SEBI (LISTING
OBLIGATION AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2015
The Securities and Exchange Board of India (SEBI) has notified the
listing regulations aligned with the Companies Act, 2013 on 02nd
September, 2015.
The latest notified SEBI (Listing Obligation and Disclosure
Requirements) Regulations, 2015 will consolidate and streamline the provisions
of existing listing agreements for different segments of the capital market.
This will also replace the existing listing agreements for all types of
securities. The regulations thus have been structured to provide ease of
reference by consolidating into one single document across various types of
securities listed on the stock exchanges’.
As per Regulation 1(2), the provisions of this regulation will be
effective from 90th day from the day of the publication of the same
in the Official Gazette. Two provisions viz. Regulation 23(4) and 31A will be
applicable with the immediate effect. These two regulations pertains to
- 1. Passing of ordinary resolution instead of
special resolution in case of all material related party transactions subject
to related parties abstaining from voting on such resolutions; and
- 2. Re-classification of promoters as public
shareholders under various circumstances.
SEBI (Listing Obligation and Disclosure Requirements) Regulations,
2015 have been divided into two parts. The substantive provisions incorporated
in the main body of regulations and procedural requirements in the form of
schedules to the regulations.
According to the SEBI, a shorten version of the listing agreement
would be prescribed shortly and the same has to be signed by the companies
while getting its securities listed on the recognized stock exchanges. Existing
listed entities will be required to sign the shortened version within 6 months
of the notification of the regulations.
APPLICABILITY : RULE 3
SEBI (Listing Obligation and Disclosure Requirements) Regulations,
2015, is applicable on the listed entity having any of the below mentioned
securities listed on the recognized stock exchange(s):
· 1. specified securities listed on main board or SME
Exchange or institutional trading platform;
· 2. non-convertible debt securities, non-convertible
redeemable preference shares, perpetual debt instrument, perpetual
non-cumulative preference shares;
· 3. Indian depository receipts;
· 4. securitised debt instruments;
· 5. units issued by mutual funds;
· 6. any other securities as may be specified by the
Board.
Now lets us discuss the
provisions which will be applicable with immediate effect.
REGUALTION 23: RELATED PARTY
TRANSACTIONS
Regulation 23(4) will be applicable with immediate effect. As per the
sub-regulation 4 of regulation 23, for any material related party transaction,
the company is required to take the approval of the shareholders through
ordinary resolution and the related parties shall abstain from voting on such
resolutions whether the entity is a related party to the related party transactions
or not.
Earlier for the approval of the related parties’ transactions, the
company is required to take approval of the shareholders through special
resolution. This change is being made in align with the changes made in the
Companies Act, 2013 through the amendment.
Before moving to regulation 31A, we have to first understand the terms
‘promoter and promoter group’ and ‘professionally managed’.
Promoters: As per
regulation 2(1)(w), the word ‘promoter and promoter group’ mean the same as
assigned in clauses (za) and (zb) of sub-regulation (1) of regulation 2 of the
Securities and Exchange Board of India (Issue of Capital and Disclosure
Requirements) Regulations, 2009.
As per Regulation 2(1)(za) “promoter”
includes:
(i) the person or persons who are in control of the issuer;
(ii) the person or persons who are instrumental in the formulation of
a plan or programme pursuant to which specified securities are offered to
public;
(iii) the person or persons named in the offer document as promoters:
Following persons cannot be deemed to be promoter:
- 1. A director or officer of the company acting
merely in his professional capacity.
- 2. Financial Institutions, scheduled bank, foreign
institutional investor and mutual fund even it holds 10% or more equity shares
of the company but these are treated as promoters for the subsidiaries or
companies promoted by them or for mutual fund sponsored by them.
As per Regulation 2(1)(zb) “promoter
group” includes
(i) the promoter;
(ii) an immediate relative of the promoter (i.e., any spouse of that
person, or any parent, brother, sister or child of the person or of the
spouse); and
(iii) in case promoter is a body corporate:
(A) a subsidiary or holding company of such body
corporate;
(B) any body
corporate in which the promoter holds ten per cent. or more of the equity share
capital or which holds ten per cent. or more of the equity share capital of the
promoter;
(C) any body
corporate in which a group of individuals or companies or combinations thereof
which hold twenty per cent. or more of the equity share capital in that body
corporate also holds twenty per cent. or more of the equity share capital of
the issuer; and
(iv) in case the promoter is an individual:
(A) any body
corporate in which ten per cent. or more of the equity share capital is held by
the promoter or an immediate relative of the promoter or a firm or Hindu
Undivided Family in which the promoter or any one or more of his immediate
relative is a member;
(B)
any body corporate in which a body corporate as provided in (A) above holds ten
per cent. or more, of the equity share capital;
(C) any Hindu
Undivided Family or firm in which the aggregate shareholding of the promoter
and his immediate relatives is equal to or more than ten per cent. of the
total; and
(v) all persons whose shareholding is aggregated for the purpose of
disclosing in the prospectus under the heading "shareholding of the
promoter group"
Financial Institutions, scheduled bank, foreign institutional investor
and mutual fund even it holds 10% or more equity shares of the company are not
treated as promoter group but these are treated as promoter group for the
subsidiaries or companies promoted by them or for mutual fund sponsored by
them.
Professionally Managed: For
the purpose of Regulation 31A, an entity may be considered as professionally
managed, if:
(i) No person or group along with persons acting in concert taken
together shall hold more than one per cent paid-up equity capital of the entity
including any holding of convertibles/outstanding warrants/ Depository
Receipts:
Provided that any mutual fund, bank, insurance company, financial
institution, foreign portfolio investor may individually hold up to ten per
cent paid-up equity capital of the entity including any holding of
convertibles/outstanding warrants/Depository Receipts.
(ii) The promoters seeking reclassification and their relatives may
act as key managerial personnel in the entity only subject to shareholders’
approval and for a period not exceeding three years from the date of
shareholders’ approval.
(iii) The promoter seeking reclassification along with his promoter
group entities and the persons acting in concert shall not have any special
right through formal or informal arrangements. All shareholding agreements
granting special rights to such outgoing entities shall be terminated.
REGULATION 31A: DISCLOSE OF
CLASS OF SHAREHOLDERS AND CONDITIONS FOR RECLASSIFICATION
As per Regulation 31A, shareholding pattern of promoter and promoter
group shall be disclosed separately on the “Shareholding
Pattern” appearing on the website of all stock exchanges where the
securities listed in accordance with the format prescribed by SEBI (format is
available on the website of the respective stock exchanges).
If there is any change in the shareholding pattern and the stock
exchange receive application to modify or reclassify the same then it may allow
on satisfaction that the compliance of the relevant provision and evidences
regarding the change in the status of the shareholders. In case the entity is
listed on more than one stock exchanges then all stock exchanges shall jointly
decide on the application for modification or reclassification.
In case of transmission/ succession/ inheritance, the inheritor shall
be classified as promoter.
When a new promoter replaces the previous promoter subsequent to an
open offer or in any other manner, reclassification may be permitted subject to
fulfillment of the following 2 conditions:
(i)
Approval of the shareholders for the same in the general meeting;
(ii)
Compliances of the following conditions:
o
Such promoter along with the promoter group and
the Persons Acting in Concert shall not
hold more than ten per cent of the paid-up equity capital of the entity.
o
Such
promoter shall not continue to have any
special rights through formal or informal arrangements. All shareholding
agreements granting special rights to such entities shall be terminated.
o
Such promoters and their relatives shall not act as key managerial person for a
period of more than three years from the date of shareholders’ approval.
(The resolution of the said shareholders’ meeting must specifically grant
approval for such promoter to act as KMP)
With the approval of the shareholders in a general meeting, the
existing promoter of the company may be re-classified as public shareholders if
the company becomes professionally managed. Existing promoters cannot
classified as public shareholders, if it exercises control over the affairs of the
company
If the public shareholders seek to re-classify itself as promoter,
then it shall make an open offer in accordance with the provisions of SEBI
(Substantial Acquisition of Shares and Takeovers) Regulations, 2011.
Remaining provisions of the
Regulation will be updated shortly on our website along with FAQs
Thanks and regards,
Prince Kumar
Associate
Proglobal Corp
Address: 46A, 1st
Floor, Amar Plaza, IP Extension, Delhi- 110092
Website: www.proglobalcorp.com | email: proglobalcorp@gmail.com |
Contact: 011- 43558440
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