The Securities and Exchange Board of India (SEBI) has, vide its notification dated 14 June 2023, amended the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations). These amendments shall come into force from 14 July 2023 (Effective Date), unless specified otherwise.

All the important changes in the Listing Regulations are summarized in the below table:

SEBI (Listing Obligations and Disclosure Requirements) (Second Amendment) Regulations, 2023
Sr. No. Amendments Applicable to Equity-Listed Companies Comments
1 Filling the Vacancy in the Office of Certain Key Managerial Personnel

Vacancies in the office of the below Key Managerial Personnels (KMPs) of a listed entity are now required to be filled within three months from the date of vacancy:
  • Compliance Officer
  • Chief Executive Officer (CEO)
  • Managing Director (MD)
  • Whole Time Director
  • Manager
  • Chief Financial Officer, and
  • Director (however, the vacancy due to expiration of the term of office of any director shall be filed not later than the date such office is vacated)
Timely filling of vacancies in the office of KMPs will ensure important functions in the listed entity are not getting hindered and, moreover is a welcome step in the interest of public investors.
2 Sale, Lease or Disposal of Undertaking Outside Scheme of Arrangement

(Effective from 15 June 2023, for transactions where notice has not been dispatched to the shareholders)
  • Prior approval of shareholders by way of special resolution is required in the event of the sale, lease, or disposal of the whole or substantial whole of any undertaking of the listed entity.
  • Furthermore, votes cast by the public shareholders in favor of the resolution exceed the votes cast by such public shareholders against the resolution.
  • The aforesaid is not applicable in case of sale, lease, or disposal of an undertaking to the wholly owned subsidiary of the listed entity, subject to certain conditions.
This new requirement of taking prior approval of shareholders along with the approval of a majority of public shareholders will protect the minority shareholders from unjust and unfair sale, lease, or disposal of undertakings.
3 Continuation of Director to be Approved Once in Every Five Years
  • From 1 April 2024, the continuation of a director of a listed entity would require the approval of the shareholders, once in every five years, from the date of their appointment or re-appointment, as the case may be.
  • If, as on 31 March 2024, a listed company has any Director whose appointment was not approved in the last five years then such appointments will be required to be approved by the shareholders in the first general meeting held after 31 March 2024.
  • Exceptions: (a) Director appointed pursuant to the order of court or tribunal; (b) Re-appointment of directors liable to retire by rotation under the Companies Act, 2013; (c) Nominee Director of (I) The Government of India, (other than in case of Public Sector Understakings); (ii) Financial Sector Regulator; (iii) Regulated financial institution pursuant a lending arrangement of the listed entity; (iv) Debenture trustee under a subscription agreement for the debentures issued by the listed entity.
As per this new amendment, no Director shall be able to hold permanent Directorships.

All Directors (except exempted categories) need to be appointed or re-appointed by the shareholders once in every five years.
4 Special Rights to Shareholders
  • Any kind of special rights granted to the selected shareholders of listed entities is now required to be approved in a general meeting by way of a special resolution once in every five years from the date of the grant of such special right.
  • Special rights available to such selected shareholders as of today will be required to be approved by shareholders by way of a special resolution within a period of five years.
  • Exceptions - Special rights granted to the following shareholder, if applicable (i) Regulated financial institution pursuant to a lending arrangement with the listed entity; (ii) Debenture trustee under a subscription agreement for the debentures issued by the listed entity.
This new requirement will ensure that no shareholder enjoys favorable rights on a perennial basis.

Any kind of special rights will now have to be approved by the shareholders once in every five years.
5 New Criteria for Determination of Materiality of Events/Information

SEBI has added one more criteria for determining the materiality of events requiring disclosures;
  • The omission of an event or information whose value or the expected impact in terms of value exceeds the lower of the following:
    • 2% of turnover, as per the last audited consolidated financial statements.
    • 2% of net worth, as per the last audited consolidated financial statements, except in case the net worth is negative.
    • 5% of the average of absolute value of profit or loss after tax, as per the last three audited consolidated financial statements.
  • Any continuing event/information which now qualifies to be "Material" as per this new Materiality Threshold, is required to be disclosed before 13 August 2023.
SEBI has introduced this additional Materiality Threshold for determining the materiality of events based on turnover/net worth/profits of the company.
6 Changes in the Policy for Determination of Materiality

The policy for determination of materiality approved by the Board of Directors shall not dilute any requirement specified under the Listing Regulations and provide a mechanism for (i) Assisting the employees in identifying any potential material event/information and (ii) Reporting the same to the relevant key managerial personnel.

Change in Timeline for Disclosure of Material Events

Listed entities are now required to disclose the material events/information to the Stock Exchanges in terms of the LODR Regulations within the following timelines:
  • 30 minutes from the closure of the board meeting where a decision pertaining to the event/information has been taken.
  • 12 hours from the occurrence of any event or information emanating from within the listed entity.
  • 24 hours from the occurrence of any event or information not emanating from within the listed entity.
These changes shall promote timely disclosures of material information concerning listed subsidiaries.
7 Response to Reported Events/Information in Mainstream Media
  • Listed entities are required to confirm, deny, or clarify any reported event/information in the mainstream media which indicates rumors of an impending specific material event/information and is not general in nature within 24 hours of such reporting.
  • The aforesaid is applicable only to top the 100 listed entities (with effect from 1 October 2023) and the top 250 listed entities (with effect from 1 April 2024).
  • The term "Mainstream Media" has been defined to include: Print or electronic mode of the following: (i) Newspapers registered with the Registrar of Newspapers for India; (ii) News channels permitted by the Government of India; (iii) Content published by the publisher of News and Current Affairs content, as defined under the Information Technology (Intermediary Guidelines and Digital Media Ethics Code), Rules, 2021; and (iv) Newspapers or news channels, or news and current affairs content similarly registered or permitted or regulated, as the case may be, in jurisdictions outside India.
Disclosure of Receipt of a Communication from any Regulatory, Statutory, Enforcement or Judicial Authority
  • The listed entity is required to disclose the communication received from any regulatory, statutory, enforcement, or judicial authority (Authority), along with the event/information, if such event/ information is required to be disclosed by the listed entity as per the LODR Regulations unless the disclosure of communication is prohibited by such Authority.
Disclosure Requirements for Certain types of Agreements Binding Listed Entities
  • All the shareholders, promoters, promoter group entities, related parties, directors, key managerial personnel, employees of the listed entity, or of its holding subsidiary, or associate company (Executing Parties) entering into any agreement, amongst themselves or with a third party, individually or jointly, which directly, indirectly, or potentially (i) Impacts the management or control of the listed entity, or (ii) Imposes restriction or creates liability on the listed entity; shall inform the listed entity about the agreement within two days and the listed company shall, in turn, disclose the same to the Stock Exchanges, even if the listed entity is not a party to the agreement (Executed Agreements).
  • All agreements that subsist as of today shall be disclosed to the Stock Exchanges and on its website within the timelines as specified by the Board and their salient features, including the link to the webpage where the complete details of such agreements are available, shall be disclosed in the Annual Report.
A responsibility has been accorded to top Listed entities to report/clarify on information being published in mainstream media's. However, it will be challenging for listed companies to keep a track of rumors being circulated on vast Indian mainstream media and clarify their stand within the prescribed timelines.

Furthermore, disclosures are also required on receipt of communications from any authority or for certain types of binding agreements.

SEBI aims to make sure that public shareholders are timely and adequately updated on all the rumors/stock news being circulated in the media and also on initiation of any kind of action against the company or its management.
8 Disclosure of Material Events

The following key events/information have been added in Paragraph A of Part A of Schedule III of the LODR Regulations and are required to be disclosed to the Stock Exchanges without any application of materiality guidelines:
  • Acquisitions by the listed entity (including an agreement to acquire), if the cost of acquisition or the price at which the shares are acquired exceeds the Materiality Threshold
  • Sale or disposal of whole or substantially whole of any undertaking or subsidiary of a listed entity; or (b) sale of a stake in Associate Company, which includes an agreement to sell shares or voting rights in a company such that (i) company ceases to be a wholly owned subsidiary, a subsidiary or an associate company of the listed entity; or (ii) amount of the sale exceeds the Materiality Threshold.
  • Fraud or Financial Defaults by a listed entity, its subsidiary, promoter, director, key managerial personnel, senior management, or arrest of the aforesaid individuals, in India or abroad.
  • Resignation of key managerial personnel, senior management, compliance officer, or director (other than an independent director) of the listed entity, along with the letter of resignation outlining the detailed reasons, is to be disclosed within seven days from the resignation coming into effect.
  • Indisposition or Unavailability of MD or CEO of the listed entity to fulfill the requirements of the role in a regular manner, for more than 45 days in any rolling period of 90 days, along with the reasons for same.
  • Announcement or Communication by directors, promoters, key managerial personnel, or senior management of a listed entity made through social media intermediaries or mainstream media in relation to any event/information which is material for the listed entity, and the same has not already been made available in the public domain by the listed entity.
  • Any action initiated or orders passed by any Authority against (i) the listed entity; (ii) its directors, key managerial personnel, senior management, or promoter; or (iii) its subsidiary, in respect of (a) search or seizure; (b) re-opening of accounts and investigation under the Companies Act, 2013; (c) suspension; (d) imposition of fine or penalty; (e) settlement of proceedings; (f) debarment; (g) disqualification; (h) closure of operations; (i) sanctions imposed; (j) warning or caution; or (h) any other similar actions, along with the requisite details.
  • Voluntary revision of financial statements or board report of the listed entity.
To ensure more accurate public disclosures, SEBI has added certain key events/information in the existing list of events which require mandatory disclosures without any application of materiality guidelines.
9 Breach of Cyber Security or Loss of Data

In the quarterly compliance report on corporate governance, listed entities must disclose the details of Cyber security incidents or breaches or loss of data or documents.
Cyber security or loss of data or documents is now required to be disclosed to Stock Exchanges.
SEBI (Listing Obligations and Disclosure Requirements) (Second Amendment) Regulations, 2023
Sr. No. Amendments Applicable to Debt-Listed Companies Comments
1 Extension of Time for Applicability of Corporate Governance norms for 'High-Value Debt-Listed Entity'

All 'high-value debt-listed companies (Companies which have listed their non-convertible debt securities and have an outstanding value of listed non-convertible debt securities of Rupees Five Hundred Crore and above) were required to comply with certain Corporate Governance norms (Reg 16 - 27 of LODR Regulations) on a 'Comply or Explain' basis until 31 March 2023 and on a mandatory basis thereafter.

This time limit for complying with Corporate Governance norms has been extended upto 31 March 2024.
Most of the Debt-Listed Private Companies were struggling to comply with the stringent Corporate Governance norms which were supposed to become mandatory from 31 March 2023.

Extension of time by one more year will bring a sigh of relief to Debt-Listed Companies.
2 Intimation to Stock Exchanges

Debt-Listed Companies are now required to only submit a certificate to the Stock Exchange regarding the status of payment of interest or dividend, or repayment, or redemption of the principal of non-convertible securities, within one working day of it becoming due, in the manner and format as specified by the Board from time to time.
Debt-listed companies were earlier required to make certain quarterly disclosures relating to interest/dividend/principal obligations.

Hence, even those companies that didn't have any interest/principal payments were required to file NIL returns on a quarterly basis.

This amendment willreduce the compliance burden of small Debt-Listed Companies.


Our Comments

The new changes introduced in the Listing Regulations by SEBI shall strengthen the listing regime for equity and debt-listed companies. These changes are aimed at protecting the interests of minority public investors and promoting complete and timely disclosures of all material information concerning the listed company, its promoter group, KMPs, senior management, etc. However, these stringent and time-bound disclosure requirements are bound to increase the compliance burden of Listed Companies. Simultaneously, the much-awaited extension of time for complying with stringent Corporate Governance norms by a "High-Value Debt-Stock Listed Company" brings a sigh of relief to the Private Debt-Listed Companies.

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