Listed entities hold a huge responsibility for adapting good corporate governance practice considering the large amount of stake involved of general public.
SEBI which regulates all listed entities in India has prescribed various regulations that deals with various compliances of listed entities. For example:
SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, SEBI (Prohibition of Insider Trading) Regulations, 2015, SEBI (AIF) Regulations, 2012, SEBI (Issue and Listing of Debt Securities) Regulations, 2008 and others.
Each regulation focuses on specific aspects of listed entities. Majorly for every listed Company Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 is applicable as it narrates the basis compliances and management of the Company.
In this article we will summaries the compliances with respect to the management of Company.
Applicability of SEBI (LODR) Regulations 2015
These regulations are applicable to the listed entities who has listed any of the following designated securities on recognized stock exchange(s) :
- specified securities listed on main board or SME Exchange or institutional trading platform;
- non-convertible debt securities, non-convertible redeemable preference shares, perpetual debt instrument, perpetual non-cumulative preference shares;
- Indian depository receipts;
- securitised debt instruments;
- security receipts;
- units issued by mutual funds;
- any other securities as may be specified by the Board.
Common Obligations of Listed Entities
Regulation 6: Appointment of Company Secretary as the Compliance Officer
Exception: Units issued by mutual funds which are listed on recognized stock exchange(s) shall be governed by the provisions of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996
Regulation 7: Share Transfer Agent
Every listed company shall appoint a Share Transfer Agent or manage the share transfer facility in-house.
Regulation 12: Payment Mechanism
Listed entity shall use any of the electronic mode of payment facility approved by the Reserve Bank of India for payment of:
- Dividends
- Interest
- Redemption and Repayment amounts
Regulation 13: Grievance Redressal Mechanism
Every listed company should register itself on SCORES portal to handle investor complaints electronically.
Management related obligations of Listed Entities
Listed entity which has listed its specified securities on any recognized stock exchange(s) either on the main board or on SME Exchange or on institutional trading platform complies with these regulations.
Regulation 15(2) states certain exception where these regulations will not be applicable. For example the compliance with the corporate governance provisions are not applicable on Listed companies having paid up capital not exceeding Rs. 10 Crore and Net worth not exceeding Rs. 25 crore as on the last day of the previous financial year.
Regulation 17: Board of Directors
| S. No | Obligation | Particular | Remark |
| 1 | Composition | · optimum combination of executive and non executive directors (NED)
· at least one woman director · not less than 50% of the board of directors (BOD) shall comprise of non-executive directors |
For top 500 listed entities
· at least one independent woman director by April 1, 2019 For top 1000 listed entities have · at least one independent woman director by April 1, 2020 |
| 2 | Chairperson | · If Chairperson is NED , 1/3 of BOD to be independent
· If No regular NED Chairperson , ½ of BOD to be independent |
If regular non-executive chairperson is;
· Promoter · related to promoter · related to person occupying management at level of BOD or one level below BOD ½ of BOD to be independent directors |
| 3 | Age | Maximum age upto 75 years
Above 75 years pass special resolution |
|
| 4 | Meeting | 4 times in a year, maximum time gap
of 120 days between any two meetings |
|
| 5 | Quorum | 1/3 of the Board or 3 director whichever is higher with at least 1 Independent Director | w.e.f April 1, 2019 for top 1000 listed entities
w.e.f April 1,2020 for top 2000 listed entities |
| 6 | Directorship | A person shall not be Director in more than 8 listed entity w.e.f April 1.2019
A person shall not be Director in more than 7 listed entity w.e.f April 1.2020 |
A person shall not be Independent Director in more than 7 listed entities |
Regulation 18: Audit Committee
| S. No | Obligation | Particular | Remark |
| 1 | Composition | · Minimum 3 directors
· 2/3 Independent Directors |
· All members to be financially literate and one member shall have accounting or related financial management expertise |
| 2 | Chairperson | To be independent director | |
| 3 | Secretary | Company Secretary will act as secretary to the Committee | |
| 4 | Meeting | 4 times in a years | Maximum gap not more than 120 days between two meetings |
| 5 | Quorum | 2 members or 1/3 of members whichever is greater with at least 2 Independent Director |
Regulation 19: Nomination and Remuneration Committee (NRC)
| S. No | Obligation | Particular | Remark |
| 1 | Composition | At least three directors
All should be NED |
|
| 2 | Chairperson | To be independent director | The chairperson of the listed entity, whether executive or non-executive, may be appointed as a member of the NRC and shall not
chair such Committee |
| 3 | Quorum | 2 members or 1/3 of members whichever is greater with at least 1 Independent Director |
Regulation 20: Stakeholders Relationship Committee (SRC)
| S. No | Obligation | Particular |
| 1 | Composition | At least three directors , One to be independent |
| 2 | Meeting | Once in a year |
Regulation 21: Risk Management Committee (RMC)
Applicable on top 500 listed entities
| S. No | Obligation | Particular |
| 1 | Composition | Majority shall be member of BOD |
| 2 | Chairperson | Member of the board of directors and senior executives of the listed entity may be members of the committee |
| 3 | Meeting | At least once in a year |
Source: SEBI LODR regulations 2015
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