Capital market regulator
The Securities and Exchange Board of India (SEBI) has notified
SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015
which amended listing regulations that allow listed companies to seek
shareholders’ approval for related party deals through ordinary
resolutions.
As per the notification, a time period of
ninety days has been given for implementing the Regulations. However,
two provisions of the regulations in the revised rules, which are facilitating in nature, are applicable with
immediate effect.
Highlights of the Listing Regulations:
- The Regulations, 2015 (Listing Regulations) have been divided into two parts. They are –
- Substantive provisions incorporated in the main body of regulations and
- Procedural requirements in the form of schedules to the regulations.
- The two provisions which came into effect immediately are –
- The first one belongs to passing of ordinary resolution instead of
special resolution in the case of all material related party
transactions subject to related parties abstaining from voting on such
resolutions, in line with the provisions of the Companies Act, 2013.
- Another one relates to re-classification of promoters as public shareholders under various circumstances.
- The latest set of norms also provides broad principles for periodic
disclosures by listed entities, apart from incorporating corporate
governance principles.
- A shortened version of the listing agreement would be prescribed and
has to be signed by the company. Furthermore, existing listed entities
will be required to sign the same within six months of the notification of the regulations.
- All disclosures required to be made on the website of the listed
entity have been enumerated at a single place for ease of reference and
all requirements pertaining to disclosures in the annual report have
been combined.
- Obligations which are applicable to specific types of securities have been incorporated in separate chapters.
- Stock exchanges will be responsible in ensuring companies comply
with the listing obligations, and in the case of non-compliance, action
can be taken against the entities.
Significance:
The regulations have been structured to provide ease of reference by
consolidating into one single document across various types of
securities listed on the stock exchanges. This would further streamline
the provisions of existing listing agreements for different segments of
the capital market namely equity, including convertibles bonds, issued
by entities listed on the main board of the stock exchanges, small and
medium enterprises listed on SME Exchange and Institutional Trading
Platform, non-convertible debt securities, non-convertible redeemable
preference shares, Indian depository receipts, securitized debt
Instruments and units issued by mutual fund schemes.
