Special Exemptions to Listed Entities and SEBI New Listing Norms

Special Exemptions to Listed Entities – SEBI Regulations, 2015, To promote the listed entitles, SEBI has made some exemptions which are available to the listed entities via SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, which is being notified on 2nd September, 2015. This exemptions would be available to the listed entities with effect from 1st December, 2015. It should be noted this exemptions are not available to all entities but to some entities which fulfilled the conditions which are mentioned in the article. Now check more details regarding “Special Exemptions to Listed Entities – SEBI Regulations, 2015” from below….

Special Exemptions to Listed Entities

Exemptions Available under Chapter 4 of SEBI Regulations:

Under this chapter, there are exemptions available under this chapter which would be available to the some of the entities which would fulfil the following:

  1. Having Paid up Share Capital of Rs. 10 Crores or less.
  2. Net Worth of Rs. 25 Crores or less.
  3. Listed on Stock exchange.

If the regulations become applicable at the later stage of the financial year, than the regulations would be required to be complied within 6 months from the date of regulations become applicable.

Regulation Details
17
  • No necessary requirement of at least 1 women director.
  • No requirement of 50% of BOD as non-executive directors.
  • No compulsory periodic review required.
  • No compulsion to review performance of independent directors.
  • No requirement of information to BOD for risk assessment.
  • No need to produce code of conduct to members.
  • No requirement of Compliance certificate for matters as specified in Schedule II of this regulation.
  • No requirement of at least ½ of BOD as independent directors incise of non-executive chairperson.
18 Some relaxation in constitution of Audit Committee
19 Some relaxation in constitution of Remuneration Committee
20 Some relaxation in constitution of Stakeholders Relationship Committee
21 Some relaxation in constitution of Risk Management Committee
22 Some relaxation in formation of mechanism to report to directors
23
  • Do not need to worry for entering into transactions with related party
  • No need to form any policy for materiality of related party transactions
  • No requirement for approval of shareholders for related party transactions.
  • All prior contracts contracts with related parties can be continued with.
  • Voting can also be done by related party but only if the point of voting is not related to the party.
24
  • Minutes of meetings of subsidiaries would not be compulsory to be kept
  • No compulsion of appointing at least 1 director as the independent director for the director in subsidiaries
  • No requirement of bringing statement of significant transaction of unlisted subsidiary.
25 No compulsion to hold 1 meeting in a year of independent directors.
26 No need to check whether the compliance is properly done or not and in compliance with code of conduct or not
27 No requirement to disclose the half-yearly financial performance. No compulsion on submission of quarterly compliance report.

SEBI New Listing Norms

SEBI Notifies New Listing Norms, SEBI has notified SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations). A time period of 90 days has been allowed to companies to implement these regulations. However, two provisions of the regulations shall be applicable with immediate effect namely,

  • Rules governing passing of ordinary resolution instead of special resolution in case of all material related party transactions and
  • Rules on re-classification of promoters as public shareholders under various circumstances

With a view to provide ease of reference, regulations have been structured by consolidating into one single document across various types of securities listed on the Stock exchanges

Th e regulations provides for– Guiding Principles under (Chapter II); Common obligations applicable to all listed entities under (Chapter III); Obligations which are applicable to specific types of securities under (Chapter III to IX); Obligations of stock exchanges and provisions in case of default under (Chapter X &XI); Ease of Reference; and ensures streamlining and segregation of initial issuance/listing obligations;

Further, wherever necessary, the provisions in Listing Regulations have been aligned with those of the Companies Act, 2013. Th e regulations prescribe a short version of the Listing Agreement of approximately (2 pages) which would be made available very soon. Th e short version of Listing Agreement is required to be signed by a company getting its securities listed on Stock Exchanges

It is to be noted that the Listing regulations consolidates and streamlines the provisions of existing listing agreements for different segments of the capital market viz., i) Equity (including convertibles) issued by entities listed on the Main Board of the Stock Exchanges, Small and Medium Enterprises listed on SME Exchange and Institutional Trading Platform, ii) Non Convertible Debt Securities, iii) Non Convertible Redeemable Preference Shares, iv) Indian Depository Receipts, v) Securitized Debt Instruments and Units issued by Mutual funds schemes.

Key highlights of the regulations are outlined as under:

1. Applicability: The regulations shall apply to the listed entity who has listed any of the designated securities on recognised stock exchange(s)

2. Common Obligations Of Listed Entities: Th e listed entity shall have to ensure that key managerial personnel, directors, promoters or any other person dealing with the listed entity, complies with responsibilities or obligations, if any, assigned to them under these regulations

3. Related party transactions: The regulation allows companies to approve any material related party transactions by passing an ordinary resolution instead of special resolution however, it should be noted that the related parties shall have to abstain from voting on such resolutions. So far, SEBI norms required a vote by two-thirds of majority shareholders for a special resolution before a related-party transaction could be passed. Th is has now been reduced to 50%, on the lines of the Companies Act. The move would make it easier for listed companies to clear such deals.

4. Appointment of Company Secretary as Compliance Officer: A listed entity shall appoint a qualified company secretary as the compliance officer who shall be responsible for ensuring conformity with the regulatory provisions applicable to the listed entity in letter and spirit; co-ordination with and reporting to the Board, recognised stock exchange(s) and depositories with respect to compliance with rules, regulations and other directives; Monitoring of grievance redressal division. This move would open a world of opportunities for Company Secretaries profession

5. Principles governing disclosures and obligations: Th e listed entity shall make disclosures and abide by its obligations under the regulations in accordance with the principles such as:

  • Preparation and disclosure of information in accordance with applicable AS and financial disclosure
  • Conduct of audit by an independent, competent and qualified auditor
  • Refraining from providing misrepresentation to recognised stock exchange(s) and not misleading the investors
  • Providing adequate and timely information to recognised stock exchange(s) and investors
  • Filings, reports, statements, documents and information which are event based or are filed periodically shall contain relevant information etc.

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