Listing Regulations Companys perspective & Role of Company - - PowerPoint PPT Presentation

Listing Regulations – Company’s perspective & Role of Company Secretary

Gaurav N Pingle, Practising Co. Secretary, Pune.

ICSI-Nashik & BSE Ltd. Joint Full Day Seminar on LODR & Secretarial Audit on Saturday, Sep. 16, 2017

Background & Introduction:

a)

Listing Agreement,

b)

Listed Entity,

c)

Enforceability,

d)

Important Features of LODR Regulations – Disclosures, Compliances, Decision Making.

SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015

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Presentation at Nashik Chapter of ICSI I By CS Gaurav Pingle

Applicability of LODR Regulations

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Specified securities listed on main board / SME Exchange / 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 Units issued by Mutual Funds Any other securities as may be specified by SEBI

Important provisions under LODR Regulations

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 eFiling of Information with SEs,  Expeditious redressal of investor complaints –

SCORES Mechanism – Grievance Redressal Mechanism,

Key Corporate Governance issues

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 Independent Director: Listing Regulations vis-à-vis

Companies Act, 2013

 Material Subsidiary: Subsidiary, whose Income or Net

Worth exceeds 20% of Consolidated income or Net Worth respectively, of the listed entity and its subsidiaries in the immediately preceding accounting year.

… Key Corporate Governance issues

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 BoD shall periodically review compliance reports

pertaining to all laws applicable to the listed entity, prepared by listed entity as well as steps taken to rectify instances of non-compliances;

 BoD shall satisfy itself that plans are in place for

• rderly succession for appointment to BoD &

Senior Management.

Formulation & Adherence of Code of Conduct

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 Code of Conduct for Directors & Senior Management,  Code

• f

Conduct shall incorporate duties

• f

Independent Directors as laid down in Cos.Act, 2013,

 Performance evaluation of Independent Directors shall be done by

the entire BoD,

 Listed entity shall lay down procedures to inform members of BoD

about risk assessment & minimization procedures,

 BoD shall be responsible for framing, implementing and monitoring

the Risk Management Plan for the listed entity.

Committees under LODR Reg.

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Committees

Audit Committee

Nomination & Remuneration Committee Stakeholders Relationship Committee Risk Management Committee

Related Party Transactions

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1

• Listed Entity

2

• Related Party – under LODR Reg.

3

• Transaction – under LODR Reg.

Related Party Transactions

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All RPTs shall require prior approval of the Audit Committee Audit Committee’s Omnibus Approval for RPTs Voting & Restriction

• n

Voting Non- Applicability

Corporate Governance requirements with respect to subsidiary of listed entity

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At least 1 ID on the BoD of unlisted Material Subsidiary Listed Entity’s AC to review Fin. St. of Unlisted Subsidiary BM Minutes of unlisted Subsidiary Co. shall be placed at BM of Listed entity

Corporate Governance requirements with respect to subsidiary of listed entity

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• Mngt. of Unlisted Subsidiary Co. shall periodically bring to

the Notice of BoD of Listed entity, a statement of all significant transactions & arrangements entered into by unlisted subsidiary Listed entity shall not dispose of shares in its material subsidiary resulting in reduction of its shareholding to less than 50% or cease the exercise of control over Subsidiary without passing Special Resolution in its General Meeting. Selling, disposing & Leasing of assets amounting to more than 20% of assets of material Subsidiary on an aggregate basis during FY shall require prior approval of shareholders (Special Resolution)

Quarterly Reporting on Corporate Governance requirements

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Listed entity shall submit Quarterly Compliance Report on Corporate Governance to recognised Stock Exchange(s) within 15 days from close of the quarter Details of all material transactions with related parties shall be disclosed along with the report Report shall be signed either by Compliance Officer or CEO of Listed Entity

Prior Intimations – Atleast 2 working days in advance

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Financial results viz. quarterly, half yearly, or annual, Proposal for buyback of securities, Proposal for voluntary delisting by the listed entity from the stock exchange(s), Fund raising by way of FPO, Rights Issue, ADR / GDR /FCCBs, QIPs, Debt Issue, Preferential Issue Declaration/recommendation

• f

dividend, issue

• f

convertible securities, Declaration of bonus securities

Prior Intimations – Atleast 11 working days in advance

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Any alteration in the form or nature of any of its securities that are listed on SE or in Rights or privileges of the holders Any alteration in the date on which, interest on debentures or bonds,

• r redemption amount of redeemable shares / of debentures /

bonds, shall be payable

Disclosure of Events or Information

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Every listed entity shall make disclosures of any events or information which, in the opinion of the board of directors

• f the listed company, is material.

Prescribed Events are deemed to be material events and listed entity shall make disclosure of such events Listed entity shall make disclosure of the prescribed events based on application of the guidelines for materiality

Prescribed events are deemed to be Material Events:

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 Acquisition(s) (including agreement to acquire),

Scheme of Arrangement (amalgamation/ merger/ demerger/restructuring), or sale or disposal of any unit(s), division(s) or subsidiary of the listed entity

• r any other restructuring;

 Issuance

• r

forfeiture

• f

securities, split

• r

consolidation of shares, buyback of securities…

 Revision in Rating(s).  Outcome of Board Meetings. Disclosure within

30mins of closure of meeting,

… Prescribed events are deemed to be Material Events:

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

Agreements which are binding and not in normal course of business, revision or amendment & termination thereof;



Fraud/defaults by Promoter or KMP or by listed entity or arrest of KMP or Promoter,



Change in directors, KMP (MD, CEO, CFO, CS), Auditor and Compliance Officer;



Appointment or discontinuation of R&TA;



Corporate debt restructuring,



One time settlement with a bank,



Reference to BIFR & winding-up petition filed by any party,



Proceedings of Annual and extraordinary general meetings of the listed entity.



Amendments to MoA and AoA of listed entity, in brief,



Schedule of Analyst or institutional investor meet and presentations on financial results made by the listed entity to analysts or institutional investors

Guidelines for materiality

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a)

Omission of an event or information, which is likely to result in discontinuity or alteration of event or information already available publicly; or

b)

Omission of an event or information is likely to result in significant market reaction if the said omission came to light at a later date;

c)

Where (a) & (b) are inapplicable, an event/information may be treated as being material if in the BoD’s opinion, the event

• r

information is considered material.

Events which shall be disclosed upon application

• f the guidelines for ‘materiality’

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

Commencement or any postponement in the date of commencement of commercial production or commercial operations of any unit/division;



Change in the general character or nature of business brought about by arrangements for strategic, technical, manufacturing, or marketing tie-up, adoption of new lines of business or closure of operations of any unit/division (entirety or piecemeal);



Capacity addition or Product launch;



Awarding, bagging/ receiving, amendment

• r

termination

• f

awarded/bagged

• rders/contracts not in the normal course of business;



Agreements (viz. loan agreement(s) (as a borrower) or any other agreement(s) which are binding and not in normal course of business) and revision(s) or amendment(s) or termination(s) thereof;



Disruption of operations of any one or more units or division of the listed entity due to natural calamity (earthquake, flood, fire etc.), force majeure or events such as strikes, lockouts etc.

…. Application of guidelines for ‘materiality’

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Effect(s) arising out of change in the regulatory framework applicable to the listed entity



Litigation(s) / dispute(s) / regulatory action(s) with impact.



Fraud/defaults etc. by directors (other than key managerial personnel) or employees of listed entity.



Options to purchase securities including any ESOP/ESPS Scheme.



Giving of guarantees or indemnity or becoming a surety for any third party.



Granting, withdrawal, surrender, cancellation or suspension of key licenses or regulatory approvals.

Disclosure of Class of shareholders & Conditions for Reclassification

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 Modification or Reclassification of shareholders’ status;  When new Promoter replaces previous Promoter subsequent to

an Open Offer, re-classification may be permitted subject to shareholders’ approval & compliance of 3 conditions:

 Shareholding (including PAC) should be less than 10%,  No special Rights through formal / informal arrangements,  Not to act as KMP for 3 more years.



Where an entity becomes professionally managed and does not have any identifiable promoter, existing promoters may be re- classified as Public Shareholders subject to shareholders approval.

Voting by Shareholders

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 Listed entity shall provide the facility of remote e-

voting facility to its shareholders, in respect of all shareholders’ resolutions.

 Bombay HC’s in Scheme of Amalgamation of Wadala

Commodities Ltd. with Godrej Industries Ltd.

Dividend Distribution Policy

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Circumstances under which the shareholders

• f the listed

entities may or may not expect dividend Financial parameters that shall be considered while declaring dividend Internal and external factors that shall be considered for declaration of dividend Policy as to how the retained earnings shall be utilized Parameters that shall be adopted with regard to various classes

• f shares

*** Mandatory for Top 500 based on M-Cap. For others, the Policy is Voluntary

Business Responsibility Report

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 Certain

listed entities based

• n

Market Capitalization (calculated as on March 31 of every FY), shall prepare Business Responsibility Report;

 Report shall include initiatives taken by Co. from

perspective of environment, society & Governance.

*** Mandatory for Top 500 based on M-Cap. For others, the Report is Voluntary

Listing Regulations – Role of CS

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Presentation at Nashik Chapter of ICSI I By CS Gaurav Pingle

Compliance Officer

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Listed entity shall appoint a qualified Company Secretary as the Compliance Officer, Compliance Officer of shall be responsible for:

1.

Ensuring conformity with regulatory provisions applicable to listed entity in letter & spirit.

2.

Co-ordination with and reporting to SEBI, recognised Stock Exchange(s) and Depositories w.r.t. compliance with Rules, Regulations and other directives of these authorities in manner as specified from time to time.

3.

Ensuring that the correct procedures have been followed that would result in the correctness, authenticity and comprehensiveness of the information, statements and reports filed by the listed entity under these Regulations.

4.

Monitoring email address of grievance redressal division as designated by the listed entity for the purpose of registering complaints by investors:

Policies under LODR Regulations

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1.

Policy for Preservation of Documents,

2.

Policy for determining ‘Material’ Subsidiary,

3.

Policy on materiality of RPTs & on dealing with RPTs

4.

Policy for determination of Materiality,

5.

Archival Policy,

6.

Dividend Distribution Policy,

7.

Whistle Blower Policy,

8.

Policy relating to, the remuneration of Directors, KMP and other employees,

9.

Policy on diversity of Board of Directors

CS actively involved in:

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Advisor to the BoD Committee Meetings Board Meetings Reporting Mechanism Disclosure Mechanism Compliance of Secretarial Standards Compliance of

• ther SEBI

Regulations Policies, Conduct

• f Conduct

Setting up of Compliance System

Certification of Practising CS under LODR Regulations

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• Listed entity shall ensure that it produces Certificate from Practicing

CS within 1 month of the end of each half of FY , certifying that all certificates have been issued within 30 days of the date of lodgement for transfer, subdivision, consolidation, renewal, exchange

• r

endorsement of calls/allotment monies;

• Half-yearly Certificate regarding maintenance of 100% Asset cover in

respect of listed non convertible debt securities, by either Practicing CS

• r Practicing CA, along with half-yearly financial results. Not applicable

where listed entity is Bank or RBI-registered NBFC or where bonds are secured by a Govt. guarantee.

• Compliance Certificate from either Auditors or Practicing CS regarding

compliance of conditions of Corporate Governance.

Q & A Session

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Presentation at Nashik Chapter of ICSI I By CS Gaurav Pingle

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Thank you Nashik Chapter of ICSI & BSE Ltd. for this wonderful opportunity!!  Thank you Students & Members for active participation!!  (E): gp@csgauravpingle.com (W): www.csgauravpingle.com (M): +91 9975565713

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