Principles governing disclosures & obligations (contd ….) • Primarily these are covered under clause 49(1) of the Listing Agreement • Financial disclosures shall be prepared and disclosed in accordance with the applicable accounting standards • In the preparation of financial statements the accounting standards shall be implemented in letter and spirit, in the interest of all stakeholders • Annual audit is to be conducted by an independent, competent and qualified auditor • Refrain from making misrepresentations and furnishing misleading information • Provide adequate and timely information to the exchanges and investors • Disseminations shall be - adequate, accurate, explicit, timely and presented in a simple language • Event based or periodical filings, reports, statements, documents and information shall contain relevant information • Such filings etc shall enable investors to assess the current status of the listed entity S.Sudhakar, RIL 21
Objectives of Principles of Governing disclosures • Listed entities shall comply with the corporate governance provisions as specified in Chapter IV, which shall be implemented in a manner to achieve the objectives of the principles as under • Protect and facilitate the exercise of various rights of shareholders • Provide adequate and timely information to shareholders • Equitable treatment of all shareholders, including minority and foreign shareholders • Recognise the rights of the stakeholders and encourage co-operation between the listed entity and the stakeholders. Devise an effective whistle blower mechanism for stakeholders • Timely and accurate disclosures on all material matters, including the financial situation, performance, ownership and governance of the listed entity • Board of Directors to discharge various responsibilities – enormous responsibilities • In case of any ambiguity or incongruity between the principles and the relevant regulations the principles shall prevail S.Sudhakar, RIL 22
Common obligations of the listed entity (chapter – III) Regulations 5 to 14 S.Sudhakar, RIL 23
5 General obligations for compliance • These obligations are common to all listed entities • Irrespective of the type of security listed, the listed entities have to comply with these obligations • Listed entities shall ensure that KMPs, Directors, Promoters or any other person dealing with the listed entity complies with the responsibilities and obligations, assigned to them under this chapter S.Sudhakar, RIL 24
6 Obligations of Compliance Officer • Qualified Company Secretary is to be appointed as Compliance Officer • The compliance officer is responsible for • Ensuring conformity with applicable regulatory provisions • Co-ordinate with SEBI, stock exchanges and Depositories with respect to compliance with rules, regulations and other directives • Ensure correct procedures have been followed, to ensure correctness, authenticity and comprehensiveness of filings • Monitor investor grievance redressal S.Sudhakar, RIL 25
7 Share Transfer Agent • For share transfers a share transfer agent may be appointed or may be managed in house • If such facility is provided in house, and the number of holders of securities exceeds one lakh, the listed entity shall either register with SEBI as a category II share transfer agent or appoint a share transfer agent registered with SEBI • Submit a compliance certificate to the exchanges, duly signed by both the compliance officer and the authorised representative of share transfer agent, wherever applicable, within one month of end of each half of the financial year, certifying that share transfer facility is either in house or through share transfer agent • In case of any change or appointment of new share transfer agent, a tripartite agreement is to be entered into between the listed entity, existing and the new share transfer agent • Intimate such appointment to the exchanges within 7 days of entering into an agreement • Such agreement shall be placed before the board of directors at the subsequent meeting S.Sudhakar, RIL 26
Other miscellaneous obligations • Listed entity shall co-operate and submit correct and adequate information to the intermediaries registered with SEBI, such as credit rating agencies, registrar to an issue and share transfer agent, debenture trustee etc • There should be a policy for preservation of documents approved by the board of directors • The policy shall have at least two categories, classifying preservation of documents – permanent in nature and for a period of not less than 8 years after completion of the relevant transactions • Scheme of arrangements / amalgamations / mergers / reconstruction / reduction of capital etc shall not violate, over ride or limit the provisions of any securities laws or requirement of exchanges S.Sudhakar, RIL 27
Other miscellaneous obligations (contd ….) • For payment of dividend, interest and redemption or repayment amounts, the listed entity shall use any of the electronic mode of payment facility approved by RBI • Where payment under electronic mode is not possible, payable-at-par warrants or cheques may be issued • Where dividend payment exceeds Rs. 1,500 the payable-at-par warrants or cheque shall be sent by speed post • Ensure registration on SCORES or such other electronic platform for investor complaints • Ensure adequate steps are taken for expeditious redressal of investor complaints • Within 21days from the end of each quarter, file with exchanges a statement giving the number of complaints pending at the beginning received and disposed off during the quarter and remaining unresolved at the end of the quarter • Such statement shall be placed before the board of directors on quarterly basis • Listed entities shall pay fee and other charges applicable to the stock exchanges S.Sudhakar, RIL 28
Action points • To appoint a qualified company secretary as the compliance officer • In case share registry is in house and number of shareholders are over one lakh • to appoint a share transfer agent registered with SEBI or to obtain registration with SEBI as category II share transfer agent • To submit half yearly compliance certificate duly signed by the compliance officer and authorised representative of share transfer agent • In case of change of share transfer agent, to enter into a tripartite agreement and place copy of the same before the board at its next meeting • To formulate a policy for preservation of documents • To ensure registration on SCORES platform and file a statement on investor complaints on quarterly basis • Ensure timely payment of listing fee S.Sudhakar, RIL 29
Obligations of listed entity which has listed its specified securities (chapter – IV) - Regulations 15 to 48 S.Sudhakar, RIL 30
APPLICABILITY • Applicable to - all listed entities which have listed its specified securities on any recognised stock exchange(s), either on the main board or on SME Exchange or on institutional trading platform • Corporate Governance norms specified in regulations 17 to 27 and clauses (b) to (i) of sub-regulation (2) of regulation 46 and para C, D, E of Schedule V shall not apply in respect of • Listed entity having paid-up equity share capital not exceeding Rs 10 crore and net worth not exceeding Rs 25 crore as on the last date of the previous financial year • In case to the aforesaid entities cross the specified limits they shall comply with the regulations within 6 months from the date they become applicable • Entity which has listed its specified securities on the SME exchange S.Sudhakar, RIL 31
APPLICABILITY (contd …..) • Also not applicable to • other listed entities which are not companies, but are body corporates or are subject to regulations under other statutes Corporate Governance norms specified in regulations 17 to 27 and clauses (b) to (i) of sub-regulation (2) of regulation 46 and para C, D, E of Schedule V shall apply to the extent that it does not violate their respective statutes and guidelines or directives issued by the relevant authorities S.Sudhakar, RIL 32
16 Definitions • ‘Control’ – shall have the same meaning as assigned under SEBI (substantial acquisition of shares and takeovers) Regulations, 2011 • ‘Independent Directors’ – same definition as per clause 49 • Material subsidiary – means a subsidiary, whose income or net worth exceeds 25% of the consolidated income or net worth respectively of these listed entity and its subsidiaries in the immediately preceding accounting year (in clause 49 this was – investment in the subsidiary exceeds 25% of the consolidated net worth or if the subsidiary has generated 25% of the consolidated income of the company). • The earlier concept of ‘material non - listed Indian subsidiary’ has been done away with. Hence even overseas subsidiary is also to be considered • Listed entity shall formulate a policy for determining ‘material subsidiary’ S.Sudhakar, RIL 33
Corporate Governance – Schedule II • Minimum information to be placed before the board of directors - Regulation 17(7) • Compliance certificate to be given by CEO & CFO – Regulation 17 (8) • Role of the audit committee and review of information – Regulation 18(3) • Role of Nomination and Remuneration Committee and Stakeholder Relationship Committee – Regulation 19(4) and 20(4) • Discretionary requirements – Regulation 27(1) (non-mandatory) S.Sudhakar, RIL 34
Clause 49 vis-a-viz new Regulations 17 to 27 • Provisions under clause 49 of the erstwhile listing agreement have been brought under Regulations 17 to 27 • More or less the provisions remains the same except for a few changes • A new provision has been brought in respect of the Audit Committee in Regulation 18 (1) (f) that “occasionally the audit committee may meet without the presence of any executives of the listed entity” • Applicability of Risk Management Committee has been brought in the Regulations itself under Regulation 21 (5), stating that “the provisions of this regulation shall be applicable to top 100 listed entities determined on the basis of market capitalisation, as at the end of the immediate previous financial year” S.Sudhakar, RIL 35
23 Related party transactions • Listed entities shall formulate a policy on materiality of related party transaction and on dealing with related party transactions • A transaction with a related party shall be considered material, if the transaction(s) to be entered into individually or taken together with previous transactions during a financial year, exceeds 10% of the annual consolidated turnover of the listed entity as per the latest audited financial statements • Prior approval of the audit committee is required and omnibus bus approval may be given • All material related party transactions shall require approval of the shareholders through a resolution • Related parties shall abstain from voting on such resolutions, whether the entity is a related party to the particular transaction or not - Regulation 23(4) • These provisions shall be applicable to all prospective transactions • Pursuant to Regulation 23 (8), all existing material related party contracts or arrangements entered into prior to the date of notification of these regulations and which may continue beyond such date shall be placed for approval of the shareholders in the first General Meeting subsequent to notification of these regulations S.Sudhakar, RIL 36
Clause 49 vis-a-viz new Regulations 17 to 27 contd … • Regulation 25(5) – 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, 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. This is in alignment with section 149 (12) of the Companies Act, 2013 • Regulation 25(6) – an independent director who resigns or is removed from the directorship shall be replaced at the earliest but not later than the immediate next board meeting or three months form the date of such vacancy which ever is later. This is in alignment with Rule 4 of the Companies (appointment and qualification of directors) Rules 2014 S.Sudhakar, RIL 37
Clause 49 vis-a-viz new Regulations 17 to 27 contd … • Audit Committee shall mandatorily review the statement of deviations: • Quarterly statement of deviations including report of monitoring agency, if applicable, submitted to stock exchanges in terms of Regulation 32(1) • Annual statement of funds utilised for purposes other than those stated in the offer document/prospectus/notice in terms of Regulation 32(7) • Role of NRC is also to review whether to extend or continue the term of the independent director, on the basis of the report of performance evaluation of independent directors S.Sudhakar, RIL 38
27 Compliance report on Corporate Governance • As against once in a quarter the report is now to be filed as under • On quarterly basis i.e. within 15 days from the closure of the quarter • At the end of the financial year (for the whole of financial year) • Within 6 months from the end of the financial year. This may be submitted along with second quarter report • The above reports shall be placed before the board of directors in its next meeting. • This report shall be signed either by the compliance officer or of the CEO of the listed entity S.Sudhakar, RIL 39
28 In principle approval • Listed entity before issuing securities shall obtain in principle approval form the recognised stock exchanges as under: • Securities are listed only on Exchanges having nationwide terminals, from all such stock exchanges • Securities are not listed on Exchanges having nationwide terminals, from all stock exchanges on which the securities are proposed to be listed • Securities are listed on Exchanges having nationwide terminals and on exchanges not having nationwide terminals, from all stock exchanges having nationwide terminals • Obtaining in principle approval shall not be applicable for securities issued, pursuant to the scheme of arrangement for which the listed entity has obtained no-objection letter in accordance with Regulation 37 S.Sudhakar, RIL 40
29 Prior Intimations • Prior intimation to stock exchanges shall be given, about the meeting of the Board of Directors in which any of the following proposals are due to be considered • Financial results – quarterly, half yearly or annual, as the case may be • Proposal for buy-back of securities • Proposal for voluntary delisting • Fund raising by way of further public offer, rights issue, ADR/GDR issue, FCCB, QI placement, debt issue, preferential issue or any other method and for determination of issue price S.Sudhakar, RIL 41
Prior Intimations (contd …) • Intimation shall also be given in case of any AGM or EGM or postal ballot, proposed for obtaining shareholder approval for further fund raising indicating the type of issuance • Declaration / recommendation or passing over of dividend • Issue of convertible securities, including convertible debentures or of debentures or of debentures carrying a right to subscribe to equity shares or the passing over of dividend • Proposal for declaration of bonus securities, where such proposal is part of the agenda • In case declaration of bonus is not on the agenda, prior intimation is not required S.Sudhakar, RIL 42
Number of days advance intimation • An advance intimation of at least two working days shall be given, excluding the date of the intimation and the date of the meeting for the aforesaid events • For consideration of financial results, an advance intimation of at least 5 days in advance (excluding the date of the intimation and date of the meting) (here it is not working days) • In the intimation date of the meeting of the board of directors to be given • For placing the following proposals before the Board, an advance intimation of 11 working days shall be given • Alteration in the form or nature of any of its securities that are listed or in the rights or privileges of the holders thereof • Any alteration in the date on which, the interest on debentures or bonds or the redemption amount of redeemable shares or of debentures or bonds shall be payable S.Sudhakar, RIL 43
30 Disclosure of events or information • Events or information which are material in the opinion of the Board of Directors shall be disclosed • Events specified in para A of part A of schedule III are deemed to be material events and shall be disclosed • Events specified in para B of part A of schedule III shall be disclosed based on application of guidelines for materiality specified under sub-regulation 4 of Regulation 30 • Criteria for determination of materiality of event / information - • Omission of an event or information, likely to results in discontinuity or alteration of an event or information already available publicly • Omission of an event or information is likely to result in significant market reaction if the same come to light at a later date • In the opinion of the board of directors of the listed entity, the event or information is considered to be material • Listed entity shall frame a policy for determination of materiality, duly approved by the board of directors and shall be disclosed on its website S.Sudhakar, RIL 44
Events deemed to be material events – para A of Part A of Schedule III • Acquisitions, scheme of arrangements, sale or disposal of units or any other restructuring • Issuance or forfeiture of securities, split or consolidation of shares, buy-back of securities, any restrictions on transferability of securities or alteration in terms of structure of existing securities • Revision in credit ratings • Outcome of meetings of Board of Directors - shall be disclosed within 30 minutes (as against 15 minutes earlier) of the closure of the meeting • Declaration / recommendation of Dividend or cash bonuses and date of payment • Cancellation of dividend with reasons • Buyback of securities • Fund raising proposals • Issue of bonus shares • Reissue of forfeited shares • Alteration of capital • Financial results • Voluntary delisting S.Sudhakar, RIL 45
Events deemed to be material events (contd …) • Agreements – shareholder agreements, joint venture agreements, family settlement agreements (to the extent of its impact on the management and control of the listed entity), agreement / treaty/contracts with media companies • Fraud /defaults by promoter or KMPs or any arrest of KMP or promoter (Directors are not included here. They are covered in part B) • Change in Directors or KMPs, Auditor and compliance officer • Appointment of discontinuation of share transfer agent • Corporate debt restructuring • One time settlement with bank • Reference to BIFR and winding up petitions • Issuance of notices, call letters, resolutions and circulars sent to shareholders, debenture holders or creditors or any class of them • Proceedings of AGM/EGMs • Amendments to Memorandum & Articles • Schedule of analyst or institutional investor meet and presentations made to them S.Sudhakar, RIL 46
Events to be disclosed upon application of guidelines of materiality -para A of Part A of Schedule III • Commencement or postponement of commercial production or commercial operations of any unit / division • Change in general character or nature of business or closure of operations • Capacity addition or product launch • Awarding/bagging/amending contracts / orders not in the normal course of business • Any loan agreements or other agreements not in the normal course of business • Disruption of operations – force majeure events • Effects arising out of changes in regulatory framework • Litigations/disputes/regulatory actions with impact • Fraud/defaults etc by directors (other than KMPs) or employees S.Sudhakar, RIL 47
Events to be disclosed upon application of guidelines of materiality (contd …) • ESOP /ESPS schemes • Giving guarantees or indemnity or becoming a surety for any third party • Granting/withdrawal/surrender/cancellation or suspension of any license or regulatory approvals • Any major developments likely to affect business - example emergence of new technologies, expiry of patents, change in accounting policies having significant impact, • Other information as specified by the Board from time to time S.Sudhakar, RIL 48
Materiality of events / information • Board shall authorise one or more KMPs to determine materiality for the purpose of making disclosures. • Contact details of such authorised personnel shall be disclosed to stock exchanges and also on the entity’s website • Listed entity shall disclose all events specified in Part A of schedule III i.e. both para A and para B as soon as reasonably possible but not later than 24 hours from the occurrence of the event • If disclosure is made after 24 hours explanation for delay is to be provided • Certain events specified in sub-para 4 of para A shall be disclosed within 30 minutes of conclusion of the board meeting – dividend, buy-back of securities, fund raising, bonus issue, financial results, voluntary de-listing etc • These disclosures are to be updated on material developments till such time the events or closed or resolved S.Sudhakar, RIL 49
Materiality of events / information (contd ….) • All disclosures made to the stock exchanges shall be hosted on the website of the listed entity, for a minimum period of 5 years, and thereafter as per the archival policy of the listed entity • Events or information with respect to subsidiaries which are material shall also be disclosed • Shall provide specific and adequate reply to all queries raised by stock exchanges • Listed entity on its own confirm or deny any reported event / information • Any other information which is not referred to in para A or B of Part A of schedule III, which may have material effect, adequate disclosure shall be given S.Sudhakar, RIL 50
31 Shareholding pattern • Listed entities shall submit to the stock exchanges a statement showing holding of securities and shareholding pattern separately for each class of security in the format specified within the following timelines • One day prior to the listing of securities • On a quarterly basis, within 21 days from the end of each quarter • Within 10 days of any capital restructuring resulting in a change exceeding 2% of the total paid-up share capital • Hundred percent shareholding of promoter and promoter group shall be in demat form • Listed entity shall comply with circulars or directions issued with respect to maintenance of shareholding in demat form S.Sudhakar, RIL 51
31A Disclosure of class of shareholders & conditions for re-classification • All entities falling under promoter and promoter group shall be disclosed separately in the shareholding pattern, in accordance with the formats specified by SEBI • Stock exchanges shall allow modification or reclassification of the status of the shareholders, only upon receipt of a request from the concerned listed entity or the concerned shareholders, along with relevant evidence • In case entity is listed on more than one exchange, the exchanges shall jointly decide • In case of transmission/succession/inheritance, the inheritor shall be classified as promoter S.Sudhakar, RIL 52
31A Disclosure of class of shareholders & conditions for re-classification (contd ….) • When a new promoter replaces the previous promoter subsequent to an open offer or in any other manner, reclassification may be permitted subject to approval of shareholders and compliance of the following conditions • Such promoter (existing) along with the promoter group or persons acting in concert shall not hold more than ten percent of the paid up capital • Such promoter shall not continue to have any special rights through formal or informal arrangements and special rights if any, shall be terminated • Such promoter shall not act as KMP for a period of more than three years from the date of approval of shareholders provided that Shareholders must specifically grant such approval for such promoter to act as KMP S.Sudhakar, RIL 53
Reclassification of existing promoters as public shareholders • Where an entity becomes professionally managed and does not have any identifiable promoter, the existing promoters may be re-classified as public shareholders, subject to the approval of shareholders • An entity may be considered as professionally managed, if • No person or group along with persons acting in concert taken together shall hold more than 1% paid-up equity capital including any holding of convertibles / outstanding warrants / DRs • Provided in case of mutual fund, banks, insurance companies, financial institutions, foreign portfolio investors, may hold up to 10% • Promoters seeking reclassification and their relatives may act as KMPs of such entity, only subject to shareholders’ approval and for a period not exceeding three years from the date of shareholders’ approval • Promoters seeking reclassification shall not have any special rights through formal or informal arrangements. • All shareholding agreements granting special rights to such outgoing entities shall be terminated S.Sudhakar, RIL 54
Re-classification of promoter as public shareholder • Shall be subject to following conditions • Such promoter shall not, directly or indirectly exercise control, over the affairs of the entity • Increase level of public shareholding pursuant to re-classification shall not be counted towards achieving compliance with minimum public shareholding, requirement under Rule 19A of Securities Contracts (Regulation) Rules, 1957 • Such re-classification shall be disclosed to stock exchanges as a material event • SEBI may relax any condition for re-classification • If any public holder seeks re-classify itself as promoter, shall make an open offer under SEBI (SAST) Regulations, 2011 S.Sudhakar, RIL 55
32 statement of deviations or variations • In respect of public issues, right issues, preferential issues etc, the listed entity shall submit the following statement to the exchanges • Indicating deviations, if any, in the usage of proceeds • Indicating category wise variation (capital expenditures, working capital expenditure etc) • Such statements shall be submitted till the issue proceeds are fully utilised • Such statements shall be placed before the audit committee • Listed entity shall furnish explanation in the Board’s report • Shall prepare a statement of funds utilised and place the same before the audit committee duly certified by the statutory auditors, till such time the money is fully utilised • In case any monitoring agency is appointed to monitor the utilisation of proceeds, any comments or report received shall be placed before the audit committee S.Sudhakar, RIL 56
33 Financial Results • Financial results shall be prepared based on accrual accounting policy with uniform accounting practices • Quarterly and year to date results shall be prepared in accordance with the recognition and measurement principles laid down under AS 25 and 31 • Standalone and consolidated results shall be prepared under the Indian GAAP • Listed entity may also submit the financial results, as per IFRS (International Financial Reporting Standards) notified by the International Accounting Standard Board • Limited review or audit reports submitted to the exchanges on quarterly or annual basis are to be given only by an auditor who has subjected himself to the and holds a valid certificate issued by peer review board of ICAI • Listed entity shall make disclosures specified in Part A of Schedule IV S.Sudhakar, RIL 57
Approval and Authentication • Quarterly results submitted shall be approved by the Board of directors • While placing the results before the Board, the CEO and CFO shall give a certificate stating that the financial results • do not contain any false or misleading statement or figures and • do not omit any material fact which may make the statements or figures contained therein misleading • The financial results shall be signed by the chairperson, or MD or WTD or any director duly authorised • Financial results shall be approved by the board of directors (no committee of the Board can approve) • Formats are yet to be prescribed by SEBI S.Sudhakar, RIL 58
Submission of financial results to exchanges • Financial results shall be submitted quarterly and year-to-date within 45 days of the end of each quarter other than the last quarter • In case the listed entity has subsidiaries, the listed entity in addition to the above, may also submit quarterly / year-to-date consolidated financial results subject to the following • Intimate the exchanges in advance that it shall also submit consolidated results but this option shall not be changed during the financial year • In case it changes the option next year it has to furnish comparable figures for the previous year • Quarterly and year-to-date financial results may be audited or un-audited subject to the following • Unaudited results shall be accompanied by a limited review by the statutory auditors • Public sector undertakings any practicing chartered accountant • In case opted for audited results they shall be accompanied by the audit report • Shall submit audited standalone financial results within 60 days from the end of the financial year, along with the audit report in Form A (unmodified opinion) or Form B (modified opinion) S.Sudhakar, RIL 59
Submission of financial results to exchanges (contd …) • Shall submit audited financial results in respect of the last quarter along with the results for the entire financial year, with a note that the figures for the last quarter are the balancing figures between the audited figures and figures up to the third quarter of the current financial year • In case the auditor has expressed any modified opinion the listed entity shall include as a note to the financial results • How the modified opinion has been resolved • If not resolved, the reason thereof and the steps taken in the matter • Together with the financial results for the half year, the listed entity shall also submit by way of a note statement of assets and liabilities as at the end of the half year • In case there is a name change suggesting any new line of business, it shall disclose the net sales, expenditure and net profit or loss after tax pertaining to the said new line of business separately in the results • Such disclosures shall be given for 3 years succeeding the date of change of name • All transactions of exceptional nature shall be disclosed • Listed entity shall carry out necessary steps for rectification of modified opinion and / or submission of revised pro-forma financial results as specified in Schedule VIII S.Sudhakar, RIL 60
35 Annual Information Memorandum (new) • Listed entity shall submit to the stock exchanges an Annual Information Memorandum in the manner specified by SEBI from time to time • Format yet to be prescribed by SEBI S.Sudhakar, RIL 61
36 Documents & information to shareholders • Annual report shall be sent in the following manner • Soft copies of full annual report to all those shareholders who have registered their e-mail addresses • Hard copy containing salient features to those who have not registered their e-mail addresses • Hard copies of full annual reports to all those who request for the same • For appointment of a new director or re-appointment of a director the shareholders must be provided with the following information • Brief resume of the director and nature of expertise • Relationships between directors inter-se • Directorships and memberships of committees of listed entities such person holds • Shareholding of non-executive directors S.Sudhakar, RIL 62
37 Scheme of Arrangement • Before filing the draft scheme of arrangement before any Court or Tribunal, it shall be filed with the stock exchanges • An observation letter or no-objection letter shall be obtained before filing such draft scheme • such observation letter or no-objection letter shall be placed before the Court or Tribunal at the time of seeking approval of the scheme of arrangement • The observation or no-objection letter shall be valid for a period of 6 months from the date of issuance within which the draft scheme of arrangement shall be submitted to the Court or Tribunal • Upon sanction of the Scheme by the Court or Tribunal the listed entity shall submit such prescribed documents to the stock exchanges S.Sudhakar, RIL 63
40 Transfer or Transmission of Securities • The Board may delegate the power of transfer of securities to a committee or to a compliance officer or to the share transfer agent • Such delegated authority shall attend to share transfer formalities once in a fortnight and shall report on the same to the Board • On receipt of proper documentation the transfer is to be effected within a period of 15 days from the date of receipt of request • Transmission requests are to be processed within a period of 7 days in case of demat mode and 21 days in case of physical mode • When the transfer is restricted by any statutory prohibition or any attachment or prohibitory order of a competent authority, no effect to transfer request to be given • No effect to register of transfer shall be given where in the transferor objects, provided he provides within 60 working days of raising objection of a prohibitory order of a court of competent jurisdiction • Procedural requirements are specified in Schedule VII S.Sudhakar, RIL 64
Transfer or Transmission of Securities (contd …) • Where the transfer was not effected within 15 days or not communicated to the transferee any valid objection, the aggrieved party shall be compensated for the opportunity losses • The aggrieved party shall also be provided with all corporate benefits • Within one month of the end of each half of the financial year, a PCS certificate is to be produced, certifying that all certificate have been issued within 30 days of the date of lodgement for transfer, sub-division, consolidation, renewal, exchange or endorsement of calls / allotment monies • such certificate shall be filed with the exchanges simultaneously • These provisions shall also apply to name deletion, transmission and transposition of securities S.Sudhakar, RIL 65
Schedule VII – transfer of securities • Requirement of PAN • For registration of transfer of securities the transferee as well as transferor shall furnish a copy of their PAN • For off-market or private transactions involving transfer of shares also both transferor and the transferee shall furnish copy of PAN • In case of residents of Sikkim PAN may be substituted by identity card • Minor difference in signature • Promptly send to the first transferor viz speed post – asking him to inform objection support by valid proof within 15 days failing which securities shall be transferred • No objection received within 15 days securities are to be transferred provided a forgery or fraud is not suspected • Proof of delivery shall be maintained S.Sudhakar, RIL 66
Schedule VII – transfer of securities (contd ….) • Major difference or non-availability of signature • Send an objection memo to the transferee by speed post marking the reason • Send a copy of the objection memo to the transferor by speed post, simultaneously • Objection memo shall also state the requirement of additional documents, such as • Affidavit to update transferor’s signature • an original unsigned cancelled cheque and banker’s attestation of transferor’s signature • Contact details of transferor • On receipt of requisite documents, the transfer shall be effected provided a fraud or forgery is not suspected S.Sudhakar, RIL 67
Additional documentation requirements for transmission of securities • Securities held in demat mode • in single name without a nominee, simplified documentation as per DP’s bye -laws where threshold limit is Rs 5 lacs only per beneficiary account • Securities held in physical mode • In single name with a nominee • Duly signed transmission request form by the nominee • Original copy of death certificate duly notarised • Self attested copy of PAN • In single name without a nominee and value of securities not exceeding Rs 2 lacs • Affidavit, Indemnity and NOC from legal heirs • If the value of securities is more than Rs 2 lacs – also succession certificate or probate or will or letter of administration or court decree • Listed entity may increase the value of securities at its discretion S.Sudhakar, RIL 68
Terms of Securities – Schedule I • For making payment of dividend / interest and redemption payments electronic clearing services shall be used • Listed entity shall mandatorily print the bank account details of the investors on such payment instruments, and where the bank details are not available, the address of the investor shall be mandatorily printed on the warrant S.Sudhakar, RIL 69
42 Record date / book closure • Shall intimate record date to all stock exchanges • Advance notice of at least 7 working days (excluding the date of intimation and the record date) to be given, specifying the purpose of record date • Shall recommend or declare all dividend and / or cash bonuses at least five working days (excluding the date of intimation and the record date) before the record date fixed for the purpose • Between two record dates and book closures at least 30 days gap shall be ensured • For securities held in physical mode closure of transfer books may be announced S.Sudhakar, RIL 70
43 & 44 Dividend and Voting • Dividend shall be declared and disclosed on per share basis only • Remote e-voting shall be provided (no mention about e-voting at the meeting) • Voting results shall be submitted within 48 hours of conclusion of the General Meeting • Proxy forms shall be sent mentioning that a holder may vote either for or against each resolution S.Sudhakar, RIL 71
45 Change of name (new) • Change of name is permitted subject to compliance with the following conditions • At least one year elapsed from the last name change • At least 50% of total revenue in the preceding one year period has been accounted for by the new activity suggested by the new name • Amount invested in the new activity/ project Is at least 50% of the assets of the listed entity • In case activities of the listed entity are changed which are not reflected in its name, it shall change its name within a period of 6 months from the change of activities • Once above conditions are satisfied, the change of name application to be moved to ROC for name availability • On receipt of name availability before filing request for change, stock exchange approval shall be sought with a certificate from a Chartered Accountant stating the compliance of the above conditions S.Sudhakar, RIL 72
46 Website • A functional website shall be maintained and following information shall be disseminated on the same • Details of business • Independent directors • Terms and conditions of appointment • Details of familiarisation programmes imparted • Composition of various committees • Code of conduct of Board and senior management personnel • Policies • Dealing with related party transactions • Determining ‘material subsidiaries’ • Vigil mechanism / whistle blower policy S.Sudhakar, RIL 73
Contents to be uploaded on website • Email address for grievance redressal and other relevant details • Contact information of designated officials responsible for assisting and handling investor grievances • Financial information • Notice of the board meeting, where financial results shall be discussed • financial results on conclusion of the meeting • Shareholding pattern • Details of agreements with media companies • Schedule of analyst or institution investor meets and presentations made there at • New name and old name for a period of one year • All items published in news papers, such as financial results, notices given to shareholders by advertisement etc • Changes in the content on website shall be updated within 2 working days from the date of such change S.Sudhakar, RIL 74
47 Advertisements in news papers • Notice of board meeting where financial results shall be discussed • Financial results as specified in regulation 33 (old 41) • Where standalone and consolidated results are submitted to the exchanges, only consolidated results are to be published, along with a foot note indicating turnover, PBT and PAT on standalone basis • Also to indicate where standalone results are available • Statement on deviations / variations as specified in regulation 32 (issue proceeds) • Notices given to shareholders by advertisement • In the newspaper publication website link of the entity and of the stock exchanges to be given where in further details are available • Financial results shall be published within 48 hours of approval by the board and other information shall be published simultaneously • This regulation is not applicable to securities listed on SMEs S.Sudhakar, RIL 75
Action points • To formulate a policy for determining ‘material subsidiary’ • May organise occasional audit committee meetings without the presence of any executives • Ordinary resolution for approval of Related party transactions • Related parties shall abstain from voting whether the entity is a related party to the particular transaction or not • To formulate a policy for determination of materiality of events or information • To authorise one or more KMPs to determine materiality of an event or information • To ensure disclosing all disclosures to stock exchanges on website for a minimum period of five years • To formulate an archival policy in regard to the same • Maintain functional website and disseminate the prescribed information S.Sudhakar, RIL 76
Obligations of an entity listed non-convertible debt securities / preference shares chapter – V (regulations 49 to62) S.Sudhakar, RIL 77
Applicability • The provisions of this Chapter shall apply only to a listed entity - • Which has listed its ‘Non -convertible Debt Securities and / or Non-convertible Preference Shares • The issue is in accordance with SEBI (Issue and Listing of Debt Securities) Regulations, 2008 or SEBI (Issue and Listing of Non-Convertible Redeemable Preference Shares) Regulations 2013 • These provisions shall also be applicable to ‘perpetual debt instruments’ and ‘perpetual non-cumulative preference shares’ listed by Banks S.Sudhakar, RIL 78
To comply with • In case of non-convertible debt securities or non-convertible redeemable preference shares or both following to be complied with: • Chapter V (containing regulations 49 to 62) • Part B of Schedule III pertaining to disclosure of information having bearing on performance / operation of listed entity • Para A of Schedule V – additional disclosures in Annual Report relating to Related party disclosures S.Sudhakar, RIL 79
50 Intimation to Exchanges • Prior intimation of at least 11 working days, shall be given to the exchanges about the date on and from which interest and redemption proceeds shall be payable • Prior to issuance of such securities through public issue or private placement, intimation shall be given to the exchanges • Above intimation may be given prior to the meeting of the board where in the proposal for issuance of such securities is considered • At least 2 working days notice (excluding the date of the intimation and date of the meeting) about the board meeting shall be given, at which declaration of issue of non- convertible debt securities or any other matter affecting the rights or interests of holders is proposed to be considered • Price sensitive information or any action that affect payment of interest or dividend shall be promptly intimated to exchanges • Without prejudice to the above intimation shall make disclosures as specified in Part B of Schedule III. These are more or less the same as per the existing debt listing provisions S.Sudhakar, RIL 80
52 Financial results • Unaudited or audited financial results on a half yearly basis shall be submitted to exchanges within 45 days from the end of the half year • Unaudited financial results shall be accompanied by a limited review report prepared by the statutory auditors • Such limited review shall be prepared by statutory auditors and by a practising Chartered Accountant in case of a public sector undertaking • Audited results shall be submitted within 60 days from the end of the financial year and in such case un-audited financial results for the last half year need not be submitted to stock exchanges • In case the listed entity opts to submit un-audited results for the last half year, it shall also submit audited financial results for the entire financial year as soon as they are approved by the board • Modified opinion in the audit report that have bearing on the interest and dividend payment shall be appropriately and adequately addressed by the Board of directors while publishing the results • Half yearly results shall be taken on record by the board of directors and signed by the MD / executive director (only Board to take on record not any Committee) S.Sudhakar, RIL 81
Financial results (contd ….) • Annual audited financial results shall be submitted along with annual audit report and either Form A for audit report with unmodified opinion or form B for audit report with modified opinion (new) • While submitting half yearly / annual financial results, in case of secured debentures shall disclose certain line items - ref 52(4) • While submitting above information to exchanges, a certificate signed by the debenture trustees that it has taken note of the contents shall also be submitted to the exchanges • Listed entity which has listed its non-convertible redeemable preference shares shall make the following additional disclosures • Profit for the half year and cumulative for the year • Free reserves as on the end of the half year • Securities premium account balance • Within 2 calendar days of the conclusion of the board meeting the financial results shall be published S.Sudhakar, RIL 82
53 Annual Report • In the annual report of the listed entity Related Party disclosures as specified in para A of Schedule V are to be given (new) • In case of a holding company, the loans and advances in the nature of loans to the subsidiary, associates and to the firms and companies in which directors are interested shall be disclosed by name and amount • In case of a subsidiary company also same details shall be disclosed • In case of a holding company, investments by the loanee in the shares of a parent company and subsidiary, where the company has made a loan or advance in the nature of loan shall be disclosed S.Sudhakar, RIL 83
54 Asset cover & Credit rating • An asset cover of hundred percent sufficient to discharge the principal amount at all times for the non-convertible debt securities issued, shall be maintained • Disclosures shall be made to the exchanges in quarterly, half-yearly and annual financial statements the extent and nature of security created and maintained • The credit rating obtained shall be reviewed at least once a year by a credit rating agency registered by SEBI S.Sudhakar, RIL 84
56 Documents and intimation to debenture trustees • Following documents shall be forwarded to the debenture trustees • Copy of annual report along with a copy of certificate from auditors in respect of utilisation of funds during the implementation of projects for which the funds were raised (new) • All notices, resolutions and circulars for new issue of non convertible debt securities and the meetings of holders of such securities • Intimations regarding revision in credit rating, default in timely payment of interest, redemption or both (new) • Failure to create charge on assets • Half yearly certificate regarding maintenance of hundred percent asset cover by a PCS or CA along with half yearly financial results S.Sudhakar, RIL 85
57 Other submissions to stock exchanges • A certificate shall be submitted to the stock exchanges within 2 days, of interest or principal or both becoming due, that the payments have been made • An undertaking shall be provided to the stock exchanges on an annual basis, stating that all documents and intimations required to be submitted to the debenture trustees under SEBI (issue and listing of debt securities) Regulations, 2008, have been complied with (new) S.Sudhakar, RIL 86
58 Documents and information to be sent to holders • to holders of non-convertible preference shares • Soft copies of full annual reports where e-mail addresses are available • Abridged hard copies in other cases • Hard copies of full annual reports to those holders of non-convertible debt securities and of preference of shares who request for the same • Half yearly communication pertaining to financial results under regulation 52 S.Sudhakar, RIL 87
59 Structure of non-convertible debt securities and of preference of shares • Shall not make material modifications without prior approval of stock exchanges, in terms of coupon / dividend, conversion, redemption or otherwise • Such approval shall be made only after • Approval of the board of directors and debenture trustee in case of non- convertible debt securities; and • After complying with the provisions of the companies Act, 2013 S.Sudhakar, RIL 88
60 Record date • Record date shall be fixed for the purposes of payment of interest, dividend and payment of redemption or repayment amount or for such other purposes specified by stock exchanges • An advance notice of at least seven working days (excluding the date of intimation and the record date) of the record date shall be given S.Sudhakar, RIL 89
61 terms on non-convertible debt securities and preference shares • Listed entity shall ensure timely payment of interest or dividend or redemption payments • In case the listed entity defaulted in payment of interest on debt securities or redemption or in creation of security thereof, It shall not declare or distribute any dividend • Listed entity shall not forfeit unclaimed interest / dividend and such unclaimed interest / dividend shall be transferred to the IEPF set up under section 125 of the Companies Act, 2013 S.Sudhakar, RIL 90
62 website (new) • Maintenance of functional website is mandatory • Listed entity shall maintain a functional website containing the following information • Details of business • Financial information – financial statements • Contact information – investor grievances • E-mail address for investor grievance redressal • Name of debenture trustees • Information, reports, notices, call letters, circulars, proceedings etc • All information and reports including compliance reports filed with stock exchanges • Information with respect to • Default in payment of interest or redemption amount • Failure to create charge on assets • Revision of credit rating assigned to debt securities • Listed entity to issue a press release with respect to the above events • Ensure contents of website are correct and updated from time to time. No time line is given here. In case of equity listing to be updated in two working days S.Sudhakar, RIL 91
Action points • To submit annual audited financial results with annual audit report and either Form A (unmodified opinion) or Form B (modified opinion) • To give related party disclosures in the annual report as specified in Para A of Schedule V • To get credit rating reviewed at least once a year • Provide an undertaking to stock exchanges that all documents and intimations required to be submitted to debenture trustees have been complied with • Maintain a functional website and upload requisite information S.Sudhakar, RIL 92
Obligations on listing of specified and non-convertible debt securities and preference shares – chapter VI S.Sudhakar, RIL 93
Listing obligations on listing of specified securities and non-convertible debt securities / preference shares • Entities which have listed their ‘specified securities’ and ‘non - convertible debt securities’ or non-convertible redeemable preference shares’ shall be bound by provisions of Chapter IV and some provisions of Chapter V • Listed entity which has submitted information under chapter IV need not re-submit any such information, unless the Board or the exchanges ask for such information • In case the listed entity got the specified securities delisted, it shall comply only with all the provisions of chapter V • In case it redeems the non-convertible debt securities or preference shares then it shall comply only with the provisions of chapter IV S.Sudhakar, RIL 94
Duties & Obligations of Stock Exchanges chapter – X (regulations 92 to 97) S.Sudhakar, RIL 95
Duties & Obligations of Stock Exchanges • To disseminate relevant intimations, information, filings, reports, statements, documents and other submissions made by the listed entities • Disseminations shall be in an organised, user friendly and easily referable manner • Draft scheme of arrangement & scheme of arrangement • Upon receipt of the scheme shall forward to the Board • Within 30 days shall submit to the board, its objection or no-objection letter on the draft scheme of arrangement • Shall issue observation or no-objection letter to the listed entity within 7 days of receipt of comments of the Board • Validity of such observation or no-objection letter is 6months from the date of issuance • Exchanges shall bring observations or objections to the notice of Court or Tribunal at the time of approval of scheme • Upon sanction of the scheme by the Court or Tribunal, the stock exchanges shall forward its recommendations to the Board on the documents submitted by the listed entity S.Sudhakar, RIL 96
Duties & Obligations of Stock Exchanges (contd …) • Shall review the Form B accompanying the annual audit report submitted by the listed entities • Shall redress / facilitate redressal of complaints of holders of listed securities from time to time • Shall monitor compliances by the listed entity with the provisions of these Regulations • Monitor adequacy / accuracy of the disclosures made by the listed entities • Shall submit a report with respect to the above to the Board • Shall put in place adequate framework, manpower and infrastructure to comply with the provisions of these Regulations S.Sudhakar, RIL 97
Procedure for action in case of default – chapter XI S.Sudhakar, RIL 98
Action in case of any default • The listed entity or any other person who contravenes any provisions of these regulations, shall be liable to action under the securities laws • In addition, would be liable for the following actions by the respective stock exchanges • Imposition of fines • Suspension of trading • Freezing of promoter / promoter group holding of designated securities • Any other action prescribed by the Board • Revocation of suspense or freeze of securities shall be as specified in circulars or guidance notes issued by the Board S.Sudhakar, RIL 99
Miscellaneous – chapter XII S.Sudhakar, RIL 100
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