with
Regulations 15 to 27.
LODR Regulations will continue to apply to an HVDLE until its
outstanding listed debt securities remain below the prescribed
threshold for three consecutive financial years.
A dedicated chapter on corporate governance norms for HVDLEs
has been introduced.
2
Changes in Directorship Limits
Regulation 17A: The definition of directorship limits now
includes HVDLEs in the cumulative count of listed entities.
Limits on committee positions have also been revised to include
those held in HVDLEs.
A new Explanation (2) clarifies that directorships held on an
ex-officio basis due to statutory requirements or contractual
frameworks (in cases of public sector undertakings and
public-private partnership entities) are excluded from these
limits.
Provisions related to HVDLEs will become effective six months
from 27 March 2025 or the next Annual General Meeting (AGM),
whichever is later.
3
Corporate Governance Norms for SME-Listed Entities
& Related Party Transactions (RPTs)
Effective 1 April 2025, Regulation 23 (RPTs) will be applicable
to SME-listed entities with either a paid-up equity share capital
exceeding INR 10 crore or a net worth exceeding INR 25 crore as of
the last day of the previous financial year.
Entities crossing the specified thresholds will be required to
comply within six months from the date of applicability.
Compliance with RPT provisions will continue until the entity
remains below the prescribed thresholds for three consecutive
financial years.
For SME-listed entities, an RPT will be considered material if
it exceeds INR 50 crore or 10% of the annual consolidated turnover,
whichever is lower, effective 1 April 2025.
Our Comments
The revised framework is expected to bolster corporate
governance mechanisms, particularly for SME-listed entities and
HVDLEs. Enhanced disclosure norms and a dedicated governance
structure for HVDLEs will promote greater accountability and
transparency. These amendments indicate SEBIs continued focus on
strengthening regulatory oversight to mitigate governance risks and
enhance investor confidence.
Entities impacted by these amendments should proactively assess
their compliance obligations and implement necessary governance
measures to align with the revised LODR Regulations.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
