|SEBI (Listing Obligations and Disclosure Requirements)
(Second Amendment) Regulations, 2023
|Amendments Applicable to Equity-Listed
|Filling the Vacancy in the Office of Certain Key
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
- 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
|Sale, Lease or Disposal of Undertaking Outside Scheme
(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.
|Continuation of Director to be Approved Once in Every
- 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
All Directors (except exempted categories) need to be appointed or
re-appointed by the shareholders once in every five years.
|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.
|New Criteria for Determination of Materiality of
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
- 2% of turnover, as per the last audited consolidated financial
- 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
- 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.
|Changes in the Policy for Determination of
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
Change in Timeline for Disclosure of Material
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.
|Response to Reported Events/Information in Mainstream
Disclosure of Receipt of a Communication from any
Regulatory, Statutory, Enforcement or Judicial Authority
- 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 Requirements for Certain types of Agreements
Binding Listed Entities
- 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.
- 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
- 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
Furthermore, disclosures are also required on receipt of
communications from any authority or for certain types of binding
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.
|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
- 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
- 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
|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
|Amendments Applicable to Debt-Listed
|Extension of Time for Applicability of Corporate
Governance norms for 'High-Value Debt-Listed
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
|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
|Debt-listed companies were earlier required to make certain
quarterly disclosures relating to interest/dividend/principal
Hence, even those companies that didn't have any
interest/principal payments were required to file NIL returns on a
This amendment willreduce the compliance burden of small