SEBI- Obligation to Listed Entity Has Its Specified Secuirites Listeed

7/25/2019 SEBI- Obligation to Listed Entity Has Its Specified Secuirites Listeed

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DIVESH GOYAL Mob: +918130757966Practicing Company Secretary [email protected]

GOYAL DIVESH& ASSOCIATES

: @DG04 A: 8130757966

FB: @. G I: @.

SEBI (Listing Obligations and Disclosure Requirements) Regulations,

2015 (Listing Regulations)

Now, Securities and Exchange Board of India took direct regulatory role over the listed entities

in India. Securities and Exchange Board of India notified in official gazette its SEBI (Listing

Obligation and Disclosure Requirements) Regulations, 2015 on 2nd September 2015.

Date of Publication in Official Gazette: September 2, 2015

Date of Applicability: December 1, 2015

OBLIGATIONS OF

LISTED

ENTITYWHICH HASLISTED ITSSPECIFIEDSECURITIES:

15. APPLICABILITY:-

A.

E,

E ()

B;

E E

I

NON APPLICABILITY:-

B.

:

Non-convertible debt securities, non-convertible redeemable preference shares, perpetual debt instrument, perpetualnon-cumulative preference shares, Indian depository receipts, securitized debt instruments, units issued by mutual

funds and any other securities as may be specified by the Board. [Regulation 2(1) (h) of SEBI (LODR) Regulations,

2015]2*Main Board means a recognized stock exchange having nationwide trading terminals, other than SME exchange;

3SME exchange means a trading platform of a recognised stock exchange having nationwide trading terminals

permitted by the Board to list the specified securities issued in accordance with this Chapter and includes a stock

exchange granted recognition for this purpose but does not include the Main Board;

CONTENT OF ARTICLES

Background- Obligation only for Specified

Securities

A. Applicability

B. Non Applicability

C. Composition of Board

D. Frequency of Board MeetingE. Review of Compliance Report

F. Duties of Board of Director

G. Compliance Certificate

H. Risk Management

I. Commiittees under Listing Regulation

A C

& C

G C

C

LODR- SERIES- 3


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10 C ( C) 25 C ( F C)

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1. 17 B D

2. 18 A C

3. 19 C

4. 20 C5. 21 C

6. 22

7. 23

8. 24 C G

C

9. 25

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10. 26 D

11. 27 C G

12. 46(2)()()

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C,D,E


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BOARD OFDIRECTORS:-

(1) TheComposition of Board ofComposition of Board ofComposition of Board ofComposition of Board ofdirectors of the listed entity shall be as follows:

4444Executive/Non Executive:

Board of Directors shall have an optimum combination of executive and non-executivedirectors

One Women Director

At least 50% of Board of Directors shall comprise of Non-Executive Director.

5555Independent Director:

If Chairman of the Board is Non-Executive director

at least (1/3) one-third of the board of directors shall comprise of independentdirectors.

where the listed entity does not have a regular non-executive chairperson

at least (1/2) half of the board of directors shall comprise of independent directors

where the regular non-executive chairperson is a6666promoter of the listed entity; or is

7related to any promoter; or is related to person occupying management positions at thelevel of board of director; or is related to person occupying management positions at onelevel below the board of directors;

at least (1/2) half of the board of directors of the listed entity shall consist ofindependent directors.

(2) Frequency of MFrequency of MFrequency of MFrequency of Meetingeetingeetingeeting:

At least 4 Board Meetings in a Year Maximum Gap B/w Two Meetings 120 days. 8The Board shall meet at least once in every calendar quarter

4 D E D 1() C ( ) , 2014 E

D D (94) 2 A. C (94) 2 C A,

2013 C.5D A.

6D A.

7D A.

8A 2.1 1.


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(3)Review of Compliance ReportReview of Compliance ReportReview of Compliance ReportReview of Compliance Report:

The board of directors shall periodically reviewcompliance reports pertaining to

all laws applicable to the listed entity.

The board of directors shall periodically review steps taken by the listed entity to

rectify instances of non-compliances

(4)(5)(5)(5)(5) Duties of Board of DirectorDuties of Board of DirectorDuties of Board of DirectorDuties of Board of Director:

Plans for Ordinary succession of appointment:The board of directors of the listed

entity shall satisfy itself that plans are in place for orderly succession for

appointment to the board of directors and senior management.

Code of Conduct:The board of directors shall lay down a 9999Code of Conduct for

all members of board of directors and senior management of the listed entity.

Duties of Independent Director:The code of conduct shall suitably incorporate the

duties of independent directors as laid down in the Companies Act, 2013.

(6)Fees or CompensationFees or CompensationFees or CompensationFees or Compensation::::

Recommendation of Fees: The board of directors shall recommend all fees or

compensation, if any, paid to non-executive directors, including independent

directors.

General Meeting Approval: After Recommendation of Board of Directors

approval of Shareholder through Ordinary Resolution in General Meeting

Required (to paid fees and compensation to non-executive directors including independent directors).

Approval of shareholders mentioned in clause (a), shall specify the limits for the

maximum number of stock options that may be granted to non-executive

directors, in any financial year and in aggregate.

Independent Director not entitled to any Stock Option

9A code of conductis a set of rulesoutlining the social norms and rules and responsibilities of, or proper practices

for, an individual, party or organization.


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Payment of Sitting Fees: There is no need to obtain approval of Shareholder for

payment of Sitting fees to Non-executive Director, If sitting fees paid according to

the limit prescribed under Companies Act, 201310101010

....

(8)Compliance Certificate:Compliance Certificate:Compliance Certificate:Compliance Certificate:The chief executive officer and the chief financial officer shall

provide the compliance certificate to the board of directors as specified in Part B of

Schedule II.

(9) Risk ManagementRisk ManagementRisk ManagementRisk Management PlanPlanPlanPlan::::

The board of directors shall be responsible for framing, implementing and

monitoring the risk management plan for the listed entity.

Listed entity shall lay down procedure to inform members of the Board about risk

assessment and minimization process.

(10) Performance evaluation ofPerformance evaluation ofPerformance evaluation ofPerformance evaluation of Independent DirectorIndependent DirectorIndependent DirectorIndependent Director::::

The performance evaluation of independent directors shall be done by the entire

board of directors.

In the above evaluation the directors who are subject to evaluation shall not

participate.

COMMITTEESUNDER LISTINGREGULATIONS:-

Name of Mandatory Committees:

10A C B C ,

B . 100,000/

B C ; H, I D D,

.


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DIVESH GOYALPracticing Company Secretary


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Lets Discuss Provisi

18.18.18.18.AUDIT COMMITTEE:AUDIT COMMITTEE:AUDIT COMMITTEE:AUDIT COMMITTEE: Every

audit committee.

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The audit committee shal

2/3 (Two-thirds) of th

All membersmember shall

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ns Relating to all the committees one

listed entity shall constitute a qualified a

.

.

&

have minimum Three directors as memb

e members of committee shall be independet dir

f audit committee shall be financially literatefinancially literatefinancially literatefinancially literate anhave accounting or related financial managemeaccounting or related financial managemeaccounting or related financial managemeaccounting or related financial manageme

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by one:

d independent

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ectors.

d at least onet expertise t expertise t expertise t expertise.


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Chairperson:

The chairperson of

He shall be present

Company Secretary: The

committee.

Invitation to attend Me

discretion shall invite the

internal audit and a rep

executives to be present at

Frequency of Meetings:

At least 4 Board

Maximum Gap B/

Quorum of Meetings:

12

,

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the audit committee shall be an Independe

at Annual general meeting to answer share

Company Secretary shall act as the secret

ting of Audit Committee: The audit c

finance director or head of the finance fu

esentative of the statutory auditor and

the meetings of the committee

eetings in a Year

w Two Meetings 120 days.

,

2

1/3 A

A

D

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t Director.

older queries

ry to the audit

mmittee at its

nction, head of

ny other such

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Powers of Committee: The audit committee shall have powers to investigate any

activity within its terms of reference, seek information from any employee, obtain

outside legal or other professional advice and secure attendance of outsiders with

relevant expertise, if it considers necessary.

Discretion of the Audit Committee: Its discretion shall invite the finance director or

head of the finance function, head of internal audit and a representative of the

statutory auditor and any other such executives to be present at the meetings of the

committee:

Meeting without executive Director: Occasionally the audit committee may meet

without the presence of any executives of the listed entity.

NOTENOTENOTENOTE:

The ROLEof the audit committee and the INFORMATION TO BE REVIEWED by the

audit committee shall be as specified in Part C of Schedule II.

19.19.19.19. NONONONOMINATIONMINATIONMINATIONMINATION& RE& RE& RE& REMUNERATIONMUNERATIONMUNERATIONMUNERATIONCOCOCOCOMMITTEEMMITTEEMMITTEEMMITTEE::::

Who Will Constitute This Committee?

Board of Directors shall constitute the nomination and remunerationcommittee. Constitution of N&R Committee will be as follow:


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Chairman of the compa

Chairman of Company

Chairperson of Commit

What will be purpose of p

Meeting?

To answer the

20.20.20.20.STSTSTSTAKEAKEAKEAKEHOHOHOHOLDERLDERLDERLDERRELRELRELRELATIONATIONATIONATION

Purpose of Constitution:

shareholders, debenture hol

The chairperson of this co

The board of directors shall

NOTENOTENOTENOTE:

The ROLEof the audit co

21.21.21.21. RIRIRIRISKSKSKSKMAMAMAMANAGEMENTNAGEMENTNAGEMENTNAGEMENTCOCOCOCOMMMM

Who Will Constitute

The committee shall have

members

All the members of co

At least fifty perc

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y shall not Chair such Committee.

can appoint as Member of committee.

tee may be present at the Annual General Me

resence of Chairman of N&R Committee in

shareholders' queries

SHIPSHIPSHIPSHIPCOCOCOCOMMITTEEMMITTEEMMITTEEMMITTEE::::

To look into the mechanism of redressal

ers and other security holders.

mittee shall be a non-executive director.

decide other members of this committee.

mittee shall be as specified in Part D of Sch

MITTEEMITTEEMITTEEMITTEE::::

this Committee?

inimum Three directors as

mittee shall be non-executive Director.

ent of the directors shall be independent directo

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eting.

nnual General

f grievances of

dule II.

rs.


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Board of Directors shall constitute the committee.

Applicability: The provisions of this regulation shall be applicable to top 100 Listed100 Listed100 Listed100 Listed

Entities,Entities,Entities,Entities,determined on the basis of market capitalization, as at the end of the immediate

previous financial year.

Constitution:Majority of Members of committee will be members of the board.

Chairperson:The Chairperson of the Risk management committee shall be a member of

the board of directors and senior executives of the listed entity may be members of the

committee.

Role and Responsibility:The board of directors shall define the role and responsibility ofthe Risk Management Committee and may delegate monitoring and reviewing of the risk

management plan to the committee and such other functions as it may deem fit

22.22.22.22.VIVIVIVIGILGILGILGILMEMEMEMECHANISMCHANISMCHANISMCHANISM::::

Purpose:The listed entity shall formulate a vigil mechanism for directors and employeesto reportgenuine concerns.genuine concerns.genuine concerns.genuine concerns.

The vigil mechanism shall provide for adequate safeguards against victimization of

director(s) or employee(s) or any other person who avail the mechanism.

The Vigil Mechanism also provides for direct access to the chairperson of the auditcommittee in appropriate or exceptional cases.


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25.OBOBOBOBLIGATIONS WITHLIGATIONS WITHLIGATIONS WITHLIGATIONS WITHRERERERESSSS

Tenure of Independent Direct

Meeting of Independent Direc

The independent directo Non-Independent Direct Members of the Manage All the Independent Dire

Agenda for the Meeting of In

Review the performancewhole.

Review the performance(Taking into account the

Limit of Direc

Unlisted Public Comp

Not More than 10Companies

F AIE

AI

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PECT TOECT TOPECT TOECT TO ININININDEPENDENTDEPENDENTDEPENDENTDEPENDENTDIDIDIDIRECTORSRECTORSRECTORSRECTORS::::

r:

tor:

s of the listed entity shall hold at least one mor will not present in such Meeting.

ent will not present in such Meeting.ctors shall strives to present in such Meeting.

ependent Director:

of non-independent directors and the board

of the chairperson of the listed entity.views of executive directors and non-executi

torship as Independent Di

any Listed Public

Not More thanif a person is al

Listed

Not Morethan 7

Companies

F ECD E F 5 EA ECIA EI

CECIE E F 5 EA

EE F IDEEDE DIEC

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eting in a year.

of directors as a

e directors ;)

ector

ompany

3 Listed Companiesready a WTD in anyCompany

EIED


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Assess the quality, quantity and timeliness of flow of information between themanagement of the listed entity and the board of directors that is necessary for theboard of directors to effectively and reasonably perform their duties.

Liability of Independent Director:

An independent director shall be held liable, ONLY in respect of such acts of omission or

commission by the listed entity which had occurred;

with his knowledge and

attributable through processes of board of directors, and

with his consent or connivance or

where he had not acted diligently with respect to the provisions contained in

these regulations.

13 Intermittent vacancy of an Independent Director: Any Intermittent Vacancy of an

Independent director shall be filled-up by the

Board of Directors at the earliest but not later than

Immediate Next Board MeetingNext Board MeetingNext Board MeetingNext Board Meeting OROROROR

3 (Three) Months3 (Three) Months3 (Three) Months3 (Three) Months from the date of Such Vacancy, Whichever Is LaterLaterLaterLater:

Duties of the Company towards Independent Director: The listed entity shall familiarize the

independent directors through various programmes about the listed entity, including the

following:

Nature of the industry in which the listed entity operates;

Business model of the listed entity;

Roles, rights, responsibilities of independent directors; and

Any other relevant information.

26.OBOBOBOBLIGATIONS WITHLIGATIONS WITHLIGATIONS WITHLIGATIONS WITHRERERERESPECT TOSPECT TOSPECT TOSPECT TO DIDIDIDIRECTORSRECTORSRECTORSRECTORSANDANDANDAND14141414SESESESENIORNIORNIORNIORMAMAMAMANAGEMENTNAGEMENTNAGEMENTNAGEMENT::::

13:where the listed entity fulfils the requirement of independent directors in its board of directors

without filling the vacancy created by such resignation or removal, the requirement of replacement by a

new independent director shall not apply14

D A.


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Limit of Number of Membership

For the purpose of considerCompany & Section-8 Compa

Duties of Board of Directors

Every director of Listed en

other Listed entities and in

take place.

All members of the board

compliance with the code o

annual basis.

Senior management shall

material, financial and co

may have a potential confli

Duty of disclosure at the time of

Non-executive directors sh

beneficial basis for any oth

appointed as directors, in th

director.

27.OTOTOTOTHERHERHERHERCOCOCOCORPORATERPORATERPORATERPORATEGGGG

15151515Quarterly Compliance Report

15The listed entity may, at its discre

A

Member in more thancommittees

For Reckoning the LimitRelationsh

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in Committee by Independent Director

ing the limit of companies Private Comy are excludedexcludedexcludedexcluded....

ity shall inform the Board about his position i

imate if there is any change and the date wh

of directors and senior management perso

f conduct of board of directors and senior m

make disclosures to the board of director

mercial transactions, where they have perso

t with the interest of the listed entity at large

appointment

all disclose their shareholding, held either

r persons in the listed entity in which they a

e notice to the general meeting called for app

VERNAVERNAVERNAVERNANCENCENCENCECOCOCOCOMPLIANCEMPLIANCEMPLIANCEMPLIANCE REREREREQUIREMENQUIREMENQUIREMENQUIREMEN

n Corporate Governance

ion, comply with requirements as specified in Part E

Director Shall not be

10Chairman in more than 5

Committees

ONLY Audit Committee and Stakeholder'sip Committee are considered

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any & Foreign

n committees of

n these position

nel shall affirm

nagement on an

relating to all

nal interest that

y them or on a

e proposed to be

intment of such

::::

of Schedule II.


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The listed entity shall submit a quarterly compliance report on corporate governance in

the format as specified by the Board from time to time to the recognized stock

exchange(s) within fifteen days from close of the quarterwithin fifteen days from close of the quarterwithin fifteen days from close of the quarterwithin fifteen days from close of the quarter....

Details of all material transactions with related parties shall be disclosed.

Report shall be sign Either by Compliance officer or Chief Executive officer.


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Requirement of Intimation to Stock Exchange as per Regulation No.15 27:

S.No.

RegulationNo.

Particular of Regulation Time Period of filing ofCertificate

1.27(1)

The listed entity shall submit a quarterlycompliance report on corporate governance inthe format as specified by the Board from timeto time

within fifteen daysfrom close of thequarter

Requirement of discussion and placement before Board of Directors as per

Regulation No. 15-27:

S.

No.

Regulation

No.

Particular of Regulation Time Period for

placement before Board

1. 17(3) The board of directors shall review compliance reportspertaining to all laws applicable to the listed entity

periodically

2. 17(3) The board of directors shall review steps taken by thelisted entity to rectify instances of non-compliances

periodically

3. 17(5) The board of directors shall lay down a code ofconduct for all members of board of directors and

senior management of the listed entity.

N.A.

4. 17(7) The minimum information to be placed before theBoard of Directors is specified in Part A of Schedule II

(Bare act language given below).

N.A.

5. 17(8) The chief executive officer and the chief financialofficer shall provide the compliance certificate to the

board of directors as specified in Part B of Schedule II.

N.A.

6. 17(9) The board of directors shall be responsible for framing,implementing and monitoring the risk management

plan for the listed entity.

Listed entity will inform before the Board about risk

assessment and minimization process

N.A.


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TERMS USE UNDER REGULATION DISCUSSED ABOVE:

Independent Director:Independent Director:Independent Director:Independent Director:

"Independent Director" means a non-executive director, other than a nominee director of the

listed entity:

(i) who, in the opinion of the board of directors, is a person of integrity and possesses relevant

expertise and experience;

(ii) who is or was not a promoter of the listed entity or its holding, subsidiary or associate

company;(iii) who is not related to promoters or directors in the listed entity, its holding, subsidiary or

associate company;

(iv) who, apart from receiving director's remuneration, has or had no material pecuniary

relationship with the listed entity, its holding, subsidiary or associate company, or their

promoters, or directors, during the two immediately preceding financial years or during the

current financial year;

(v) none of whose relatives has or had pecuniary relationship or transaction with the listed entity,

its holding, subsidiary or associate company, or their promoters, or directors, amounting to

two per cent. or more of its gross turnover or total income or fifty lakh rupees or such higheramount as may be prescribed from time to time, whichever is lower, during the two

immediately preceding financial years or during the current financial year;

(vi) who, neither himself, nor whose relative(s)

(A) holds or has held the position of a key managerial personnel or is or has been an

employee of the listed entity or its holding, subsidiary or associate company in any of the

three financial years immediately preceding the financial year in which he is proposed to

be appointed;

(B) is or has been an employee or proprietor or a partner, in any of the three financial years

immediately preceding the financial year in which he is proposed to be appointed, of

(1) a firm of auditors or company secretaries in practice or cost auditors of the listed

entity or its holding, subsidiary or associate company; or


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(2) any legal or a consulting firm that has or had any transaction with the listed entity, its

holding, subsidiary or associate company amounting to ten per cent or more of the

gross turnover of such firm;

(C) holds together with his relatives two per cent or more of the total voting power of the

listed entity; or

(D) is a chief executive or director, by whatever name called, of any non-profit organisation

that receives twenty-five per cent or more of its receipts or corpus from the listed entity,

any of

its promoters, directors or its holding, subsidiary or associate company or that holds two per

cent or more of the total voting power of the listed entity;

(E) is a material supplier, service provider or customer or a lessor or lessee of the listed entity;

(vii) who is not less than 21 years of age.

It shall have the same meaning as assigned to them respectively 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.

Promoter:Promoter:Promoter:Promoter:

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:

A director or officer of the issuer or a person shall not be deemed as a promoter, if such

director or officer or person is acting as such merely in his professional capacity. A

financial institution, scheduled bank, foreign portfolio investor other than Category III

foreign portfolio investor, and mutual fund shall not be deemed to be a promoter

merely by virtue of the fact that ten percent or more of the equity share capacity of theissuer is held by such person. A financial institution, scheduled bank and foreign

portfolio investor other than Category III foreign portfolio investor shall be treated as

promoter for the subsidiaries or companies promoted by them or for mutual fund

sponsored by them.


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Related to Any Promoter:Related to Any Promoter:Related to Any Promoter:Related to Any Promoter:

For the purpose of this clause, the expression related to any promoter" shall have the

following meaning:

(i) if the promoter is a listed entity, its directors other than the independent directors,

its employees or its nominees shall be deemed to be related to it;

(ii) if the promoter is an unlisted entity, its directors, its employees or its nominees shall

be deemed to be relatedto it.

Senior managementSenior managementSenior managementSenior management

Senior Managemetn shall mean officers/personnel of the listed entity who are members

of its core management team excluding board of directors and normally this shall

comprise all members of management one level below the executive directors, includingall functional heads.

(Author CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in Practice from

Delhi and can be contacted at [email protected])

Disclaimer: The entire contents of this document have been prepared on the basis of relevant

provisions and as per the information existing at the time of the preparation. The observations of the

authorare personal view and the authors do not take responsibility of the same and this cannot be quoted

before any authority without the written

SEBI- Obligation to Listed Entity Has Its Specified Secuirites Listeed

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