SEBI Meeting: Several key decisions including, relaxation in Delisting norms and enhanced compliance for Related Party Transactions

✓ SEBI board has approved certain key amendments to SEBI Delisting Regulations and SEBI Listing Regulations, as follows:

1. Review of delisting framework pursuant to open offer:

The Board approved the proposal to amend the existing regulatory framework

for delisting of equity shares pursuant to open offer as provided under the extant

Regulation 5A of the SEBI (Substantial Acquisition of Shares and Takeovers)

Regulations, 2011 (Takeover Regulations).

2. Review of certain provisions related to Superior Voting Rights Shares

Framework:

- Relaxation in the eligibility requirements related to Superior Voting Rights (SR) Shares framework as follows:

1. As per the existing provisions, an SR shareholder should not be part of promoter group having net worth more than INR 500 Cr. It has been changed to

require that the SR shareholder, as an individual, should not have net-worth of more than INR 1000 Cr.

2. The minimum gap between issuance of SR shares and filing of Red Herring Prospectus is reduced to 3 months from the existing requirement of 6 months.

3. Review of regulatory provisions on Related Party Transactions under SEBI Listing Regulations:

A. Definition of related party shall include:

a. all persons or entities forming part of promoter or promoter group irrespective of their shareholding;

b. any person/entity holding equity shares in the listed entity, as below, either directly or on a beneficial interest basis at any time during the immediately preceding financial year:

i. to the extent of 20% or more

ii. to the extent of 10% or more w.e.f. April 1, 2023.

B. Scope of Related Party Transactions expanded to include following transactions:

a. the listed entity or any of its subsidiaries on one hand and a related party of the listed entity or any of its subsidiaries on the other hand;

b. the listed entity or any of its subsidiaries on one hand, and any

other person or entity on the other hand, the purpose and effect of which is to benefit a related party of the listed entity or any of its subsidiaries w.e.f. April 1, 2023.

C. Prior approval of the shareholders:

- Prior approval of the shareholders of the listed entity shall be required for material RPTs having a threshold of lower of INR 1000 Cr or 10% of the consolidated annual turnover of the listed entity.

D. Approval of the Audit committee shall be required for following:

a. All RPTs and subsequent material modifications as defined by the Audit committee;

b. RPTs where subsidiary is a party but listed entity is not a party subject to threshold of -

i. 10% of the consolidated turnover of the listed entity,

ii. 10% of the standalone turnover of the subsidiary w.e.f. April 1, 2023.

E. Enhanced disclosure of information related to RPTs to be:

a. Placed before the audit committee,

b. Provided in the notice to shareholders for material RPTs, and

c. Submitted to the stock exchanges every six months in the format specified by the Board with the following timelines:

i. within 15 days from the date of publication of financials;

ii. simultaneously with the financials w.e.f. April 1, 2023.

- These amendments shall come into force with effect from April 1, 2022 unless

otherwise specified above.

∆ Other Key Decisions:

1. Framework for Gold Exchange and SEBI (Vault Managers) Regulations, 2021 proposed.

2. Framework for Social Stock Exchange approved.

3. Investor Charter for Securities Market

4. Amendment to SEBI (Alternative Investment Funds) Regulations, 2012

5. Introduction of Silver Exchange Traded Funds in India

6. Amendments to SEBI (Portfolio Managers) Regulations, 2020 and SEBI

(Alternative Investment Funds) Regulations, 2012

7. Permitting Resident Indians (other than Individuals) to become constituents

of FPIs that are registered as AIFs in IFSCs.

8. Amendment to Schedule II of Securities and Exchange Board of India (Intermediaries) Regulations, 2008 -Criteria for determining ‘Fit and Proper

Person’

- Please click here to refer SEBI press release.

Company Law Update: Extension of AGM by 2 Months

✓ Ministry of Corporate Affairs has advised Registrar of Companies to give approval for extension of timeline for holding Annual General Meeting by 2 Months to the Companies whose financial year ended on March 31, 2021.

✓ Click here to view extension Orders issued by all Registrar of Companies.

MCA21 V3 Version : Slew of announcements and improvements by MCA for ease of stakeholders experience and to ensure timely compliance

✓ Ministry of Corporate Affairs to roll out updated version of official website MCA 21 V3.0 soon, as announced by official of Ministry of Corporate Affairs (MCA) during a webinar hosted by Institute of Company Secretaries of India. 

✓ Glance at key objectives, features, benefits, improvements and future features as follows:

✓ Key objectives:

- Enhanced user experience

- Improved helpdesk & support

- Alignment with global best practices

- Strengthening enforcemert of law: Autopilot surveillance, e-adjudication, single source of truth

✓ Key Components:

✓ Features of New Website:

- New design focused on simpilfication, content priorilisation and updated categorisation.

- Natural Language Processing based Chatbot to assist user with their queries on a real time basis.

- Updated Contact Us feature will help identication of relevant MCA Office, finding their addresses and location of Google Maps.

- Re-categorization of reports and documents helps in eliminating duplicate and redundant information.

- Revamped Master Data Sevice will provide Corporate Master data with new detalis pertaining to Jurisdictions of ROC, RD and NCLT, Auditors detais, key financial information of the Company.

- Feedback tool to collaborate inputs from stakeholders on proposed amendments/ changes on a real-time basis.

- Re-categorization of services with introduction of quick access to key services will enable ease of use

Simplfied User registration Process

Upgraded User dashboards.

✓ Benefits of New Website:

- Improved look and Feel of the website to improve user experience

- Easy navigation for users

- Simplfied design to re-fresh the user's experience along with enhanced focus on key services

- Increased stakeholder convenience and alignment with global trends

✓ Improvements:

- Forms to be made Web forms

- Based on the information subomitted, a pdf will be generated which will be signed by the stakeholders before submission

- Improved auto-fill and quicker validation

✓ Attachment:

- To be removed as far as possible

- Accepted size of attachment to be increased

✓ Future Features:

- Mobile application to access MCA 21 V3 Website.

- Limited forms can be uploaded from mobile without necessity of system.

Courtsey: ICSI Webinar

SEBI Update: Corporate Governance requirements to become applicable to Debt Listed Companies

KEY AMENDMENTS:

(1) SEBI has merged SEBI ILDS (Issue and Listing of Debt Securities) Regulations and SEBI NCRPS (Non-Convertible Redeemable Preference Shares) Regulations into a single regulation to be called SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021.

(2) SEBI has amended SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 to include Corporate Governance requirements for listed companies which have listed their debt securities.

✓ Corporate Governance provisions such as Composition of Board, Related Party Transactions and Audit Committee, shall also apply to a listed entity which has listed its non-convertible debt securities and has an outstanding value of such debt securities of INR 500 Crore and above.

✓ In case an entity crosses specified threshold of Rs 500 crore later on during the year, it shall ensure compliance with these provisions within six months from such date.

✓ These provisions shall be applicable to a 'high value debt listed entity' on a 'comply or explain' basis until March 31, 2023 and on a mandatory basis thereafter. Such listed entities would be determined on basis of value of principal outstanding of listed debt securities as on March 31, 2021.

✓ Further, in case the entity is not able to achieve full compliance with the provisions, till such time, it shall explain the reasons for such non-compliance/ partial compliance and the steps initiated to achieve full compliance in the quarterly compliance report filed on Corporate Governance.

✓ Board of the manager of the trust shall comply with the rules related to corporate governance, in case of a 'high value debt listed entity' is a Real Estate Investment Trust (REIT) and Infrastructure Investment Trust (InvIT), 

✓ In case of a high value Debt Listed Company which is a body corporate, the non-executive directors on the board of such Company shall be treated as independent directors and in case such entity which is a trust, the non-employee Trustees on its board will be treated as Independent Directors.

✓ Listed Company shall inform the exchanges at least two working days in advance about the board meeting in which proposals, including financial results and fund raising by way of issuance of non-convertible securities, are to be considered.

✓ The listed entity shall intimate the exchanges not later than the date of commencement of dispatch of notices, in case of any annual general meeting or extraordinary general meeting that is proposed to be held for obtaining shareholder approval for financial results and fund raising via non-convertible securities.

✓ Listed Company shall prepare and submit unaudited or audited quarterly and year-to-date standalone financial results on a quarterly basis within 45 days from the end of the quarter to the stock exchange.

✓ In case of entities which have listed their debt securities, a copy of the financial results submitted to stock exchanges shall also be provided to debenture trustees on the same day.

✓ Aforementioned amendments shall be effective from September 7, 2021.

✓ To view, the amendments regulations, please click here.

NSE Update: Introduction of XBRL Facility for reporting of Related Party Transactions under SEBI Listing Regulations

✓ Introduction of facility of filing of Related Party Transactions in XBRL mode (with immediate effect) by National Stock Exchange of India Limited, in consultation with SEBI, under Regulation 23 (9) of SEBI (Listing Regulations and Disclosure Requirements) Regulations, 2015, to make the disclosure more accurate and efficient.