- SEBI (Buy Back) Regulation 2015
- CHAPTER I PRELIMINARY
1. Short title and commencement
(a) These regulations shall be called the Securities and Exchange Board of India (Buy Back of Securities) Regulations, 1998.
(b) These regulations shall come into force on the date of their publication in the Official Gazette.
2. Definitions : (1) In these regulations, unless the context otherwise requires :—
(a) ‘Act’ means the Securities and Exchange Board of India Act, 1992 (15 of 1992);
(b) ‘associate’ includes a person,—
(i) who directly or indirectly by himself or in combination with relatives, exercise control over the company or,
(ii) whose employee, officer or director is also a director, officer or employee of another company;
(c) ‘Board’ means the board as defined in clause (a) of sub-section (1) of section 2 of the Act;
(d) ‘control’ shall include the right to appoint majority of the directors or to control the management or policy decisions exercisable by a person or persons acting individually or in concert, directly or indirectly, including by virtue of their shareholding or management rights or security-holders or voting agreements or in any other manner;
(e) ‘company’ includes a company registered under the Companies Act, 1956 (1 of 1956) any buys or intends to buy its own shares or other specified securities in accordance with these regulations;
(f) ‘Companies Act’ means the Companies Act, 1956 (1 of 1956), as inserted by the Companies (Amendment) Act, 1999 (21 of 1999)];
(g) ‘insider’ means an insider as defined in clause (e) of regulation 2 of the Securities and Exchange Board of India (Insider Trading) Regulations, 1992;
(h) ‘merchant banker’ means a merchant banker registered under section 12 of the Act;
(i) ‘Ordinance’ means the Companies (Amendment) Act, 1999 (21 of 1999);
(j) ‘promoter’ means ‘promoter’ as defined in clause (h) of sub-regulation (1) of regulation 2 of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997;
(k) ‘registrar’ means a registrar to an issue and includes a share transfer agent registered under section 12 of the Act;
(l) ‘securities’ means ‘securities’ as defined in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956);
(la) ‘small shareholder’ means a shareholder of a listed company, who holds shares or other specified securities whose market value, on the basis of closing price of shares or other specified securities, on the recognised stock exchange in whichhighest trading volume in respect of such security, as on record date is not more than two lakh rupee;
(m) ‘statutory auditor’ means an auditor appointed by a company under section 224 of the Companies Act, 1956 (1 of 1956);
(n) ‘stock exchange’ means a stock exchange which has been granted recognition under section 4 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956);
(o) ‘tender offer’ means an offer by a company to buy-back its shares or other specified securities through a letter of offer from the holders of the shares or other specified securities of the company;
(p) ‘working day’ means any working day of the Board.
(2) All other expressions unless defined herein shall have the same meaning as have been assigned to them under the Act or the Securities Contracts (Regulation) Act, 1956, or the Companies Act, 1956, or any statutory modification or re-enactment thereof, as the case may be. - CHAPTER II CONDITION FOR BUY BACK
3.Applicability:
(1) These regulations shall be applicable to buy-back of shares or other specified securities of a company listed on a stock exchange.
(2) Notwithstanding anything contained in sub-regulation (1), a company listed on a stock exchange shall not buy-back its shares or other specified securities so as to delist its shares or other specified securities from the stock exchange.4.Company may buy-back its own shares or other specified securities:
(1) A company may buy-back its shares or other specified securities by any one of the following methods :—
(a) from the existing security-holders on a proportionate basis through the tender offer;
(b) from the open market through—
(i) book-building process,
(ii) stock exchange;
(c) from odd-lot holders:
Provided that no offer of buy-back for fifteen per cent or more of the paid up capital and free reserves of the company shall be made from the open market.
(2) A company shall not buy-back its shares or other specified securities from any person through negotiated deals, whether on or of the stock exchange or through spot transactions or through any private arrangement.
(3) Any person or an insider shall not deal in securities of the company on the basis of unpublished information relating to buy-back of shares or other specified securities of the company.
(4) A company shall not make any offer of buy-back within a period of one year reckoned from the date of closure of the preceding offer of buy-back, if any.5.Special resolution
(1) For the purposes of passing a special resolution under sub-section (2) of section 77A of the Companies Act, the explanatory statement to be annexed to the notice for the general meeting pursuant to section 173 of the Companies Act shall contain disclosures as specified in Schedule II, Part A.
(2) A copy of the resolution passed at the general meeting under sub-section (2) of section 77A of the Companies Act, shall be filed with the Board and the stock exchanges where the shares or other specified securities of the company are listed, within seven days from the date of passing of the resolution.5A.Board resolution
A company, authorized by a resolution passed by the Board of Directors at its meeting to buy back its shares or other specified securities under first proviso to clause (b) of sub-section (2) of section 77A of the Companies Act, 1956, as inserted by the Companies (Amendment) Act, 2001, shall file a copy of the resolution, with the Board and the stock exchanges, where the shares or other specified securities ofthe company are listed, within two working days of the date of the passing of the resolution.
- CHAPTER III BUY-BACK THROUGH TENDER OFFER
6.Buy-back from existing security-holders:
A company may buy-back its shares or other specified securities from its existing security-holders on a proportionate basis in accordance with the provisions of this Chapter:
Provided that fifteen percent of the number of securities which the company proposes to buy back or number of securities entitled as per their shareholding,whichever is higher, shall be reserved for small shareholders.7.Additional disclosures:
The explanatory statement annexed to the notice under section 173 of theCompanies Act, shall contain the disclosures mentioned in regulation 5 and also the following disclosures:—
(a) the maximum price at which the buy-back of shares or other specified securities shall be made and whether the Board of Directors of the companyare being authorised at the general meeting to determine subsequently the specific price at which the buy-back may be made at the appropriate time;
(b) if the promoter intends to offer their shares or other specified securities,
(i) the quantum of shares or other specified securities proposed to be tendered, and
(ii) the details of their transactions and their holdings for the last six months prior to the passing of the special resolution for buy-back including information of number of shares or other specified securities acquired,the price and the date of acquisition.8.Filing of offer document, etc.
(1) The company which has been authorised by a special resolution or a resolution passed by the Board of Directors at its meeting shall make a public announcement within two working days from the date of resolution in at least one English National Daily, one Hindi National Daily and a Regional language daily all with wide circulation at the place where the Registered office of the company issituated and shall contain all the material information as specified in Schedule II, Part A.
(1A) A copy of the public announcement along with the soft copy, shall also be submitted to the Board simultaneously through a merchant banker.(2) The company shall within five working days of the public announcement file with the Board a draft-letter of offer , along with soft copy, containing disclosures as specified in Schedule III through a merchant banker who is not associated with the company.
(3) The draft letter of offer referred to in sub-regulation (4) shall be accompanied with fees specified in Schedule IV.
(4)The Board may give its comments on the draft letter of offer not later than seven working days of the receipt of the draft letter of offer:
Provided that in the event the Board has sought clarifications or additional information from the merchant banker to the buyback offer, the period of issuance ofcomments shall be extended to the seventh working day from the date of receipt of satisfactory reply to the clarification or additional information sought:
Provided further that in the event the Board specifies any changes, the merchant banker to the buyback offer and the company shall carryout such changes in the letter of offer before it is dispatched to the shareholders.
(5) The company shall file along with the draft letter of offer, a declaration of solvency in the prescribed form and in a manner prescribed in sub-section (6) of section 77A of the Companies Act.9.Offer procedure:
(1) A company making a buyback offer shall announce a record date for the purpose of determining the entitlement and the names of the security holders, who are eligible to participate in the proposed buyback offer.
(2) The letter of offer along with the tender form shall be dispatched to the security holders who are eligible to participate in the buyback offer, not later than five working days from the receipt of communication of comments from the Board.(3) The date of the opening of the offer shall be not later than five working days from the date of dispatch of letter of offer.
3A. The acquirer or promoter shall facilitate tendering of shares by the shareholders and settlement of the same, through the stock exchange mechanism as specified by the Board.
(4) The offer for buy back shall remain open for a period of ten working days.
(5) The company shall accept shares or other specified securities from the security holders on the basis of their entitlement as on record date.
(6) The shares proposed to be bought back shall be divided in to two categories; (a) reserved category for small shareholders and (b) the general category for other shareholders, and the entitlement of a shareholder in each category shall be calculated accordingly.
(7) After accepting the shares or other specified securities tendered on the basis of entitlement, shares or other specified securities left to be bought back, if any in one category shall first be accepted, in proportion to the shares or other specified securities tendered over and above their entitlement in the offer by security holders in that category and thereafter from security holders who have tendered over andabove their entitlement in other category.10.Escrow account:
(1) The company shall as and by way of security for performance of its obligations under the regulations, on or before the opening of the offer deposit in an escrow account such sum as specified in sub-regulation (2).
(2) The escrow amount shall be payable in the following manner,—
(i) if the consideration payable does not exceed Rs. 100 crores - 25 per cent of the consideration payable;
(ii) if the consideration payable exceeds Rs. 100 crores - 25 per cent upto Rs. 100 crores and 10 per cent thereafter.
(3) The escrow account referred in sub-regulation (1) shall consist of,:
(a) cash deposited with a scheduled commercial bank, or
(b) bank guarantee in favour of the merchant banker, or
(c) deposit of acceptable securities with appropriate margin, with the merchant banker, or
(d) a combination of (a), (b) and (c) above.
(4) Where the escrow account consists of deposit with a scheduled commercial bank, the company shall, while opening the account, empower the merchant banker to instruct the bank to issue a banker’s cheque or demand draft for the amount lying to the credit of the escrow account, as provided in the regulations.
(5) Where the escrow account consists of bank guarantee, such bank guarantee shall be in favour of the merchant banker and shall be valid until thirty days after the closure of the offer.
(6) The company shall, in case the escrow account consists of securities, empower the merchant banker to realise the value of such escrow account by sale or otherwise and if there is any deficit on realisation of the value of the securities, the merchant banker shall be liable to make good any such deficit.
(7) In case the escrow account consists of bank guarantee or approved securities, these shall not be returned by the merchant banker till completion of all obligations under the regulations.
(8) Where the escrow account consists of bank guarantee or deposit of approved securities, the company shall also deposit with the bank in cash a sum of at least one per cent of the total consideration payable, as and by way of security for fulfilment of the obligations under the regulations by the company.
(9) On payment of consideration to all the security-holders who have accepted the offer and after completion of all formalities of buy-back, the amount, guarantee and securities in the escrow, if any, shall be released to the company.
(10) The Board in the interest of the security-holders may in case of non-fulfilment of obligations under the regulations by the company forfeit the escrow account either in full or in part.
(11) The amount forfeited under sub-regulation (10) may be distributed pro rata amongst the security-holders who accepted the offer and balance, if any, shall be utilised for investor protection.
11.Payment to security-holders:(1) The company shall immediately after the date of closure of the offer open a special account with a banker to an issue registered with the Board and deposit therein, such sum as would, together with ninety per cent. of the amount lying in the escrow account make-up the entire sum due and payable as consideration for buy-back in terms of these regulations and for this purpose, may transfer the funds from the escrow account.
(2) The company shall complete the verifications of offers received and make payment of consideration to those security holders whose offer has been accepted or return the shares or other specified securities to the security holders within seven working days of the closure of the offer.12.Extinguishment of certificate:
(1) The company shall extinguish and physically destroy the security certificates so bought back in the presence of a Registrar to issue or the MerchantBanker and the Statutory Auditor within fifteen days of the date of acceptance of the shares or other specified securities:
Provided that the company shall ensure that all the securities bought - back are extinguished within seven days of the last date of completion of buy - back.(2) The shares or other specified securities offered for buy-back if already dematerialised shall be extinguished and destroyed in the manner specified under the Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996, and the bye-laws framed thereunder.
(3)(a) The company shall, furnish a certificate to the Board certifying compliance as specified in sub-regulation (1) and duly certified and verified by -
(i) the registrar and whenever there is no registrar by the merchant banker;
(ii) two directors of the company one of whom shall be a managing director where there is one;
(iii) the statutory auditor of the company,
(b) The certificate required under clause (a) shall be furnished to the Board on a monthly basis by the seventh day of the month succeeding the month in which the securities certificates are extinguished and destroyed.
(4) The company shall furnish, the particulars of the security certificates extinguished and destroyed under sub-regulation (1), to the stock exchanges wherethe shares of the company are listed on a monthly basis by the seventh day of the month succeeding the month in which the securities certificates are extinguished and destroyed.
(5) The company shall maintain a record of 52[security certificates] which have been cancelled and destroyed as prescribed in sub-section (9) of section 77A of the Companies Act.13.Odd-lot Buy-back:
The provisions pertaining to buy-back through tender offer as specified in this Chapter shall be applicable mutatis mutandis to odd-lot shares or other specified securities.
- CHAPTER IV BUY-BACK FROM THE OPEN MARKET
14.Buy-back from open market:
(1) A company intending to buy-back its shares or other specified securities from the open market shall do so in accordance with the provisions of this Chapter.
(2) The buy-back of shares or other specified securities from the open market may be in any one of the following methods :
(a) through stock exchange,
(b) book-building process.
(3) The company shall ensure that atleast fifty per cent of the amount earmarked for buy-back, as specified in resolutions referred to in regulation 5 or regulation 5A, is utilized for buying-back shares or other specified securities.15.Buy-back through stock exchange:
A company shall buy-back its shares or other specified securities through the stock exchange as provided hereunder :
(a) The special resolution referred to in regulation 5 or the resolution passed by the Board of Directors at its meeting as referred to in regulation 5A shall specify the maximum price at which the buy-back shall be made;
(b) The buy-back of the shares or other specified securities shall not be made from the promoters or persons in control of the company;
(c) The company shall appoint a merchant banker and make a public announcement as referred to in regulation 8;(d) The public announcement shall be made 60[within seven working days from the date of passing the resolution referred to in regulation 5 or regulation 5A, and shall contain disclosures as specified in Schedule II, Part B;
(e) Simultaneously with the issue of such public announcement, the company shall file a copy of the public announcement with the Board along with the fees specified in Schedule IV;
(f) The public announcement shall also contain disclosures regarding details of the brokers and stock exchanges through which the buy-back of shares or other specified securities would be made;
(g) The buy-back shall be made only on stock exchanges having nationwide trading terminals;
(h) The buy-back of shares or other specified securities shall be made only through the order matching mechanism except ‘all or none’ order matching system;
(i) the company shall submit the information regarding the shares or other specified securities bought-back, to the stock exchange on a daily basis in such form as may be specified by the Board and the stock exchange shall upload the same on its official website immediately;(ia) The company shall upload the information regarding the shares or other specified securities bought-back on its website on a daily basis;
(j) The identity of the company as a purchaser shall appear on the electronic screen when the order is placed;
(k) The buy-back offer shall open not later than seven working days from the date of public announcement and shall close within six months from the date of opening of the offer.15A.Buy-back of physical shares or other specified securitie:
A company shall buy-back its shares or other specified securities in physical form through open market method as provided hereunder:(a) a separate window shall be created by the stock exchange, which shall remain open during the buy-back period, for buy-back of shares or other specified securities in physical form.
(b) the company shall buy-back shares or other specified securities from eligible shareholders holding physical shares through the separate window specified in clause (a), only after verification of the identity proof and address proof by the broker.(c) the price at which the shares or other specified securities are bought back shall be the volume weighted average price of the shares or other specified securities bought-back, other than in the physical form, during the calendar week in which such shares or other specified securities were received by the broker:
Provided that the price of shares or other specified securities tendered during the first calendar week of the buy-back shall be the volume
weighted average market price of the shares or other specified securities of the company during the preceding calendar week.
Explanation: In case no shares or other specified securities were bought back in the normal market during calendar week, the preceding week when the company has last bought back the shares or other specified securities may be considered.15B. Escrow account:
(1) The Company shall, before opening of the offer, create an escrow account towards security for performance of its obligations under these regulations, and deposit in escrow account 25 per cent of the amount earmarked for the buy-back as specified in the resolutions referred to in regulation 5 or regulation 5A.
(2) The escrow account referred to in sub-regulation (1) may be in the form of,—(a) cash deposited with any scheduled commercial bank; or
(b) bank guarantee issued in favour of the merchant banker by any scheduled commercial bank.(3) For such part of the escrow account as is in the form of a cash deposit with a scheduled commercial bank, the company shall while opening the account, empower the merchant banker to instruct the bank to make payment of the amounts lying to the credit of the escrow account, to meet the obligations arising out of the buy-back.
(4) For such part of the escrow account as is in the form of a bank guarantee:(1) The Company shall, before opening of the offer, create an escrow account towards security for performance of its obligations under these regulations, and
deposit in escrow account 25 per cent of the amount earmarked for the buy-back as specified in the resolutions referred to in regulation 5 or regulation 5A.
(2) The escrow account referred to in sub-regulation (1) may be in the form of,—(a) cash deposited with any scheduled commercial bank; or
(b) bank guarantee issued in favour of the merchant banker by any scheduled commercial bank.
(3) For such part of the escrow account as is in the form of a cash deposit with a scheduled commercial bank, the company shall while opening the account, empower the merchant banker to instruct the bank to make payment of the amounts lying to the credit of the escrow account, to meet the obligations arising out of the buy-back.
(4) For such part of the escrow account as is in the form of a bank guarantee:(1) The Company shall, before opening of the offer, create an escrow account towards security for performance of its obligations under these regulations, and deposit in escrow account 25 per cent of the amount earmarked for the buy-back as specified in the resolutions referred to in regulation 5 or regulation 5A.
(2) The escrow account referred to in sub-regulation (1) may be in the form of,—
(a) cash deposited with any scheduled commercial bank; or
(b) bank guarantee issued in favour of the merchant banker by any scheduled commercial bank.
(3) For such part of the escrow account as is in the form of a cash deposit with a scheduled commercial bank, the company shall while opening the account, empower the merchant banker to instruct the bank to make payment of the amounts lying to the credit of the escrow account, to meet the obligations arising out of the buy-back.(4) For such part of the escrow account as is in the form of a bank guarantee:
(a) the same shall be in favour of the merchant banker and shall be kept valid for a period of thirty days after the closure of the offer or till the completion of all obligations under these regulations, whichever is later.
(b) the same shall not be returned by the merchant banker till completion of all obligations under the regulations.(5) Where part of the escrow account is in the form of a bank guarantee, the company shall deposit with a scheduled commercial bank, in cash, a sum of at least 2.5 per cent of the total amount earmarked for buy-back as specified in the resolutions referred to in regulation 5 or regulation 5A. as and by way of security for fulfillment of the obligations under the regulations by the company.
(6) The escrow amount may be released for making payment to the shareholders subject to atleast 2.5% of the amount earmarked for buy-back as specified in the resolutions referred to in regulation 5 or regulation 5A remaining in the escrow account at all points of time.
(7) On fulfilling the obligation specified at sub regulation (3) of Regulation 14, the amount and the guarantee remaining in the escrow account, if any, shall be released to the company.
(8) In the event of non-compliance with sub-regulation (3) of regulation 14, except in cases where,-a. volume weighted average market price (VWAMP) of the shares or other specified securities of the company during the buy-back period was higher than the buy-back price as certified by the Merchant banker based on the inputs provided by the Stock Exchanges.
b. inadequate sell orders despite the buy orders placed by the company as certified by the Merchant banker based on the inputs provided by the Stock Exchanges.
c. such circumstances which were beyond the control of the company and in the opinion of the Board merit consideration,
the Board may direct the merchant banker to forfeit the escrow account, subject to a maximum of 2.5 per cent of the amount earmarked for buy-back as specified in the resolutions referred to in regulations 5 or 5A.(9) In the event of forfeiture for non-fulfillment of obligations specified in subregulation (8), the amount forfeited shall be deposited in the Investor Protection and Education Fund of Securities and Exchange Board of India.
16.Extinguishment of certificates:
(1) Subject to the provisions of sub-regulation (2) and sub-regulation (3), the provisions of regulation 12 pertaining to extinguishment of certificates shall be applicable mutatis mutandis.
(2) The company shall complete the verification of acceptances within fifteen days of the payout.
(3) The company shall extinguish and physically destroy the security certificates so bought back during the month in the presence of a Merchant Banker and the Statutory Auditor, on or before the fifteenth day of the succeeding month:
Provided that the company shall ensure that all the securities bought-back areextinguished within seven days of the last date of completion of buyback.17.Buy-back through book building:
A company may buy-back its shares or other specified securities through the book-building process as provided hereunder:
(1) (a) The special resolution referred to in regulation 5 73[or the resolution passed by the Board of Directors at its meeting, as referred to in regulation 5A] shall specify the maximum price at which the buy-back shall be made.
(b) The company shall appoint a merchant banker and make a public announcement as referred to in regulation 8.
(c) The public announcement shall be made at least seven days prior to the commencement of buy-back.(d) Subject to the provisions of sub-clauses (i) and (ii) the provisions of regulation 10 shall be applicable :
(i) The deposit in the escrow account shall be made before the date of the public announcement.
(ii) The amount to be deposited in the escrow account shall be determined with reference to the maximum price as specified in the public announcement.
(e) A copy of the public announcement shall be filed with the Board within two days of such announcement along with the fees as specified in Schedule IV.
(f) The public announcement shall also contain the detailed methodologyof the book-building process, the manner of acceptance, the format of acceptance to be sent by the security-holders pursuant to the public announcement and the details of bidding centres.
(g) The book-building process shall be made through an electronically linked transparent facility.
(h) The number of bidding centres shall not be less than thirty and there shall be at least one electronically linked computer terminal at all the bidding centres.
(i) The offer for buy-back shall remain open to the security-holders for a period not less than fifteen days and not exceeding thirty days.
(j) The merchant banker and the company shall determine the buy-back price based on the acceptances received.
(k) The final buy-back price, which shall be the highest price accepted shall be paid to all holders whose shares or other specified securities have been accepted for buy-back.(2) The provisions of sub-regulation (2) of regulation 11 pertaining to verification of acceptances and the provisions of regulation 11 pertaining to opening of special account and payment of consideration shall be applicable mutatis mutandis.
18.Extinguishment of certificates:
The provisions of regulation 12 pertaining to extinguishment of certificates shall be applicable mutatis mutandis.
- CHAPTER V GENERAL OBLIGATIONS
19.Obligations of the company:
(1) The company shall ensure that,—
(a) the letter of offer, the public announcement of the offer or any other advertisement, circular, brochure, publicity material shall contain true, factual and material information and shall not contain any misleading information and must state that the directors of the company accepts the responsibility for the information contained in such documents;
(b) the company shall not issue any shares or other specified securities including by way of bonus till the date of closure of the offer made under these regulations;
(c) the company shall pay the consideration only by way of cash;
(d) the company shall not withdraw the offer to buy-back after the draft letter of offer is filed with the Board or public announcement of the offer to buy-back is made;(e) the promoter or the person shall not deal in the shares or other specified securities of the company in the stock exchange or off-market, including interse transfer of shares among the promoters] during the period from the date ofpassing the resolution under regulation 5 or regulation 5A till the closing of the offer.
(f) the company shall not raise further capital for a period of one year from the closure of buy-back offer, except in discharge of its subsisting obligations.
(2) No public announcement of buy-back shall be made during the pendency of any scheme of amalgamation or compromise or arrangement pursuant to the provisions of the Companies Act.
(3) The company shall nominate a compliance officer and investors service centre for compliance with the buy-back regulations and to redress the grievances of the investors.(4) The particulars of the 84[security certificates] extinguished and destroyed shall be furnished by the company to the stock exchanges where the shares or other specified securities of the company are listed within seven days of extinguishment and destruction of the certificates.
(5) The company shall not buy-back the locked-in 86[shares or other specified securities] and non-transferable shares or other specified securities till the pendency of the lock-in or till the shares or other specified securities become transferable.(6) The company shall within two days of the completion of buy-back issue a public advertisement in a national daily, inter alia, disclosing:
(i) number of shares or other specified securities bought;
(ii) price at which the shares or other specified securities bought;
(iii) total amount invested in the buy-back;
(iv) details of the security-holders from whom shares or other specified securities exceeding one per cent of total shares or other specified securities were bought back; and
(v) the consequent changes in the capital structure and the shareholding pattern after and before the buy-back.
(7) The company in addition to these regulations shall comply with the provisions of buy-back as contained in the Companies Act and other applicable laws.20.Obligations of the Merchant Banker:
The merchant banker shall ensure that—
(a) the company is able to implement the offer;
(b) the provision relating to escrow account as referred to in regulation 10 has been made;
(c) firm arrangements for monies for payment to fulfil the obligations under the offer are in place;
(d) the public announcement of buy-back is made in terms of the regulations;(e) the letter of offer has been filed in terms of the regulations;
(f) the merchant banker shall furnish to the Board a due diligence certificate which shall accompany the draft letter of offer;
(g) the merchant banker shall ensure that the contents of the public announcement of offer as well as the letter of offer are true, fair and adequate and quoting the source wherever necessary;
(h) the merchant banker shall ensure compliance of section 77A and section 77B of the Companies Act, and any other laws or rules as may be applicable in this regard;
(i) upon fulfilment of all obligations by the company under the regulations, the merchant banker shall inform the bank with whom the escrow or special amount has been deposited to release the balance amount to the company;
(j) the merchant banker shall send a final report to the Board in the form specified within 15 days from the date of closure of the buy-back offer.21.Action against intermediaries:
(1) The Board may, on failure of the merchant banker to comply with the obligations or failing to observe due diligence initiate action against the merchant banker in terms of the Securities and Exchange Board of India (Merchant Bankers) Regulations, 1992.
(2) The Board may on the failure of a registrar or a broker to comply with the provisions of these regulations or failing to observe due diligence initiate action against the registrar or the broker in terms of the regulations applicable to such intermediaries. - CHAPTER VI PENALTIES AND PROCEDURE
22.Power of the Board to order investigation:
(1) The Board may, suo motu or upon information received by it, cause an investigation to be made in respect of the conduct and affairs of any person associated with the process of buy-back, by appointing an officer of the Board :
Provided that no such investigation shall be made except for the purposes specified in sub-regulation (2).(2) The purposes referred to in sub-regulation (1) are the following, namely :—
(a) to ascertain whether there are any circumstances which would render any person guilty of having contravened any of these regulations or any directions issued thereunder;
(b) to investigate into any complaint of any contravention of the regulation, received from any investor, intermediary or any other person.(3) An order passed under sub-regulation (1) shall be sufficient authority for the Investigating Officer to undertake the investigation and on production of an authenticated copy of the order, the person concerned shall be bound to carry out the duty imposed in regulation 23
23.Duty to produce records, etc.:
(1) It shall be the duty of every person in respect of whom an investigation has been ordered under regulation 22, to produce before the Investigating Officer such books, accounts and other documents in his custody or control and furnish him with such statements and information as the said officer may require from the purposes of the investigation.
(2) Without prejudice to the generality of the provisions of sub-regulation (1), such person shall—
(a) extend to the Investigating Officer reasonable facilities for examining any books, accounts and other documents in his custody or control (whether kept manually or in computer or in any other form) reasonably required for the purposes for the investigation;
(b) to provide such Investigating Officer with copies of such books, accounts and records which, in the opinion of the Investigating Officer, are relevant to the investigation or, as the case may be, allow him to take out computer printouts thereof;
(c) to provide such assistance and co-operation as may be required in connection with the investigation and furnish information relevant to such investigation as may be sought by such officer.(3) The Investigating Officer shall for the purpose of investigation, have the full powers :
(a) of summoning and enforcing the attendance of persons;(b) to examine orally and to record on oath the statement of the persons concerned,any director, partner, member or employee of such person.
24.Submission of Report to the Board:
(1) The Investigating Officer shall, on completion of the investigation, after taking into account all relevant facts and circumstances, submit a report to the Board.
(2) On the receipt of report under sub-regulation (1), the Board may initiate such action as it may be empowered to do in the interests of investors and the securities market.25.Power of the Board to issue directions:
(1) The Board may in the interests of the securities market and without prejudice to its right to initiate action including criminal prosecution by the Board under section 24 of the Act and give such directions as it deems fit including :
(a) directing the person concerned not to further deal in securities in any particular manner;
(b) prohibiting the person concerned from cancelling any of the securities bought back in violation of the Companies Act;
(c) directing the person concerned to sell or divest the 95[shares or other specified securities] acquired in violation of the provisions of these Regulations or any other law or regulations;
(d) taking action against the intermediaries registered with the Board in accordance with the Regulations applicable to it;
(e) prohibiting the persons concerned, directors, partners, members, employees and associates of such persons, from accessing the securities market;
(f) disgorgement of any ill-gotten gains or profits or avoidance of loss;
(g) restraining the company from making a further offer for buy-back.
(2) In case any person is guilty of insider trading or market manipulation the person concerned shall be dealt with in accordance with the provisions of the Securities and Exchange Board of India (Insider Trading) Regulations, 1992 and the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices Relating to the Securities Market) Regulations, 1995. - CHAPTER VII MISCELLANEOUS
26.Power of the Board to remove difficulties:
In order to remove any difficulties in the interpretation or application of the provisions of these Regulations, the Board shall have the power to issue directions through guidance notes or circulars :
Provided that where any direction is issued by the Board in a specific case relating to interpretation or application of any provision of these Regulations, it shall be done only after affording a reasonable opportunity to the concerned parties and after recording reasons for the direction. - SCHEDULE I(omitted by the by the SEBI w.e.f. 07-02- 2012.)
Before omission Schedule I read as under:
Schedule I
Contents of explanatory statement [under regulation 5(1) and regulation 5A (1)(c)]
The Explanatory statement of the notice for special resolution for buy-back shall, inter alia, contain the following :
i. the date of the Board meeting at which the proposal for buy-back was approved by the Board of Directors of the company;
ii. the necessity for the buy-back;
iii. the company may specify in the explanatory statement to the notice that the shareholders at the general meeting may authorise the Board of Directors of the company to adopt one of the methods referred in sub-regulation (1) of regulation 4 at the appropriate time;
iv. the maximum amount required under the buy-back and the sources of funds from which the buy-back would be financed;
v. the basis of arriving at the buy-back price;
vi. the number of securities that the company proposes to buy-back; - SCHEDULE II- Contents of The Public Announcement
Schedule II
Contents of the Public Announcement Substituted w.e.f. 07.20.2012[under regulation 8(1)]
The public announcement shall, inter alia, contain the following :
1. Details of the offer including the total number and percentage of the total paid-up capital and free reserves proposed to be bought back and price.
2. The proposed time table from opening of the offer till the extinguishment of the certificates.
3. The specified date.
4. Authority for the offer of buy-back.
5. A full and complete disclosure of all material facts including the contents of the explanatory statement annexed to the notice for the general meeting at which the special resolution approving the buy back was passed or the contents of public notice issued after the passing of the resolution by the Board of Directors authorising the buy back.
6. The necessity for the buy-back.
7. The process and methodology to be adopted for the buy-back.
8. The maximum amount to be invested under the buy-back.
9. The minimum and the maximum number of securities that the company proposes to buy-back, sources
of funds from which the buy-back would be made and the cost of financing the buy-back.
10. Brief information about the company.
11. Audited financial information for the last 3 years and the lead manager shall ensure that the particulars (audited statement and un-audited statement) contained therein shall not be more than 6 months old from the date of the public announcement together with financial ratios as may be specified by the Board.
12. Details of escrow account opened and the amount deposited therein.
13. Listing details and stock market data :
(a) high, low and average market prices of the securities of the company proposed to be bought back, during the preceding three years;
(b) monthly high and low prices for the six months preceding the date of the public announcement;
(c) the number of securities traded on the days when the high and low prices were recorded on the relevant stock exchanges during the period stated at (a) and (b) above;
(d) the stock market data referred to above shall be shown separately for periods marked by a change in apital structure, with such period commencing from the date the concerned stock exchange recognises the change in the capital structure (e.g., when the securities have become ex-rights or ex-bonus);
(e) the market price immediately after the date of the resolution of the Board of directors approving the buy-back; and
(f) the volume of securities traded in each month during the six months preceding the date of the
public announcement. Along with high, low and average prices of securities of the company,
details relating to volume of business transacted should also be stated for respective periods.
15. Present capital structure (including the number of fully paid and partly paid securities) and shareholding
pattern.
16. The capital structure including details of outstanding convertible instruments, if any, post buy-back.
17. The aggregate shareholding of the promoter group and of the directors of the promoters, where the promoter is a company and of persons who are in control of the company.
18. The aggregate number of shares or other specified securities purchased or sold by persons mentioned in clause 17 above during a period of twelve months preceding the date of the public announcement; the maximum and minimum price at which purchases and sales referred to above were made along with the relevant dates.
19. Management discussion and analysis on the likely impact of buy-back on the company’s earnings, public holdings, holding of NRIs/FIIs, etc., promoters holdings and any change in management structure.
20. The details of statutory approvals obtained.
21. Collection and bidding centres.
22. Name of compliance officer and details of investors service centres.
23. Such other disclosures as may be specified by the Board from time to time by way of guidelines.
1. The Public announcement shall be dated and signed on behalf of the Board of Directors of the company by its manager or secretary, if any, and by not less than two directors of the company one of whom shall be a managing director where there is one.
2. The Public announcement shall be dated and signed on behalf of the Board of Directors of the company by its manager or secretary, if any, and by not less than two directors of the company one of whom shall be a managing director where there is one.
3. A full and complete disclosure of all material facts including the following shall be made:Part A: Disclosures under Regulation 5(1) and 8(1)
i. Date of the Board meeting at which the proposal for buy back was approved by the Board of Directors of the company;
ii. Necessity for the buy back;
iii. Maximum amount required under the buy back and its percentage of the total paid up capital and free reserves;
iv. Maximum price at which the shares or other specified securities are proposed be bought back and the basis of arriving at the buyback price;
v. Maximum number of securities that the company proposes to buy back;
vi. Method to be adopted for buyback as referred in sub-regulation(1) of regulation4;
vii. (a) the aggregate shareholding of the promoter and of the directors of the promoters, where the promoter is a company and of persons who are in control of the company as on the date of the notice convening the General Meeting or the Meeting of the Board of Directors;
(b) aggregate number of shares or other specified securities purchased or sold by persons including persons mentioned in (a) above from a period of six months preceding the date of the Board Meeting at which the buyback was approved till the date of notice convening the general meeting;
(c) the maximum and minimum price at which purchases and sales referred to in (b) above were made along with the relevant dates;
viii. Intention of the promoters and persons in control of the company to tender shares or other specified securities for buy-back indicating the number of shares or other specified securities ,details of acquisition with dates and price;
ix. A confirmation that there are no defaults subsisting in repayment of deposits, redemption of debentures or preference shares or repayment of term loans to any financial institutions or banks;
x. A confirmation that the Board of Directors has made a full enquiry into the affairs and prospects of the company and that they have formed the opinion-(a) that immediately following the date on which the General Meeting or the meeting of the Board of Directors is convened there will be no grounds on which the company could be found unable to pay its debts;
(b) as regards its prospects for the year immediately following that date that, having regard to their intentions with respect to the management of the company’s business during that year and to the amount and character of the financial resources which will in their view be available to the company during that year, the company will be able to meet its liabilities as and when they fall due and will
not be rendered insolvent within a period of one year from that date; and(c) in forming their opinion for the above purposes, the directors shall take into account the liabilities as if the company were being wound up under the provisions of the Companies Act, 1956 (including prospective and contingent liabilities);
xi. A report addressed to the Board of Directors by the company’s auditors stating that-
(i) they have inquired into the company’s state of affairs;
(ii) the amount of the permissible capital payment for the securities in question is in their view properly determined; and
(iii) the Board of Directors have formed the opinion as specified in clause(x) on reasonable grounds and that the company will not, having regard to its state of affairs, will not be rendered insolvent within a period of one year from that date.
Part B: Disclosures under Regulation 15(d)
In addition to the disclosures in Part A, the following disclosures shall be made:
i. Date of shareholders approval for buy back, if applicable;
ii. Minimum and maximum number of securities that the company proposes to buy back, sources of funds from which the buyback would be made and the cost of financing the buy back;
iii. Proposed time table from opening of offer till the extinguishment of the certificates;
iv. Process and methodology to be adopted for the buyback;
v. Brief information about the company;
vi. Audited Financial information for the last 3 years and the lead manager shall ensure that the particulars (audited statement and un-audited statement) contained therein shall not be more than more than 6 months old from the date of the public announcement together with financial ratios as may be specified by the Board;
vii. Details of escrow account opened and the amount deposited therein;
viii. Listing details and stock market data:
(a) high, Low and average market prices of the securities of the company proposed to be bought back, during the preceding three years;(b) monthly high and low prices for the six months preceding the date of the public announcement;
(c) the number of securities traded on the days when the high and low prices were recorded on the relevant stock exchanges during the period stated at
(a) and (b) above;
(d) the stock market data referred to above shall be shown separately for periods marked by a change in capital structure, with such period commencing from the date the concerned stock exchange recognises the change in the capital structure.(e.g. when the securities have become exrights or ex-bonus) ;
(e) the market price immediately after the date of the resolution of the Board of directors approving the buy back; and
(f) the volume of securities traded in each month during the six months preceding the date of the public announcement along with high, low and average prices of securities of the company, details relating to volume of business transacted should also be stated for respective periods.
ix. Present capital structure (including the number of fully paid and partly paid securities) and shareholding pattern;
x. The capital structure including details of outstanding convertible instruments, if any post buyback;
xi. Aggregate shareholding of the promoter group and of the directors of the promoters, where the promoter is a company and of persons who are in control of the company;
xii. Aggregate number of shares or other specified securities purchased or sold by persons mentioned in clause xi above during a period of twelve months preceding the date of the public announcement; the maximum and minimum price at which purchases and sales referred to above were made along with the relevant dates;
xiii. Management discussion and analysis on the likely impact of buy back on the company’s earnings, public holdings, holdings of NRIs/FIIs etc., promoters holdings and any change in management structure;
xiv. Details of statutory approvals obtained;
xv. Collection and bidding centers;
xvi. Name of compliance officer and details of investors service centers;
xvii. Such other disclosures as may be specified by the Board from time to time by way of guidelines. - SCHEDULE III Disclosures to be made in the letter of offer
[Under regulation 8(4)]
The letter of offer shall, inter alia, contain the following :
1. Disclaimer Clause as may be prescribed by the Board.
2. Details of the offer including the total number and percentage of the total paid-up capital and free reserves proposed to be bought back and price.
3. The proposed time table from opening of the offer till the extinguishment of the certificates.
4. The specified date.
5. Authority for the offer of buy-back.
6. A full and complete disclosure of all material facts including the contents of the explanatory statement annexed to the notice for the general meeting at which the special resolution approving the buy back was passed or the contents of public notice issued after the passing of the resolution by the Board of Directors authorising the buy back.
7. The necessity for the buy-back.
8. The process to be adopted for the buy-back.
9. The maximum amount to be invested under the buy-back.
10. The minimum and the maximum number of securities that the company proposes to buy-back, sources of funds from which the buy-back would be made and the cost of financing the buy-back.
11. Brief information about the company.
12. Audited financial information for the last 3 years and the lead manager shall ensure that the particulars (audited statement and unaudited statement) contained therein shall not be more than 6 months old from the date of the offer document together with financial ratios as may be specified by the Board.
13. Details of escrow account opened and the amount deposited therein.
14. Listing details and stock market data :
(a) High, low and average market prices of the securities of the company proposed to be bought back, during the preceding three years ;
(b) monthly high and low prices for the six months preceding the date of filing the draft letter of offer with the Board which shall be updated till the date of the letter of offer;
(c) the number of securities traded on the days when the high and low prices were recorded on the relevant stock exchanges during the period stated at (a) and (b) above;
(d) the stock market data referred to above shall be shown separately for periods marked by a change in capital structure, with such period commencing from the date the concerned stock exchange recognises the change in the capital structure (e.g., when the securities have become ex-rights or exbonus);
(e) the market price immediately after the date on which the resolution of the Board of Directors approving the buy-back; and
(f) the volume of securities traded in each month during the six months preceding the date of the offer document along with high, low and average prices of securities of the company, details relating to volume of business transacted should also be stated for respective periods.
15. Present capital structure (including the number of fully paid and partly paid securities) and shareholding pattern.
16. The capital structure including details of outstanding convertible instruments, if any, post buy-back.
17. The aggregate shareholding of the promoter group and of the directors of the promoters, where the promoter is a company and of persons who are in control of the company.
18. The aggregate number of shares or other specified securities purchased or sold by persons mentioned in clause 17 above during a period of twelve months preceding the date of the public announcement and from the date of public announcement to the date of the letter of offer; the maximum and minimum price at which purchases and sales referred to above were made along with the relevant dates.
The letter of offer shall be dated and signed on behalf of the Board of Directors of the company by its manager or secretary, if any, and by not less than two directors of the company one of whom shall be a managing director where there is one.
The letter of offer shall, inter-alia, contain the following;
i. Disclosures in Schedule II;
ii. Disclaimer Clause as may be specified by the Board;
iii. Record date and ratio of buyback as per the entitlement in each category.”19. Management discussion and analysis on the likely impact of buy-back on the company’s earnings, public holdings, holdings of NRIs/FIIs, etc., promoters holdings and any change in management structure.
20. The details of statutory approvals obtained.
21. Collection and bidding centres.
22. Name of compliance officer and details of investors service centres.
23. (1) A declaration to be signed by at least two directors of the company one of whom shall be a managing director where there is one that there are no defaults subsisting in repayment of deposits, redemption of debentures or preference shares or repayment of a term loans to any financial institutions or banks.(2) A declaration to be signed by at least two directors of the company one of whom shall be a managing director where there is one stating that the Board of Directors has made a full enquiry into the affairs and prospects of the company and that they have formed the opinion—
(a) as regards its prospects for the year immediately following the date of the letter of offer that, having regard to their intentions with respect to the management of the company’s business during that year and to the amount and character of the financial resources which will in their view be available to the company during that year, the company will be able to meet its liabilities and will not be rendered insolvent within a period of one year from that date;
(b) in forming their opinion for the above purposes, the directors shall take into account the liabilities as if the company were being wound up under the provisions of the Companies Act, 1956 (including prospective and contingent liabilities).
24. The declaration must in addition have annexed to it a report addressed to the directors by the company’s auditors stating that—
(i) they have inquired into the company’s state of affairs; and
(ii) the amount of permissible capital payment for the securities in question is in their view properly determined; and they are not aware of anything to indicate that the opinion expressed by the directors in the declaration as to any of the matters mentioned in the declaration is
unreasonable in all the circumstances.
25. Such other disclosures as may be specified by the Board from time to time by way of guidelines.98[26. The letter of offer shall be dated and signed on behalf of the Board of Directors of the company by its manager or secretary, if any, and by not less than two directors of the company one of whom shall be a managing director where there is one.]
- SCHEDULE-IV SECURITIES AND EXCHANGE BOARD OF INDIA (BUY BACK OF SECURITIES) REGULATIONS, 1996 [regulations 8(5), 15(e), 17(e)]
99[(1) Every merchant banker shall while submitting the offer document or a copy of the public announcement to the Board, pay fees as set out below:-
Offer size Fee (Rs.) Less than or equal to ten crore rupees One lakh rupees (Rs. 1,00,000/-). More than ten crore rupees, but less than
or equal to one thousand crore rupees.0.125% of the offer size. More than one thousand crore rupees,
but less than or equal to five thousand
crore rupees.One Crore twenty five lakh rupees
(Rs. 1,25,00,000/- )plus 0.03125 per
cent of the portion of the offer size in99 Substituted by the SEBI (Payment of Fees) (Amendment) Regulations, 2008, w.e.f. 1-4-2008 for the following, as amended by the SEBI (Buy-back of Securities) (Amendment) Regulations, 2007 w.e.f. 28-5.2007:
“(1). Every merchant banker shall while submitting the offer document or a copy of the public announcement to the Board, pay fees as set out below:-Offer size Fee (Rs.) Less than or equal to one crore rupees. One lakh rupees (Rs. 1,00,000) More than one crore rupees, but less than or equal to five crore rupees. Two lakh rupees (Rs. 2,00,000) More than five crore rupees, but less than or equal to
ten crore rupees.Three lakh rupees (Rs. 3,00,000) More than ten crore rupees, but less than or equal to
one thousand crore rupees.0.5% of the offer size. More than one thousand crore rupees, but less than or
equal to five thousand crore rupees.Five crore rupees (Rs. 5,00,00,000) plus 0.125% of
the portion of the offer size in excess of one
thousand crore rupees. (Rs. 1000,00,00,000).More than five thousand crore rupees. Ten crore rupees (Rs.10,00,00,000).” Prior to the above substitution, paragraph (1), as amended by the SEBI (Buy-back of Securities) (Amendment)
Regulations, 2006, w.e.f. 21-8-2006, read as under:
“(1). Every merchant banker shall while submitting the offer document or a copy of the public announcement to
the Board, pay fees as set out below:-Offer size Fee (Rs.) Less than or equal to one crore rupees 1,00,000 More than one crore rupees, but less than or equal to five crore rupees 2,00,000 More than five crore rupees, but less than or equal to ten crore rupees 3,00,000 More than ten crore rupees 0.5% of the offer size.” excess of one thousand crore rupees (Rs. 1000,00,00,000/-) More than five thousand crore rupees. A flat charge of three crore rupees (Rs. 3,00,00,000/-). (2) Fees referred to in clause (1) above, shall be paid in the following manner :
(a) the fees shall be paid along with the draft of the offer document or public announcement submitted to the Board;
(b) the fees shall be payable by a draft in favour of Securities and Exchange Board of India at Mumbai.
- CHAPTER I PRELIMINARY
- SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009
- CHAPTER I PRELIMINARY
1.Short title and commencement.
(1) These regulations may be called the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009.
(2) They shall come into force on the date of their publication in the Official Gazette.
2. Definitions:- (1) In these regulations, unless the context otherwise requires:(a) “Act” means the Securities and Exchange Board of India Act, 1992 (15 of 1992);
(b) “advertisement” includes notices, brochures, pamphlets, show cards, catalogues,hoardings, placards, posters, insertions in newspaper, cover pages of offer documents,pictures and films in any print media or electronic media, radio, television programme;
(c) “anchor investor" means a qualified institutional buyer [who makes an application for a value of ten crore rupees or more in a public issue made through the book building process in accordance with these regulations;
(d) “Application Supported by Blocked Amount (ASBA)” means an application for subscribing to a public issue or rights issue, along with an authorisation to Self Certified Syndicate Bank to block the application money in a bank account;
(e) “Board” means the Securities and Exchange Board of India established under section 3 of the Act;
(f) “book building” means a process undertaken to elicit demand and to assess the price for determination of the quantum or value of specified securities or Indian Depository Receipts, as the case may be, in accordance with these regulations;
(g) “book runner” means a merchant banker appointed by the issuer to undertake the book building process;
(h) “composite issue” means an issue of specified securities by a listed issuer on publiccum- rights basis, wherein the allotment in both public issue and rights issue is proposed to be made simultaneously;
(i) “control” shall have the same meaning as assigned to it under clause (c) of subregulation (1) of regulation 2 of the Securities and Exchange Board of India (Substantial Acquisitions of Shares and Takeovers) Regulations, 1997;
(j) “convertible debt instrument” means an instrument which creates or acknowledges indebtedness and is convertible into equity shares of the issuer at a later date at or without the option of the holder of the instrument, whether constituting a charge on the assets of the issuer or not;
(k) “convertible security” means a security which is convertible into or exchangeable with equity shares of the issuer at a later date, with or without the option of the holder of the security and includes convertible debt instrument and convertible preference shares;
(l) “designated stock exchange” means a recognised stock exchange in which securities of an issuer are listed or proposed to be listed and which is chosen by the issuer as a designated stock exchange for the purpose of a particular issue of specified securities under these regulations:
Provided that where one or more of such stock exchanges have nationwide trading terminals, the issuer shall choose one of them as the designated stock exchange:
Provided further that subject to the provisions of this clause, the issuer may choose a different recognised stock exchange as a designated stock exchange for any subsequent issue of specified securities under these regulations;
(m) “employee” means a permanent and full-time employee, working in India or abroad, of the issuer or of the holding company or subsidiary company or of that
material associate(s) of the issuer whose financial statements are consolidated with the issuer’s financial statements as per Accounting Standard 21, or a director of the issuer, whether whole time or part time and does not include promoters and an immediate relative of the promoter (i.e., any spouse of that person, or any parent, brother, sister or child of that person or of the spouse);(n) “further public offer” means an offer of specified securities by a listed issuer to the public for subscription and includes an offer for sale of specified securities to the public by any existing holders of such securities in a listed issuer;
(na) “General Corporate Purposes” include such identified purposes for which no specific amount is allocated or any amount so specified towards General Corporate Purpose or any such purpose by whatever name called, in the draft offer document filed with the
Board:Provided that any issue related expenses shall not be considered as a part of General Corporate Purpose merely because no specific amount has been allocated for such expenses in the draft offer document filed with the Board.
(o) “green shoe option” means an option of allotting equity shares in excess of the equity shares offered in the public issue as a post-listing price stabilizing mechanism;
(p) “initial public offer” means an offer of specified securities by an unlisted issuer to the public for subscription and includes an offer for sale of specified securities to the public by any existing holders of such securities in an unlisted issuer;
(q) “issue size” includes offer through offer document and promoters’ contribution;
(r) “issuer” means any person making an offer of specified securities;
(s) “key management personnel” means the officers vested with executive powers and the officers at the level immediately below the board of directors of the issuer and includes any other person whom the issuer may declare as a key management personnel;
(t) “listed issuer” means an issuer whose equity shares are listed in a recognised stock exchange;
(u) “net offer to public” means an offer of specified securities to the public but does not include reservations;
(v) “net worth” means the aggregate of the paid up share capital, share premium account, and reserves and surplus (excluding revaluation reserve) as reduced by the aggregate of miscellaneous expenditure (to the extent not adjusted or written off) and the debit balance of the profit and loss account;
(w) “non institutional investor” means an investor other than a retail individual investor and qualified institutional buyer;
(x) “offer document” means a red herring prospectus, prospectus or shelf prospectus and information memorandum in terms of section 60A of the Companies Act, 1956 in case of a public issue and letter of offer in case of a rights issue;
(y) "offer through offer document” means net offer to public and reservations;
(z) “preferential issue” means an issue of specified securities by a listed issuer to any select person or group of persons on a private placement basis and does not include an offer of specified securities made through a public issue, rights issue, bonus issue, employee stock option scheme, employee stock purchase scheme or qualified institutions placement or an issue of sweat equity shares or depository receipts issued in a country outside India or foreign securities;
(za) “promoter” includes:
(i) the person or persons who are in control of the issuer;
(ii) the person or persons who are instrumental in the formulation of a plan or programme pursuant to which specified securities are offered to public;
(iii)the person or persons named in the offer document as promoters:
Provided that a director or officer of the issuer or a person, if acting as such merely in his professional capacity, shall not be deemed as a promoter:
Provided further that a financial institution, scheduled bank, foreign portfolio investor other than Category III foreign portfolio investor and mutual fund shall not be deemed to be a promoter merely by virtue of the fact that ten per cent. or more of the equity share capital of the issuer is held by such person;
Provided further that such financial institution, scheduled bank and foreign portfolio investor other than Category III foreign portfolio investor shall be treated as promoter for the subsidiaries or companies promoted by them or for the mutual fund sponsored by them;
(zb) “promoter group” includes:
(i) the promoter;
(ii) an immediate relative of the promoter (i.e., any spouse of that person, or any parent, brother, sister or child of the person or of the spouse); and
(iii) in case promoter is a body corporate:
(A) a subsidiary or holding company of such body corporate;
(B) any body corporate in which the promoter holds ten per cent. or more of the equity share capital or which holds ten per cent. or more of the equity share
capital of the promoter;(C) any body corporate in which a group of individuals or companies or combinations thereof which hold twenty per cent. or more of the equity share capital in that body corporate also holds twenty per cent. or more of the equity share capital of the issuer; and
(iv) in case the promoter is an individual:
(A) any body corporate in which ten per cent. or more of the equity share capital is held by the promoter or an immediate relative of the promoter or a firm or Hindu Undivided Family in which the promoter or any one or more of his immediate relative is a member;
(B) any body corporate in which a body corporate as provided in (A) above holds ten per cent. or more, of the equity share capital;
(C) any Hindu Undivided Family or firm in which the aggregate shareholding of the promoter and his immediate relatives is equal to or more than ten per cent. of the total; and
(v) all persons whose shareholding is aggregated for the purpose of disclosing in the prospectus under the heading "shareholding of the promoter group":
Provided that a financial institution, scheduled bank, foreign portfolio investor other than Category III foreign portfolio investor and mutual fund shall not be deemed to be promoter group merely by virtue of the fact that ten per cent. or more of the equity share capital of the issuer is held by such person:
Provided further that such financial institution, scheduled bank and foreign portfolio investor other than Category III foreign portfolio investor shall be treated as promoter group for the subsidiaries or companies promoted by them or for the mutual fund sponsored by them;
(zc) “public issue” means an initial public offer or further public offer;
(zd) “qualified institutional buyer” means:
(i) a mutual fund, venture capital fund, Alternative Investment Fund and foreign venture capital investor registered with the Board;
(ii) a foreign portfolio investor other than Category III foreign portfolio investor, registered with the Board;
(iii) a public financial institution as defined in section 4A of the Companies Act, 1956;
(iv) a scheduled commercial bank;
(v) a multilateral and bilateral development financial institution;
(vi) a state industrial development corporation;
(vii) an insurance company registered with the Insurance Regulatory and Development Authority;
(viii) a provident fund with minimum corpus of twenty five crore rupees;
(ix) a pension fund with minimum corpus of twenty five crore rupees;
(x) National Investment Fund set up by resolution no. F. No. 2/3/2005-DDII dated November 23, 2005 of the Government of India published in the Gazette of India;
(xi) insurance funds set up and managed by army, navy or air force of the Union of India;
(xii) insurance funds set up and managed by the Department of Posts, India;
(ze) “retail individual investor” means an investor who applies or bids for specified securities for a value of not more than 13[two lakhs] rupees;
(zf) “retail individual shareholder” means a shareholder of a listed issuer, who:
(i) applies or bids for specified securities for a value of not more than two lakhs rupees
(zg) “rights issue” means an offer of specified securities by a listed issuer to the shareholders of the issuer as on the record date fixed for the said purpose;
(zh) “Schedule” means schedule annexed to these regulations;
(zi) “Self Certified Syndicate Bank” means a banker to an issue registered with the Board, which offers the facility of Application Supported by Blocked Amount;
(zj) “specified securities" means equity shares and convertible securities;
(zk) “stabilising agent” means a merchant banker who is responsible for stabilising the price of equity shares under a green shoe option, in terms of these regulations;
(zl) “syndicate member” means an intermediary registered with the Board and who is permitted to carry on the activity as an underwriter;
(zm) “unlisted issuer” means an issuer which is not a listed issuer,
(zn) "wilful defaulter" means anissuer who is categorized asa wilful defaulter by any bank or financial institution or consortium thereof, in accordance with the guidelines on wilful defaulters issued by the Reserve Bank of India and includes an issuer whose director or promoter is categorized as such.
(2) All other words and expressions used but not defined in these regulations, but defined in the Act or the Companies Act, 1956, the Securities Contracts (Regulation) Act, 1956, the Depositories Act, 1996 and/or the rules and regulations made thereunder shall have the same meaning as respectively assigned to them in such Acts or rules or regulations or any statutory modification or re-enactment thereto, as the case may be.
3.Applicability of the regulations.:- Unless otherwise provided, these regulations shall apply to the following:
(a) a public issue;
(b) a rights issue, where the aggregate value of specified securities offered is fifty lakh rupees or more;
(c) a preferential issue;
(d) an issue of bonus shares by a listed issuer;
(e) a qualified institutions placement by a listed issuer;
(f) an issue of Indian Depository Receipts;
Provided that the provisions of these regulations shall not apply to issue of securities under clause (b), (d) and (e) of sub-regulation (1) of regulation 9 of Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.
- CHAPTER II COMMON CONDITIONS FOR PUBLIC ISSUES AND RIGHTS ISSUES
4. General conditions.
(1) Any issuer offering specified securities through a public issue or rights issue shall satisfy the conditions of this Chapter at the time of filing draft offer document with the Board (unless stated otherwise in this Chapter) and at the time of registering or filing the final offer document with the Registrar of Companies or designated stock exchange, as the case may be.
(2) No issuer shall make a public issue or rights issue of specified securities:
(a) if the issuer, any of its promoters, promoter group or directors or persons in control of the issuer are debarred from accessing the capital market by the Board;
(b) if any of the promoters, directors or persons in control of the issuer was or also is a promoter, director or person in control of any other company which is debarred from accessing the capital market under any order or directions made by the Board;
(c) unless it has made an application to one or more recognised stock exchanges for listing of specified securities on such stock exchanges and has chosen one of them as the designated stock exchange:
Provided that in case of an initial public offer, the issuer shall make an application for listing of the specified securities in at least one recognised stock exchange having nationwide trading terminals;
(d) unless it has entered into an agreement with a depository for dematerialisation of specified securities already issued or proposed to be issued;
(e) unless all existing partly paid-up equity shares of the issuer have either been fully paid up or forfeited;
(f) unless firm arrangements of finance through verifiable means towards seventy five per cent. of the stated means of finance, excluding the amount to be raised through the proposed public issue or rights issue or through existing identifiable internal accruals, have been made.
(3) Warrants may be issued along with public issue or rights issue of specified securities subject to the following:
(a) the tenure of such warrants shall not exceed eighteen months from their date of allotment in the public/rights issue;
(b) not more than one warrant shall be attached to one specified security,
(c) the price or conversion formula of the warrants shall be determined upfront and at least 25% of the consideration amount shall also be received upfront;
(d) in case the warrant holder does not exercise the option to take equity shares against any of the warrants held by him, the consideration paid in respect of such warrant shall bem forfeited by the issuer.
(4) The amount for general corporate purposes, as mentioned in objects of the issue in the draftm offer document filed with the Board, shall not exceed twenty five per cent of the amount raised by the issuer by issuance of specified securities
"(5) No issuer shall make,
(a) a public issue of equity securities, if the issuer or any of its promoters or directors is a wilful defaulter; or
(b) a public issue of convertible debt instruments if,
(i) the issuer or any of its promoters or directors is a wilful defaulter,or
(ii) it is in default of payment of interest or repayment of principal amount in respect of debt instruments issued by it to the public, if any, for a period of more than six months.
(6) An issuer making a rights issue of specified securities, shall make disclosures as specified in Part G of Schedule VIII, in the offer document and abridged letter of offer, if the issuer or any of its promoters or directors is a wilful defaulter.
(7) In case of a rights issue of specified securities referred to in sub-regulation (6) above, the promoters or promoter group of the issuer, shall not renounce their rights except to the extent of renunciation within the promoter group
5.Appointment of merchant banker and other intermediaries.
(1) The issuer shall appoint one or more merchant bankers, at least one of whom shall be a lead merchant banker and shall also appoint other intermediaries, in consultation with the lead merchant banker, to carry out the obligations relating to the issue.
(2) The issuer shall, in consultation with the lead merchant banker, appoint only those intermediaries which are registered with the Board
(3) Where the issue is managed by more than one merchant banker, the rights, obligations and responsibilities, relating inter alia to disclosures, allotment, refund and underwriting obligations, if any, of each merchant banker shall be predetermined and disclosed in the offer document as specified in Schedule;
Provided that where any of the merchant bankers is an associate of the issuer, it shall declare itself as a marketing lead manager and its role shall be limited to marketing of the issue.
(4) The lead merchant banker shall, only after independently assessing the capability of other intermediaries to carry out their obligations, advise the issuer on their appointment.
(5) The issuer shall enter into an agreement with the lead merchant banker in the format specified in Schedule II and with other intermediaries as required under the respective regulations applicable to the intermediary concerned:
Provided that such agreements may include such other clauses as the issuer and the intermediary may deem fit without diminishing or limiting in any way the liabilities and obligations of the merchant bankers, other intermediaries and the issuer under the Act, the Companies Act, 1956, the Securities Contracts (Regulation) Act, 1956, the Depositories Act, 1996 and the rules and regulations made thereunder or any statutory modification or statutory enactment thereof:
Provided further that in case of ASBA process, the issuer shall take cognisance of the deemed agreement of the issuer with Self Certified Syndicate Banks.
(6) An issuer shall, in case of an issue made through the book building process, appoint syndicate members and in the case of any other issue, appoint bankers to issue, at all mandatory collection centres as specified in Schedule III and such other collection centres as it may deem fit.
(7) The issuer shall appoint a registrar which has connectivity with all the depositories:
Provided that if issuer itself is a registrar to an issue registered with the Board, then another registrar to an issue shall be appointed as registrar to the issue:
Provided further that the lead merchant banker shall not act as a registrar to the issue in which it is also handling the post issue responsibilities.
Explanation: For the purpose of this regulation, in case of a book built issue, the lead merchant banker appointed by the issuer shall act as the lead book runner.
6.Filing of offer document.
(1) No issuer shall make,
(a) a public issue; or
(b) a rights issue, where the aggregate value of the specified securities offered is fifty lakh rupees or more, unless a draft offer document, along with fees as specified in Schedule IV, has been filed with the Board through the lead merchant banker, at least thirty days prior to registering the prospectus, red herring prospectus or shelf prospectus with the Registrar of Companies or filing the letter of offer with the designated stock exchange, as the case may be.
(2) The Board may specify changes or issue observations, if any, on the draft offer document within thirty days from the later of the following dates:
(a) the date of receipt of the draft offer document under sub-regulation (1); or
(b) the date of receipt of satisfactory reply from the lead merchant bankers, where the Board has sought any clarification or additional information from them; or
(c) the date of receipt of clarification or information from any regulator or agency, where the Board has sought any clarification or information from such regulator or agency; or
(d) the date of receipt of a copy of in-principle approval letter issued by the recognised stock exchanges.
(3) If the Board specifies changes or issues observations on the draft offer document, the issuer and lead merchant banker shall carry out such changes in the draft offer document and comply with the observations issued by the Board before registering the prospectus, red-herring prospectus or shelf prospectus, as the case may be, with the Registrar of Companies or filing the letter of offer with the designated stock exchange.
(4) The issuer shall, simultaneously while registering the prospectus, red herring prospectus or shelf prospectus with the Registrar of Companies or filing the letter of offer with the designated stock exchange or before the opening of the issue, file a copy thereof with the Board through the lead merchant banker.
(5) The lead merchant banker shall, while filing the offer document with the Board in terms of subregulation (1) and sub-regulation (4), file a copy of such document with the recognised stock exchanges where the specified securities are proposed to be listed.
(6) The offer document filed with the Board under this regulation shall also be furnished to the Board in a soft copy in the manner specified in Schedule V.
7. Security Deposit.
(1) The issuer shall deposit, before the opening of subscription list, and keep deposited with the stock exchange(s), an amount calculated at the rate of one per cent. of the amount of securities offered for subscription to the public.
(2)The amount specified in sub-regulation (1) shall be deposited in the manner specified by Board and/or stock exchange(s).
(3)The amount specified in sub-regulation (1) shall be refundable or forfeitable in the manner specified by the Board.
8. Documents to be submitted before opening of the issue.
(1) The lead merchant bankers shall submit the following to the Board along with the draft offer document:
(a) a certificate, confirming that an agreement has been entered into between the issuer and the lead merchant bankers as per the format specified in Schedule II;
(b) a due diligence certificate as per Form A of Schedule VI;
(c) in case of an issue of convertible debt instruments, a due diligence certificate from the debenture trustee as per Form B of Schedule VI;
(d) a certificate confirming compliance of the conditions specified in Part C of Schedule VIII
(2) The lead merchant bankers shall submit the following documents to the Board after issuance of observations by the Board or after expiry of the period stipulated in sub-regulation (2) of regulation 6 if the Board has not issued observations:
(a) a statement certifying that all changes, suggestions and observations made by the Board have been incorporated in the offer document;
(b) a due diligence certificate as per Form C of Schedule VI, at the time of registering the prospectus with the Registrar of Companies;
(c) a copy of the resolution passed by the board of directors of the issuer for allotting specified securities to promoters towards amount received against promoters’ contribution, before opening of the issue;
(d) a certificate from a Chartered Accountant, before opening of the issue, certifying that promoters’ contribution has been received in accordance with these regulations, accompanying therewith the names and addresses of the promoters who have contributed to the promoters’ contribution and the amount paid by each of them towards such contribution;
(e) a due diligence certificate as per Form D of Schedule VI, immediately before the opening of the issue, certifying that necessary corrective action, if any, has been taken;
(f) a due diligence certificate as per Form E of Schedule VI, after the issue has opened but before it closes for subscription.
(3) The issuer shall, at the time of filing draft offer document with the recognised stock exchange where the specified securities are proposed to be listed, submit the Permanent Account Number, bank account number and passport number of its promoters to such stock exchange.
9.Draft offer document to be made public.
(1) The draft offer document filed with the Board shall be made public, for comments, if any, for a period of at least twenty one days from the date of such filing, by hosting it on the websites of the Board, recognised stock exchanges where specified securities are proposed to be listed and merchant bankers associated with the issue.
(2) The lead merchant bankers shall, after expiry of the period stipulated in sub-regulation (1), file with the Board a statement giving information of the comments received by them or the issuer on the draft offer document during that period and the consequential changes, if any, to be made in the draft offer document.
(3) The issuer either on the date of filing the draft offer document with the Board or on the next day shall make a public announcement in one English national daily newspaper with wide circulation, one Hindi national daily newspaper with wide circulation and one regional language newspaper with wide circulation at the place where the registered office of the issuer is situated, disclosing to the public the fact of filing of draft offer document with the Board and inviting the public to give their comments to the Board in respect of disclosures made in the draft offer document.
10.Fast Track Issue.
(1) Nothing contained in sub-regulations (1), (2) and (3) of regulation 6 and regulations 7 and 8 shall apply to a public issue or rights issue if the issuer satisfies the following conditions:
(a) the equity shares of the issuer have been listed on any recognised stock exchange having nationwide trading terminals for a period of at least three years immediately preceding the reference date;
(b) the average market capitalisation of public shareholding of the issuer is at least one thousand crore rupees in case of public issue and two hundred and fifty crore rupees in case of rights issue;
(c) the annualised trading turnover of the equity shares of the issuer during six calendar months immediately preceding the month of the reference date has been at least two per cent. of the weighted average number of equity shares listed during such six months’ period:
Provided that for issuers, whose public shareholding is less than fifteen per cent. of its issued equity capital, the annualised trading turnover of its equity shares has been at least two per cent. of the weighted average number of equity shares available as free float during such six months’ period;
(d) the issuer has redressed at least ninety five per cent. of the complaints received from the investors till the end of the quarter immediately preceding the month of the reference date;
(e) the issuer has been in compliance with the equity listing agreement for a period of at least three years immediately preceding the reference date:
Provided that if the issuer has not complied with the provision of the equity listing agreement relating to composition of board of directors, for any quarter during the last three years immediately preceding the reference date, but is compliant with such provisions at the time of filing of offer document with the Registrar of Companies or designated stock exchange, as the case may be, and adequate disclosures are made in the offer document about such non-compliances during the three years immediately preceding the reference date, it shall be deemed as compliance with the condition:
Provided further that imposition of only monetary fines by stock exchanges on the issuer shall not be a ground for ineligibility for undertaking issuances under this regulation;
(f) the impact of auditors’ qualifications, if any, on the audited accounts of the issuer in respect of those financial years for which such accounts are disclosed in the offer document does not exceed five per cent. of the net profit or loss after tax of the issuer for the respective years;
(g) no show-cause notices have been issued or prosecution proceedings initiated by the Board or pending against the issuer or its promoters or whole time directors as on the reference date;
(ga) the issuer or promoter or promoter group or director of the issuer has not settled any alleged violation of securities laws through the consent or settlement mechanism with the Board during three years immediately preceding the reference date;
(h) the entire shareholding of the promoter group of the issuer is held in dematerialised form on the reference date;
(i) in case of a rights issue, promoters and promoter group shall mandatorily subscribe to their rights entitlement and shall not renounce their rights, except to the extent of renunciation within the promoter group or for the purpose of complying with minimum public shareholding norms prescribed under Rule 19A of the Securities Contracts (Regulation) Rules, 1957;
(j) the equity shares of the issuer have not been suspended from trading as a disciplinary measure during last three years immediately preceding the reference date;
(k) the annualized delivery-based trading turnover of the equity shares during six calendar months immediately preceding the month of the reference date has been at least ten per cent of the weighted average number of equity shares listed during such six months’ period;
(l) there shall be no conflict of interest between the lead merchant banker(s) and the issuer or its group or associate company in accordance with applicable regulations.
(2) The issuer shall file the offer document with the Board and the recognised stock exchanges in accordance with sub-regulations (4), (5) and (6) of regulation 6 and shall pay fees to the Board as specified in Schedule IV.
(3) The lead merchant bankers shall submit to the Board, the following documents along with the offer document:
(a) a due diligence certificate as per Form A of Schedule VI including additional confirmations as specified in Form F of Schedule VI;
(b) in case of a fast track issue of convertible debt instruments, a due diligence certificate from the debenture trustee as per Form B of Schedule VI.
Explanation: For the purposes of this regulation:(I) “reference date” means:
(a) in case of a public issue by a listed issuer, the date of registering the red herring prospectus (in case of a book built issue) or prospectus (in case of a fixed price issue) with the Registrar of Companies; and
(b) in case of a rights issue by a listed issuer, the date of filing the letter of offer with the designated stock exchange.
(II) “average market capitalisation of public shareholding” means the sum of daily market capitalisation of public shareholding for a period of one year up to the end of the quarter preceding the month in which the proposed issue was approved by the shareholders or the board of the issuer, as the case may be, divided by the number of trading days.
(III) “public shareholding” shall have the same meaning as assigned to it in the equity listing agreement.
11. ?Opening of an issue:
(1) Subject to the compliance with sub-section (4) of section 60 of the Companies Act, 1956, a public issue or rights issue may be opened:
(a) within twelve months from the date of issuance of the observations by the Board under regulation 6; or
(b) within three months of expiry of the period stipulated in sub-regulation (2) of regulation 6, if the Board has not issued observations:
Provided that in case of a fast track issue, the issue shall open within the period stipulated in sub-section (4) of section 60 of the Companies Act, 1956.
(2) In case of shelf prospectus, the first issue may be opened within three months of issuance of observations by the Board.
(3) The issuer shall, before registering the red herring prospectus (in case of a book built issue) or prospectus (in case of a fixed price issue) with the Registrar of Companies or filing the letter of offer with the designated stock exchange, as the case may be, file with the Board through the lead merchant bankers, an updated offer document highlighting all changes made in the offer document.
(4) Notwithstanding anything contained in this regulation, if there are changes in the offer document in relation to the matters specified in Schedule VII, the updated offer document or new draft offer document, as the case may be, shall be filed with the Board along with fees specified in Schedule IV.
(5) An issue shall be opened after at least three working days from the date of registering the red herring prospectus with the Registrar of Companies.
12.Dispatch of issue material:- The lead merchant bankers shall dispatch the offer document and other issue material including forms for ASBA to the designated stock exchange, syndicate members, 40[registrar to issue and share transfer agents, depository participants, stock brokers,] underwriters, bankers to the issue, investors’ associations and Self Certified Syndicate Banks in advance.
13. Underwriting.
(1) Where the issuer making a public issue (other than through the book building process) or rights issue, desires to have the issue underwritten, it shall appoint the underwriters in accordance with Securities and Exchange Board of India (Underwriters) Regulations, 1993.
(2) Where the issuer makes a public issue through the book building process, such issue shall be underwritten by book runners or syndicate members:
Provided that atleast seventy five per cent of the net offer to the public proposed to be compulsorily allotted to qualified institutional buyers for the purpose of compliance of the eligibility conditions specified in sub-regulation (2) of regulation 26 and regulation 27, cannot be underwritten.
(3) The issuer shall enter into underwriting agreement with the book runner, who in turn shall enter into underwriting agreement with syndicate members, indicating therein the number of specified securities which they shall subscribe to at the predetermined price in the event of undersubscription in the issue.
(4) If syndicate members fail to fulfil their underwriting obligations, the lead book runner shall fulfil the underwriting obligations.
(5) The book runners and syndicate members shall not subscribe to the issue in any manner except for fulfilling their underwriting obligations.
(6) In case of every underwritten issue, the lead merchant banker or the lead book runner shall undertake minimum underwriting obligations as specified in the Securities and Exchange Board of India (Merchant Bankers) Regulations, 1992.
(7) Where hundred per cent. of the offer through offer document is underwritten, the underwriting obligations shall be for the entire hundred per cent. of the offer through offer document and shall not be restricted upto the minimum subscription level.
14.Minimum subscription
(1) The minimum subscription to be received in an issue shall not be less than ninety per cent of the offer through offer document;
Provided that in the case of an initial public offer, the minimum subscription to be received shall be subject to allotment of minimum number of specified securities, as prescribed in sub-clause (b) of clause (2) of rule 19 of Securities Contracts (Regulation) Rules, 1957.
(2) In the event of non-receipt of minimum subscription referred to in sub-regulation (1), all application moneys received shall be refunded to the applicants forthwith, but not later than:
(a) fifteen days of the closure of the issue, in case of a non-underwritten issue; and
(b) seventy days of the closure of the issue, in the case of an underwritten issue where minimum subscription including devolvement obligations paid by the underwriters is not received within sixty days of the closure of the issue.
(3) The offer document shall contain adequate disclosures regarding minimum subscription as specified in Part A of Schedule VIII.
(4) Nothing contained in this regulation, except the requirement relating to allotment of minimum number of specified securities, shall apply to offer for sale of specified securities.
Explanation: For the purpose of clause (b) of sub-regulation (4), the term “infrastructure company” means, an enterprise wholly engaged in the business of (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining any infrastructure facility.
15.Oversubscription.
No allotment shall be made by the issuer in excess of the specified securities offered through the offer document:
Provided that in case of oversubscription, an allotment of not more than ten per cent. of the net offer to public may be made for the purpose of making allotment in minimum lots.
16. Monitoring agency
(1) If the issue size exceeds five hundred crore rupees, the issuer shall make arrangements for the use of proceeds of the issue to be monitored by a public financial institution or by one of the scheduled commercial banks named in the offer document as bankers of the issuer:
Provided that nothing contained in this clause shall apply to an offer for sale or an issue of specified securities made by a bank or public financial institution or an insurance company.
(2) The monitoring agency shall submit its report to the issuer in the format specified in Schedule IX on a half yearly basis, till the proceeds of the issue have been fully utilised.
17.Manner of calls.
If the issuer proposes to receive subscription monies in calls, it shall ensure that the outstanding subscription money is called within twelve months from the date of allotment in the issue and if any applicant fails to pay the call money within the said twelve months, the equity shares on which there are calls in arrear along with the subscription money already paid on such shares shall be forfeited:
Provided that it shall not be necessary to call the outstanding subscription money within twelve months, if the issuer has appointed a monitoring agency in terms of regulation 16.
18.Allotment, refund and payment of interest.
(1) The issuer and merchant bankers shall ensure that specified securities are allotted and/or application moneys are refunded within fifteen days from the date of closure of the issue.
(2) Where specified securities are not allotted and/or application moneys are not refunded within the period stipulated in sub-regulation (1), the issuer shall undertake to pay interest at such rate and within such time as disclosed in the offer document.
19.Restriction on further capital issues.
No issuer shall make any further issue of specified securities in any manner whether by way of public issue, rights issue, preferential issue, qualified institutions placement, issue of bonus shares or otherwise:
(a) in case of a fast track issue, during the period between the date of registering the red herring prospectus (in case of a book built issue) or prospectus (in case of a fixed price issue) with the Registrar of Companies or filing the letter of offer with the designated stock exchange and the listing of the specified securities offered through the offer document or refund of application moneys; or
(b) in case of other issues, during the period between the date of filing the draft offer document with the Board and the listing of the specified securities offered through the offer document or refund of application moneys; unless full disclosures regarding the total number of specified securities and amount proposed to be raised from such further issue are made in such draft offer document or offer document, as the case may be.
20.Additional requirements for issue of convertible debt instruments.
(1) In addition to other requirements laid down in these regulations, an issuer making a public issue or rights issue of convertible debt instruments shall comply with the following conditions:
(a) it has obtained credit rating from one or more credit rating agencies;
(b) it has appointed one or more debenture trustees in accordance with the provisions of section 117B of the Companies Act, 1956 and Securities and Exchange Board of India (Debenture Trustees) Regulations, 1993;
(c) it has created debenture redemption reserve in accordance with the provisions of section 117C of the Companies Act, 1956;
(d) if the issuer proposes to create a charge or security on its assets in respect of secured convertible debt instruments, it shall ensure that:
(i) such assets are sufficient to discharge the principal amount at all times;
(ii) such assets are free from any encumbrance;
(iii) where security is already created on such assets in favour of financial institutions or banks or the issue of convertible debt instruments is proposed to be secured by creation of security on a leasehold land, the consent of such financial institution, bank or lessor for a second or pari passu charge has been obtained and submitted to the debenture trustee before the opening of the issue;
(iv) the security/asset cover shall be arrived at after reduction of the liabilities having a first/prior charge, in case the convertible debt instruments are secured by a
second or subsequent charge.(2) The issuer shall redeem the convertible debt instruments in terms of the offer document
21. Roll over of non convertible portion of partly convertible debt instruments.
(1) The non-convertible portion of partly convertible debt instruments issued by a listed issuer, the value of which exceeds fifty lakh rupees, may be rolled over without change in the interest rate, subject to compliance with the provisions of section 121 of the Companies Act, 1956 and the following conditions:
(a) seventy five per cent. of the holders of the convertible debt instruments of the issuer have, through a resolution, approved the rollover through postal ballot;
(b) the issuer has, along with the notice for passing the resolution, sent to all holders of the convertible debt instruments, an auditors’ certificate on the cash flow of the issuer and with comments on the liquidity position of the issuer;
(c) the issuer has undertaken to redeem the non-convertible portion of the partly convertible debt instruments of all the holders of the convertible debt instruments who have not agreed to the resolution;
(d) credit rating has been obtained from at least one credit rating agency registered with the Board within a period of six months prior to the due date of redemption and has been communicated to the holders of the convertible debt instruments, before the roll over;
(2) The creation of fresh security and execution of fresh trust deed shall not be mandatory if the existing trust deed or the security documents provide for continuance of the security till redemption of secured convertible debt instruments;
Provided that whether the issuer is required to create fresh security and to execute fresh trust deed or not shall be decided by the debenture trustee.
22.Conversion of optionally convertible debt instruments into equity share capital.
(1) An issuer shall not convert its optionally convertible debt instruments into equity shares unless the holders of such convertible debt instruments have sent their positive consent to the issuer and non-receipt of reply to any notice sent by the issuer for this purpose shall not be construed as consent for conversion of any convertible debt instruments.
(2) Where the value of the convertible portion of any convertible debt instruments issued by a listed issuer exceeds fifty lakh rupees and the issuer has not determined the conversion price of such convertible debt instruments at the time of making the issue, the holders of such convertible debt instruments shall be given the option of not converting the convertible portion into equity shares:
Provided that where the upper limit on the price of such convertible debt instruments and justification thereon is determined and disclosed to the investors at the time of making the issue, it shall not be necessary to give such option to the holders of the convertible debt instruments for converting the convertible portion into equity share capital within the said upper limit.
(3) Where an option is to be given to the holders of the convertible debt instruments in terms of sub-regulation (2) and if one or more of such holders do not exercise the option to convert the instruments into equity share capital at a price determined in the general meeting of the shareholders, the issuer shall redeem that part of the instruments within one month from the last date by which option is to be exercised, at a price which shall not be less than its face value.
(4) The provision of sub-regulation (3) shall not apply if such redemption is in terms of the disclosures made in the offer document.
23.Issue of convertible debt instruments for financing.
No issuer shall issue convertible debt instruments for financing replenishment of funds or for providing loan to or for acquiring shares of any person who is part of the same group or who is under the same management:
Provided that an issuer may issue fully convertible debt instruments for these purposes if the period of conversion of such debt instruments is less than eighteen months from the date of issue of such debt instruments.
Explanation: For the purpose of this regulation:
(I) Two persons shall be deemed to be “part of the same group” if they belong to the group within the meaning of clause (ef) of section 2 of the Monopolies and Restrictive Trade Practices Act, 1969 (54 of 1969) or if they own “inter connected undertakings within the meaning of clause (g) of section 2 of the said Act;
(II) The expression “under the same management” shall have the same meaning as assigned to it in sub-section (1B) of section 370 of the Companies Act, 1956 (1 of 1956).
24.Alteration of rights of holders of specified securities.
No issuer shall alter the terms (including the terms of issue) of specified securities which may adversely affect the interests of the holders of that specified securities, except with the consent in writing of the holders of not less than three-fourths of the specified securities of that class or with the sanction of a special resolution passed at a meeting of the holders of the specified securities of that class.
- CHAPTER III PROVISIONS AS TO PUBLIC ISSUE
PART I - ELIGIBILITY REQUIREMENTS
25. Reference date.
Unless otherwise provided in this Chapter, an issuer making a public issue shall satisfy the conditions of this Chapter as on the date of filing draft offer document with the Board and also as on the date of registering the offer document with the Registrar of Companies.
26.Conditions for initial public offer.1) An issuer may make an initial public offer, if:
(a) it has net tangible assets of at least three crore rupees in each of the preceding three full years (of twelve months each), of which not more than fifty per cent. are held in monetary assets:
Provided that if more than fifty per cent. of the net tangible assets are held in monetary assets, the issuer has made firm commitments to utilise such excess monetary assets in its business or project;
Provided further that the limit of fifty per cent. on monetary assets shall not be applicable in case the public offer is made entirely through an offer for sale.
(b) it has a minimum average pre-tax operating profit of rupees fifteen crore, calculated on a restated and consolidated basis, during the three most profitable years out of the immediately preceding five years.
(c) it has a net worth of at least one crore rupees in each of the preceding three full years (of twelve months each);
(d) the aggregate of the proposed issue and all previous issues made in the same financial year in terms of issue size does not exceed five times its pre-issue net worth as per the audited balance sheet of the preceding financial year;
(e) if it has changed its name within the last one year, at least fifty per cent. of the revenue for the preceding one full year has been earned by it from the activity indicated by the new name.
(2) An issuer not satisfying the condition stipulated in sub-regulation (1) may make an initial public offer if the issue is made through the book-building process and the issuer undertakes to allot, at least seventy five percent of the net offer to public, to qualified institutional buyers and to refund full subscription money if it fails to make the said minimum allotment to qualified institutional buyers.
(3) An issuer may make an initial public offer of convertible debt instruments without making a prior public issue of its equity shares and listing thereof.
(4) An issuer shall not make an allotment pursuant to a public issue if the number of prospective allottees is less than one thousand.
(5) No issuer shall make an initial public offer if there are any outstanding convertible securities or any other right which would entitle any person with any option to receive equity shares:
Provided that the provisions of this sub-regulation shall not apply to:
(a) a public issue made during the currency of convertible debt instruments which were issued through an earlier initial public offer, if the conversion price of such convertible debt instruments was determined and disclosed in the prospectus of the earlier issue of convertible debt instruments;
(b) outstanding options granted to employees pursuant to an employee stock option scheme framed in accordance with the relevant Guidance Note or Accounting Standards, if any, issued by the Institute of Chartered Accountants of India in this regard.
(c) fully paid-up outstanding convertible securities which are required to be converted on or before the date of filing of the red herring prospectus (in case of book-built issues) or the prospectus (in case of fixed price issues), as the case may be.
(6) Subject to provisions of the Companies Act, 1956 and these regulations, equity shares may be offered for sale to public if such equity shares have been held by the sellers for a period of at least one year prior to the filing of draft offer document with the Board in accordance with subregulation (1) of regulation 6:
Provided that in case equity shares received on conversion or exchange of fully paid-up compulsorily convertible securities including depository receipts are being offered for sale, the holding period of such convertible securities as well as that of resultant equity shares together shall be considered for the purpose of calculation of one year period referred in this sub-regulation:
Provided further that the requirement of holding equity shares for a period of one year shall not apply:
(a) in case of an offer for sale of specified securities of a government company or statutory authority or corporation or any special purpose vehicle set up and controlled by any one or more of them, which is engaged in infrastructure sector;
(b) if the specified securities offered for sale were acquired pursuant to any scheme approved by a High Court under sections 391-394 of the Companies Act, 1956, in lieu of business and invested capital which had been in existence for a period of more than one year prior to such approval;
(c) if the specified securities offered for sale were issued under a bonus issue on securities held for a period of at least one year prior to the filing of draft offer document with the Board and further subject to the following, -
(i) such specified securities being issued out of free reserves and share premium existing in the books of account as at the end of the financial year preceding the financial year in which the draft offer document is filed with the Board ; and
(ii) such specified securities not being issued by utilization of revaluation reserves or unrealized profits of the issuer.
(7) An issuer making an initial public offer may obtain grading for such offer from one or more credit rating agencies registered with the Board.
Explanation: For the purposes of this regulation:
(I) “net tangible assets” mean the sum of all net assets of the issuer, excluding intangible assets as defined in Accounting Standard 26 (AS 26) issued by the Institute of Chartered Accountants of India;
(II) “project” means the object for which monies are proposed to be raised to cover the objects of the issue;
(III) In case of an issuer which had been a partnership firm, the track record of distributable profits of the partnership firm shall be considered only if the financial statements of the partnership business for the period during which the issuer was a partnership firm, conform to and are revised in the format prescribed for companies under the Companies Act, 1956 and also comply with the following:
(a) adequate disclosures are made in the financial statements as required to be made by the issuer as per Schedule VI of the Companies Act, 1956;
(b) the financial statements are duly certified by a Chartered Accountant stating that:
(i) the accounts and the disclosures made are in accordance with the provisions of Schedule VI of the Companies Act, 1956;
(ii) the accounting standards of the Institute of Chartered Accountants of India have been followed;
(iii) the financial statements present a true and fair view of the firm’s accounts;
(IV) In case of an issuer formed out of a division of an existing company, the track record of distributable profits of the division spun-off shall be considered only if the requirements regarding financial statements as provided for partnership firms in Explanation III are complied with;
(V) “bid-ask spread” means the difference between quotations for sale and purchase;
(VI) The term “infrastructure sector” includes the facilities or services as specified in Schedule X.
27. Conditions for further public offer.
An issuer may make a further public offer if it satisfies the conditions specified in clauses (d) and (e) of sub-regulation (1) of regulation 26 and if it does not satisfy those conditions, it may make a further public offer if it satisfies the conditions specified in sub-regulation (2) of regulation 26.
PART II - PRICING IN PUBLIC ISSUE
28. Pricing.
(1) An issuer may determine the price of specified securities in consultation with the lead merchant banker or through the book building process.
(2) An issuer may determine the coupon rate and conversion price of convertible debt instruments in consultation with the lead merchant banker or through the book building process.
(3) The issuer shall undertake the book building process in a manner specified in Schedule XI.
29.Differential pricing.
An issuer may offer specified securities at different prices, subject to the following:
(a) retail individual investors or retail individual shareholders or employees entitled for reservation made under regulation 42 making an application for specified securities of value not more than two lakhs rupees, may be offered specified securities at a price lower than the price at which net offer is made to other categories of applicants:
Provided that such difference shall not be more than ten per cent. of the price at which specified securities are offered to other categories of applicants;
(b) in case of a book built issue, the price of the specified securities offered to an anchor investor shall not be lower than the price offered to other applicants;
(c) in case of a composite issue, the price of the specified securities offered in the public issue may be different from the price offered in rights issue and justification for such price difference shall be given in the offer document.
(d) In case the issuer opts for the alternate method of book building in terms of Part D of Schedule XI, the issuer may offer specified securities to its employees at a price lower than the floor price:
Provided that the difference between the floor price and the price at which specified securities are offered to employees shall not be more than ten per cent. of the floor price.
30.Price and price band.
(1) The issuer may mention a price or price band in the draft prospectus (in case of a fixed price issue) and floor price or price band in the red herring prospectus (in case of a book built issue) and determine the price at a later date before registering the prospectus with the Registrar of Companies:
Provided that the prospectus registered with the Registrar of Companies shall contain only one price or the specific coupon rate, as the case may be.
(2) The issuer shall announce the floor price or price band at least five working days before the opening of the bid (in case of an initial public offer) and at least one working day before the opening of the bid (in case of a further public offer), in all the newspapers in which the pre issue advertisement was released.
(3) The announcement referred to in sub-regulation (2) shall contain relevant financial ratios computed for both upper and lower end of the price band and also a statement drawing attention of the investors to the section titled “basis of issue price” in the prospectus.
(3A) The announcement referred to in sub-regulation (2) and the relevant financial ratios referred to in sub-regulation (3) shall be disclosed on the websites of those stock exchanges where the securities are proposed to be listed and shall also be pre-filled in the application forms available
on the websites of the stock exchanges.(4) The cap on the price band shall be less than or equal to one hundred and twenty per cent. of the floor price.
(5) The floor price or the final price shall not be less than the face value of the specified securities.
Explanation: For the purposes of sub-regulation (4), the “cap on the price band” includes cap on the coupon rate in case of convertible debt instruments
31.Face value of equity shares.
(1) Subject to the provisions of the Companies Act, 1956, the Act and these regulations, an issuer making an initial public offer may determine the face value of the equity shares in the following manner:
(a) if the issue price per equity share is five hundred rupees or more, the issuer shall have the option to determine the face value at less than ten rupees per equity share:
Provided that the face value shall not be less than one rupee per equity share;
(b) if the issue price per equity share is less than five hundred rupees, the face value of the equity shares shall be ten rupees per equity share:
Provided that nothing contained in this sub-regulation shall apply to initial public offer made by any government company, statutory authority or corporation or any special purpose vehicle set up by any of them, which is engaged in infrastructure sector.
(2) The disclosure about the face value of equity shares (including the statement about the issue price being “X” times of the face value) shall be made in the advertisements, offer documents and application forms in identical font size as that of issue price or price band.
Explanation: For the purposes of this regulation, the term “infrastructure sector” includes the facilities or services as specified in Schedule X.
PART III - PROMOTERS’ CONTRIBUTION.
32. Minimum promoters’ contribution
(1) The promoters of the issuer shall contribute in the public issue as follows:
(a) in case of an initial public offer, not less than twenty per cent. of the post issue capital:
Provided that in case the post issue shareholding of the promoters is less than twenty per cent., alternative investment funds may contribute for the purpose of meeting the shortfall in minimum contribution as specified for promoters, subject to a maximum of ten per cent of the post issue capital.
(b) in case of a further public offer, either to the extent of twenty per cent. of the proposed issue size or to the extent of twenty per cent. of the post-issue capital;
(c) in case of a composite issue, either to the extent of twenty per cent. of the proposed issue size or to the extent of twenty per cent. of the post-issue capital excluding the rights issue component.
(2) In case of a public issue or composite issue of convertible securities, minimum promoters’ contribution shall be as follows:
(a) the promoters shall contribute twenty per cent. as stipulated in clauses (a), (b) or (c) of sub-regulation (1), as the case may be, either by way of equity shares or by way of subscription to the convertible securities:
Provided that if the price of the equity shares allotted pursuant to conversion is not predetermined and not disclosed in the offer document, the promoters shall contribute only by way of subscription to the convertible securities being issued in the public issue and shall undertake in writing to subscribe to the equity shares pursuant to conversion of such securities.
(b) in case of any issue of convertible securities which are convertible or exchangeable on different dates and if the promoters’ contribution is by way of equity shares (conversion price being pre-determined), such contribution shall not be at a price lower than the weighted average price of the equity share capital arising out of conversion of such securities.
(c) subject to the provisions of clause (a) and (b) above, in case of an initial public offer of convertible debt instruments without a prior public issue of equity shares, the promoters shall bring in a contribution of at least twenty per cent. of the project cost in the form of equity shares, subject to contributing at least twenty per cent. of the issue size from their own funds in the form of equity shares:
Provided that if the project is to be implemented in stages, the promoters’ contribution shall be with respect to total equity participation till the respective stage vis-à-vis the debt raised or proposed to be raised through the public issue.
(3) In case of a further public offer or composite issue where the promoters contribute more than the stipulated minimum promoters’ contribution, the allotment with respect to excess contribution shall be made at a price determined in terms of the provisions of regulation 76 or the issue price, whichever is higher.
(4) The promoters shall satisfy the requirements of this regulation at least one day prior to the date of opening of the issue and the amount of promoters’ contribution shall be kept in an escrow account with a scheduled commercial bank and shall be released to the issuer along with the release of the issue proceeds:
Provided that where the promoters’ contribution has already been brought in and utilised, the issuer shall give the cash flow statement disclosing the use of such funds in the offer document;
Provided further that where the minimum promoters’ contribution is more than one hundred crore rupees, the promoters shall bring in at least one hundred crore rupees before the date of opening of the issue and the remaining amount may be brought on pro-rata basis before the calls are made to public.
Explanation: For the purpose of this regulation:
(I) Promoters’ contribution shall be computed on the basis of the post-issue expanded capital:
(a) assuming full proposed conversion of convertible securities into equity shares;
(b) assuming exercise of all vested options, where any employee stock options are outstanding at the time of initial public offer in terms of proviso (b) to sub-regulation (5) of regulation 26.
(II) For computation of “weighted average price”:
(a) “weights” means the number of equity shares arising out of conversion of such specified securities into equity shares at various stages;
(b) “price” means the price of equity shares on conversion arrived at after taking into account predetermined conversion price at various stages.
33. Securities ineligible for minimum promoters’ contribution.
(1) For the computation of minimum promoters’ contribution, the following specified securities shall not be eligible:
(a) specified securities acquired during the preceding three years, if they are:
(i) acquired for consideration other than cash and revaluation of assets or capitalisation of intangible assets is involved in such transaction; or
(ii) resulting from a bonus issue by utilisation of revaluation reserves or unrealised profits of the issuer or from bonus issue against equity shares which are ineligible for minimum promoters’ contribution;
(b) specified securities acquired by promoters 65[ and alternative investment funds] during the preceding one year at a price lower than the price at which specified securities are being offered to public in the initial public offer:
Provided that nothing contained in this clause shall apply:
(i) if promoters66[/alternative investment funds, as applicable] pay to the issuer, the difference between the price at which specified securities are offered in the initial public offer and the price at which the specified securities had been acquired;
(ii) if such specified securities are acquired in terms of the scheme under sections 391-394 of the Companies Act, 1956, as approved by a High Court, by promoters in lieu of business and invested capital that had been in existence for a period of more than one year prior to such approval;
(iii) to an initial public offer by a government company, statutory authority or corporation or any special purpose vehicle set up by any of them, which is engaged in infrastructure sector;
(c) specified securities allotted to promoters 67[and alternative investment funds] during the preceding one year at a price less than the issue price, against funds brought in by them during that period, in case of an issuer formed by conversion of one or more partnership firms, where the partners of the erstwhile partnership firms are the promoters of the issuer and there is no change in the management:
Provided that specified securities, allotted to promoters against capital existing in such firms for a period of more than one year on a continuous basis, shall be eligible;
(d) specified securities pledged with any creditor.
(2) Specified securities referred to in clauses (a) and (c) of sub-regulation (1) shall be eligible for the computation of promoters’ contribution, if such securities are acquired pursuant to a scheme which has been approved under sections 391-394 of the Companies Act, 1956.
Explanation: For the purposes of clause (b) of sub-regulation (1), the term “infrastructure sector” includes the facilities or services as specified in Schedule X
34. Requirement of minimum promoters’ contribution not applicable in certain cases.
The requirements of minimum promoters’ contribution shall not apply in case of:
(a) an issuer which does not have any identifiable promoter;
(b) a further public offer, where the equity shares 68[of the issuer] 69[***] are not infrequently traded in a recognised stock exchange for a period of at least three years and the issuer has a track record of dividend payment for at least immediately preceding three years:
Provided that where promoters propose to subscribe to the specified securities offered to the extent greater than higher of the two options available in clause (b) of sub-regulation (1) of regulation 32, the subscription in excess of such percentage shall be made at a price determined in terms of the provisions of regulation 76 or the issue price, whichever is higher.
(c) rights issues.
Explanation: For the purpose of clause (b), the words “infrequently traded” have the same meaning as assigned to them in Explanation to sub-regulation (5) of regulation 20 of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 and the reference date for the purpose of computing the annualised trading turnover referred to in the said Explanation shall be the date of filing the draft offer document with the Board and in case of a fast track issue, the date of filing the offer document with the Registrar of Companies before opening of the issue..
PART IV - RESTRICTION ON TRANSFERABILITY (LOCK-IN) OF PROMOTERS’ CONTRIBUTION, ETC.
35. Date of commencement of lock in and inscription of non-transferability.
(1) Save as otherwise provided in this Chapter, specified securities held by promoters and persons other than promoters shall not be transferable (hereinafter referred to as “lock-in’) from the date of allotment of the specified securities in the proposed public issue for the period stipulated in this Chapter .
(2) The certificate of specified securities which are subject to lock-in shall contain the inscription “non transferable” and the lock-in period and in case such specified securities are dematerialised, the issuer shall ensure that lock-in is recorded by the depository.
(3) Where the specified securities which are subject to lock-in are partly paid-up and the amount called-up on such specified securities is less than the amount called-up on the specified securities issued to the public, the “lock-in” shall end only on the expiry of three years after such specified securities have become pari-passu with the specified securities issued to the public.
36. Lock-in of specified securities held by promoters.
In a public issue, the specified securities held by promoters shall be locked-in for the period stipulated hereunder:
(a) minimum promoters’ contribution including contribution made by alternative investment funds, referred to in proviso to clause (a) of sub-regulation (1) of regulation 32, shall be locked-in for a period of three years from the date of commencement of commercial production or date of allotment in the public issue, whichever is later;
(b) promoters’ holding in excess of minimum promoters’ contribution shall be locked-in for a period of one year:
Provided that excess promoters’ contribution as provided in proviso to clause (b) of regulation 34 shall not be subject to lock-in.
Explanation: For the purposes of this clause, the expression "date of commencement of commercial production" means the last date of the month in which commercial production in a manufacturing company is expected to commence as stated in the offer document.
37.Lock-in of specified securities held by persons other than promoters.
In case of an initial public offer, the entire pre-issue capital held by persons other than promoters shall be locked-in for a period of one year:
Provided that nothing contained in this regulation shall apply to:
(a) equity shares allotted to employees under an employee stock option or employee stock purchase scheme of the issuer prior to the initial public offer, if the issuer has made full disclosures with respect to such options or scheme in accordance with Part A of Schedule VIII;
(b) equity shares held by a venture capital fund or alternative investment fund of category I or a foreign venture capital investor:
Provided that such equity shares shall be locked in for a period of at least one year from the date of purchase by the venture capital fund or alternative investment fund or foreign venture capital investor.
Explanation: For the purpose of clause (b), in case such equity shares have resulted pursuant to conversion of fully paid-up compulsorily convertible securities, the holding period of such convertible securities as well as that of resultant equity shares together shall be considered for the purpose of calculation of one year period and convertible securities shall be deemed to be fully paid-up, if the entire consideration payable thereon has been paid and no further consideration is payable at the time of their conversion.
38. Lock-in of specified securities lent to stabilising agent under green shoe option.
The lock-in provisions of this Chapter shall not apply with respect to the specified securities lent to stabilising agent for the purpose of green shoe option, during the period starting from the date of lending of such specified securities and ending on the date on which they are returned to the lender in terms of sub-regulation (5) or (6) of regulation 45:
Provided that the specified securities shall be locked-in for the remaining period from the date on which they are returned to the lender.
39. Pledge of locked-in specified securities.
Specified securities held by promoters and locked-in may be pledged with any scheduled commercial bank or public financial institution as collateral security for loan granted by such bank or institution, subject to the following:
(a) if the specified securities are locked-in in terms of clause (a) of regulation 36, the loan has been granted by such bank or institution for the purpose of financing one or more of the objects of the issue and pledge of specified securities is one of the terms of sanction of the loan;
(b) if the specified securities are locked-in in terms of clause (b) of regulation 36 and the pledge of specified securities is one of the terms of sanction of the loan.
40. Transferability of locked-in specified securities.
Subject to the provisions of Securities and Exchange Board of India (Substantial Acquisition of shares and Takeovers) Regulations, 1997, the specified securities held by promoters and locked-in as per regulation 36 may be transferred to another promoter or any person of the promoter group or a new promoter or a person in control of the issuer and the specified securities held by persons other than promoters and locked-in as per regulation 37 may be transferred to any other person
holding the specified securities which are locked-in along with the securities proposed to be transferred:Provided that lock-in on such specified securities shall continue for the remaining period with the transferee and such transferee shall not be eligible to transfer them till the lock-in period stipulated in these regulations has expired.
PART V - MINIMUM OFFER TO PUBLIC, RESERVATIONS, ETC.
41. Minimum offer to public. The minimum net offer to the public shall be subject to the provisions of clause (b) of sub-rule (2) of rule 19 of Securities Contracts (Regulations) Rules, 1957.
42. Reservation on competitive basis.
(1) In case of an issue made through the book building process, the issuer may make reservation on competitive basis out of the issue size excluding promoters’ contribution and net offer to public in favour of the following categories of persons:
(a) employees; and in case of a new issuer, persons who are in the permanent and full time employment of the promoting companies excluding the promoters and an immediate relative of the promoter of such companies;
(b) shareholders (other than promoters) of:
(i) listed promoting companies, in case of a new issuer; and
(ii) listed group companies, in case of an existing issuer:
Provided that if the promoting companies are designated financial institutions or state and central financial institutions, the shareholders of such promoting companies shall not be eligible for the reservation on competitive basis;
(c) persons who, as on the date of filing the draft offer document with the Board, are associated with the issuer as depositors, bondholders or subscribers to services of the issuer making an initial public offer:
Provided that the issuer shall not make the reservation to the issue management team, syndicate members, their promoters, directors and employees and for the group or associate companies of the issue management team and syndicate members and their promoters, directors and employees;
(2) In case of an issue made other than through the book building process, the issuer may make reservation on competitive basis out of the issue size excluding promoters’ contribution and net offer to public in favour of the following categories of persons:
(a) employees; and in case of a new issuer, persons who are in the permanent and full time employment of the promoting companies excluding the promoters and an immediate relative of the promoter of such companies;
(b) shareholders (other than promoters) of:
(i) listed promoting companies, in the case of a new issuer; and
(ii) listed group companies, in the case of an existing issuer:
Provided that if the promoting companies are designated financial institutions or state and central financial institutions, the shareholders of such promoting companies shall not be eligible for the reservation on competitive basis.
(3) In case of a further public offer (not being a composite issue), the issuer may make reservation on competitive basis out of the issue size excluding promoters’ contribution and net offer to public in favour of retail individual shareholders of the issuer.
(4) The reservation on competitive basis shall be subject to following conditions:
(a) the aggregate of reservations for employees shall not exceed five per cent. of the post issue capital of the issuer;
(b) reservation for shareholders shall not exceed ten per cent. of the issue size;
(c) reservation for persons who as on the date of filing the draft offer document with the Board, have business association as depositors, bondholders and subscribers to services with the issuer making an initial public offer shall not exceed five per cent. of the issue size;
(d) no further application for subscription in the net offer to public category shall be entertained from any person (except an employee and retail individual shareholder) in favour of whom reservation on competitive basis is made;
(e) any unsubscribed portion in any reserved category may be added to any other reserved category and the unsubscribed portion, if any, after such inter-se adjustments among the reserved categories shall be added to the net offer to the public category;
(f) in case of under-subscription in the net offer to the public category, spill-over to the extent of under-subscription shall be permitted from the reserved category to the net public offer category;
(g) value of allotment to any employee in pursuance of reservation made under subregulations (1) or (2), as the case may be, shall not exceed two lakhs rupees.
(5) In the case of reserved categories, a single applicant in the reserved category may make an application for a number of specified securities which exceeds the reservation.
Explanation: For the purposes of this regulation:
(I) The term "reservation on competitive basis” means reservation wherein specified securities are allotted in proportion of the number of specified securities applied for in respect of a particular reserved category to the number of specified securities reserved for that category;
(II) The term “new issuer” means an issuer which has not completed twelve months of commercial operation and its audited operative results are not available.
43.Allocation in net offer to public.
(1) No person shall make an application in the net offer to public category for that number of specified securities which exceeds the number of specified securities offered to public.
(2) In an issue made through the book building process under sub-regulation (1) of regulation 26, the allocation in the net offer to public category shall be as follows:
(a) not less than thirty five per cent to retail individual investors;
(b) not less than fifteen per cent to non-institutional investors;
(c) not more than fifty per cent to qualified institutional buyers, five per cent. of which shall be allocated to mutual funds:
Provided that in addition to five per cent allocation available in terms of clause (c), mutual funds shall be eligible for allocation under the balance available for qualified institutional buyers.";
(2A) In an issue made through the book building process under sub-regulation (2) of regulation 26, the allocation in the net offer to public category shall be as follows:
(a) not more than ten per cent to retail individual investors;
(b) not more than fifteen per cent to non-institutional investors;
(c) not less than seventy five per cent to qualified institutional buyers, five per cent. of which shall be allocated to mutual funds:
Provided that in addition to five per cent. allocation available in terms of clause (c), mutual funds shall be eligible for allocation under the balance available for qualified institutional buyers.
(3) In an issue made through the book building process, the issuer may allocate upto sixty per cent. of the portion available for allocation to qualified institutional buyers to an anchor investor in accordance with the conditions specified in this regard in Schedule XI.
(4) In an issue made other than through the book building process, allocation in the net offer to public category shall be made as follows:
(a) minimum fifty per cent. to retail individual investors; and
(b) remaining to:
(i) individual applicants other than retail individual investors; and
(ii) other investors including corporate bodies or institutions, irrespective of the number of specified securities applied for;
(c) the unsubscribed portion in either of the categories specified in clauses (a) or (b) may be allocated to applicants in the other category.
Explanation: For the purpose of sub-regulation (4), if the retail individual investor category is entitled to more than fifty per cent. on proportionate basis, the retail individual investors shall be allocated that higher percentage.
44. Safety-net arrangement.
An issuer may provide for a safety-net arrangement for the specified securities offered in any public issue in consultation with the merchant banker after ascertaining the financial capacity of the person offering the safety-net arrangement, subject to disclosures specified in this regard in Part A of Schedule VIII:
Provided that any such arrangement shall provide for an offer to purchase up to a maximum of one thousand specified securities per original resident retail individual allottee at the issue price within a period of six months from the last date of despatch of security certificates or credit of demat account.
Explanation: For the purpose of this regulation, the term “safety net arrangement” means an arrangement provided by the issuer under which a person offers to purchase specified securities from the original resident retail individual allottees at the issue price..
45.Price stabilisation through green shoe option
(1) An issuer making a public issue of specified securities may provide green shoe option for stabilising the post listing price of its specified securities, subject to the following:
(a) the issuer has been authorized, by a resolution passed in the general meeting of shareholders approving the public issue, to allot specified securities to the stabilising agent, if required, on the expiry of the stabilisation period;
(b) the issuer has appointed a merchant banker or book runner, as the case may be, from amongst the merchant bankers appointed by the issuer as a stabilising agent, who shall be responsible for the price stabilisation process;
(c) prior to filing the draft offer document with the Board, the issuer and the stabilising agent have entered into an agreement, stating all the terms and conditions relating to the green shoe option including fees charged and expenses to be incurred by the stabilising agent for discharging his responsibilities;
(d) prior to filing the offer document with the Board, the stabilising agent has entered into an agreement with the promoters or pre-issue shareholders or both for borrowing specified securities from them in accordance with clause (g) of this sub-regulation, specifying therein the maximum number of specified securities that may be borrowed for the purpose of allotment or allocation of specified securities in excess of the issue size (hereinafter referred to as the “over- allotment”), which shall not be in excess of fifteen per cent. of the issue size;
(e) subject to clause (d), the lead merchant banker or lead book runner, in consultation with the stabilising agent, shall determine the amount of specified securities to be over-allotted in the public issue;
(f) the draft and final offer documents shall contain all material disclosures about the green shoe option specified in this regard in Part A of Schedule VIII;
(g) in case of an initial public offer pre-issue shareholders and promoters and in case of a further public offer pre-issue shareholders holding more than five per cent. specified securities and promoters, may lend specified securities to the extent of the proposed overallotment;
(h) the specified securities borrowed shall be in dematerialised form and allocation of these securities shall be made pro-rata to all successful applicants.
(2) For the purpose of stabilisation of post-listing price of the specified securities, the stabilising agent shall determine the relevant aspects including the timing of buying such securities, quantity to be bought and the price at which such securities are to be bought from the market.
(3) The stabilisation process shall be available for a period not exceeding thirty days from the date on which trading permission is given by the recognised stock exchanges in respect of the specified securities allotted in the public issue.
(4) The stabilising agent shall open a special account, distinct from the issue account, with a bank for crediting the monies received from the applicants against the over-allotment and a special account with a depository participant for crediting specified securities to be bought from the market during the stabilisation period out of the monies credited in the special bank account.
(5) The specified securities bought from the market and credited in the special account with the depository participant shall be returned to the promoters or pre-issue shareholders immediately, in any case not later than two working days after the end of the stabilization period.
(6) On expiry of the stabilisation period, if the stabilising agent has not been able to buy specified securities from the market to the extent of such securities over-allotted, the issuer shall allot specified securities at issue price in dematerialised form to the extent of the shortfall to the special account with the depository participant, within five days of the closure of the stabilisation period and such specified securities shall be returned to the promoters or pre-issue shareholders by the stabilising agent in lieu of the specified securities borrowed from them and the account with the depository participant shall be closed thereafter.
(7) The issuer shall make a listing application in respect of the further specified securities allotted under sub-regulation (6), to all the recognised stock exchanges where the specified securities allotted in the public issue are listed and the provisions of Chapter VII shall not be applicable to such allotment.
(8) The stabilising agent shall remit the monies with respect to the specified securities allotted under sub-regulation (6) to the issuer from the special bank account.
(9) Any monies left in the special bank account after remittance of monies to the issuer under subregulation (8) and deduction of expenses incurred by the stabilising agent for the stabilisation process shall be transferred to the Investor Protection and Education Fund established by the Board and the special bank account shall be closed soon thereafter.
(10) The stabilising agent shall submit a report to the stock exchange on a daily basis during the stabilisation period and a final report to the Board in the format specified in Schedule XII.
(11) The stabilising agent shall maintain a register for a period of at least three years from the date of the end of the stabilisation period and such register shall contain the following particulars:
(a) The names of the promoters or pre-issue shareholders from whom the specified securities were borrowed and the number of specified securities borrowed from each of them;
(b) The price, date and time in respect of each transaction effected in the course of the stabilisation process; and
(c) The details of allotment made by the issuer on expiry of the stabilisation process.
46. Period of subscription.
(1) Except as otherwise provided in these regulations] a public issue shall be kept open for at least three working days but not more than ten working days including the days for which the issue is kept open in case of revision in price band.
(2) In case the price band in a public issue made through the book building process is revised, the bidding (issue) period disclosed in the red herring prospectus shall be extended for a minimum period of three working days:
Provided that the total bidding period shall not exceed ten working days.
47.Pre-issue advertisement for public issue.
1) Subject to the provisions of section 66 of the Companies Act, 1956, the issuer shall, after registering the red herring prospectus (in case of a book built issue) or prospectus (in case of fixed price issue) with the Registrar of Companies, make a pre-issue advertisement in one English national daily newspaper with wide circulation, Hindi national daily newspaper with wide circulation and one regional language newspaper with wide circulation at the place where the registered office of the issuer is situated.
(2) The pre-issue advertisement shall be in the format and shall contain the disclosures specified in Part A of Schedule XIII.
48. Issue opening and issue closing advertisement for public issue.
An issuer may issue advertisements for issue opening and issue closing advertisements, which shall be in the formats specified in Parts B and C of Schedule XIII.
49.Minimum application value.
(1) The issuer shall stipulate in the offer document, the minimum application size in terms of number of specified securities which shall fall within the range of minimum application value of ten thousand rupees to fifteen thousand rupees.
(2) The issuer shall invite applications in multiples of the minimum application value, an illustration whereof is given in Schedule XIV.
(3) The minimum sum payable on application shall not be less than twenty five per cent. of the issue price:
Provided that in case of an offer for sale, the issue price payable for each specified security shall be brought in at the time of application.
Explanation: For the purpose of this regulation, “minimum application value” shall be with reference to the issue price of the specified securities and not with reference to the amount payable on application.
50. Allotment procedure and basis of allotment.
(1) The allotment of specified securities to applicants other than retail individual investors and anchor investors shall be on proportionate basis within the specified investor categories and the number of securities allotted shall be rounded off to the nearest integer, subject to minimum allotment being equal to the minimum application size as determined and disclosed by the issuer:
Provided that value of specified securities allotted to any person in pursuance of reservation made under clause (a) of sub-regulation (1) or clause (a) of sub-regulation (2) of regulation 42, shall not exceed two lakhs rupees.
(1A) The allotment of specified securities to each retail individual investor shall not be less than the minimum bid lot, subject to availability of shares in retail individual investor category, and the remaining available shares, if any, shall be allotted on a proportionate basis.
(2) The executive director or managing director of the designated stock exchange along with the post issue lead merchant bankers and registrars to the issue shall ensure that the basis of allotment is finalised in a fair and proper manner in accordance with the allotment procedure as specified in Schedule XV.
51.Utilisation of subscription money.
The post-issue lead merchant banker shall ensure that moneys received in respect of the issue are released to the issuer in compliance with the provisions of section 73 of the Companies Act,1956.
51A.Annual Updation of Offer Document
The disclosures made in the red herring prospectus while making an initial public offer, shall be updated on an annual basis by the issuer and shall be made publicly accessible in the manner specified by the Board.
- CHAPTER IV RIGHTS ISSUE
52. Record Date.
(1) A listed issuer making a rights issue shall announce a record date for the purpose of determining the shareholders eligible to apply for specified securities in the proposed rights issue.
(2) The issuer shall not withdraw rights issue after announcement of the record date.
(3) If the issuer withdraws the rights issue after announcing the record date, it shall not make an application for listing of any of its specified securities on any recognised stock exchange for a period of twelve months from the record date announced under sub-regulation (1):
Provided that the issuer may seek listing of its equity shares allotted pursuant to conversion or exchange of convertible securities issued prior to the announcement of the record date, on the recognised stock exchange where its securities are listed.
53.Restriction on rights issue.
(1) No issuer shall make a rights issue of equity shares unless it has made reservation of equity shares of the same class in favour of the holders of outstanding compulsorily convertible debt instruments 91[,if any,] in proportion to the convertible part thereof.(2) The equity shares so reserved for the holders of fully or partially compulsorily convertible debt instruments shall be issued at the time of conversion of such convertible debt instruments on the same terms at which the equity shares offered in the rights issue were issued.
54.Letter of offer, abridged letter of offer, pricing and period of subscription.
(1) The abridged letter of offer, along with application form, shall be dispatched through registered post or speed post to all the existing shareholders at least three days before the date of opening of the issue:
Provided that the letter of offer shall be given by the issuer or lead merchant banker to any existing shareholder who has made a request in this regard.
(2) The shareholders who have not received the application form may apply in writing on a plain paper, along with the requisite application money.
(3) The shareholders making application otherwise than on the application form shall not renounce their rights and shall not utilise the application form for any purpose including renunciation even if it is received subsequently.
(4) Where any shareholder makes an application on application form as well as on plain paper, the application is liable to be rejected.
(5) The issue price shall be decided before determining the record date which shall be determined in consultation with the designated stock exchange.
(6) A rights issue shall be open for subscription for a minimum period of fifteen days and for a maximum period of thirty days.
(7) The issuer shall give only one payment option out of the following to all the investors—
(a) part payment on application with balance money to be paid in calls; or
(b) full payment on application:
Provided that where the issuer has given the part payment option to investors, the part payment on application shall not be less than 25% of the issue price and such issuer shall obtain the necessary regulatory approvals to facilitate the same.
- CHAPTER I PRELIMINARY
- SEBI(Listing Obligations And Disclosure Requirements) Regulations,2015
- Chapter I- Preliminary
Short title and commencement
1. (1) These regulations may be called the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.
(2) They shall come into force on the ninetieth day from the date of their publication in the Official Gazette:
Provided that the provisions of sub-regulation (4) of regulation 23 and regulation 31A shall come into force on the date of notification of these regulations.
Definitions
2. (1) In these regulations, unless the context otherwise requires:—
(a) “Act” means the Securities and Exchange Board of India Act, 1992 (15 of 1992);
(b) “associate” shall mean any entity which is an associate under sub-section (6) of section 2 of the Companies Act, 2013 or under the applicable accounting standards:
Provided that this definition shall not be applicable for the units issued by mutual fund which are listed on a recognised stock exchange(s) for which the provisions of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 shall be applicable;
(c) "Board" means the Securities and Exchange Board of India established under section 3 of the Act ;
(d) “board of directors” or “board of trustees” shall mean the board of directors or board of trustees, whichever applicable, of the listed entity;
(e) “chief executive officer” or “managing director” or “manager” shall mean the person so appointed in terms of the Companies Act, 2013;
(f) “chief financial officer” or “whole time finance director” or “head of finance”, by whatever name called, shall mean the person heading and discharging the finance function of the listed entity as disclosed by it to the recognised stock exchange(s) in its filing under these regulations;
(g) “committee” shall mean committee of board of directors or any other committee so constituted;
(h) “designated securities” means specified securities, non-convertible debt securities, non-convertible redeemable preference shares, perpetual debt instrument, perpetual non-cumulative preference shares, Indian depository receipts, securitised debt instruments, [security deposits]1 units issued by mutual funds and any other securities as may be specified by the Board ;
(i) “financial year” shall have the same meaning as assigned to it under sub-section (41) of section 2 of the Companies Act, 2013;
2[(ia) “fugitive economic offender” shall mean an individual who is declared a fugitive economic offender under section 12 of the Fugitive Economic Offenders Act, 2018 (17 of 2018);]
(j) "global depository receipts” means global depository receipts as defined in sub-section (44) of section 2 of the Companies Act, 2013;
(k) “half year” means the period of six months commencing on the first day of April or October of a financial year;
(l) “half yearly results” means the financial results prepared in accordance with these regulations in respect of a half year;
(m) "holding company" means a holding company as defined in sub-section (46) of section 2 of the Companies Act, 2013;
(n) ‘Indian depository receipts’ means Indian depository receipts as defined in sub-section(48) of section 2 of the Companies Act, 2013;
[(na) “Insolvency Code” means the Insolvency and Bankruptcy Code, 2016 [No. 31 of 2016]]3
(o) “key managerial personnel” means key managerial personnel as defined in sub-section (51) of section 2 of the Companies Act, 2013;
(p) "listed entity" means an entity which has listed, on a recognised stock exchange(s), the designated securities issued by it or designated securities issued under schemes managed by it, in accordance with the listing agreement entered into between the entity and the recognized stock exchange(s);
(q) “listing agreement” shall mean an agreement that is entered into between a recognised stock exchange and an entity, on the application of that entity to the recognised stock exchange, undertaking to comply with conditions for listing of designated securities;
(r) “main board" means main board as defined in clause (a) of sub-regulation (1) of regulation 106N of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009;
(s) “net worth” means net worth as defined in sub-section (57) of section 2 of the Companies Act, 2013;
(t) ‘non-convertible debt securities’ which is ‘debt securities’ as defined under regulation 2(1)(e) of the Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008;
(u) ‘non-convertible redeemable preference shares’, ‘perpetual debt instrument’/'innovative perpetual debt instrument' and ‘perpetual non-cumulative preference share’ shall have the same meaning as assigned to them in the Securities and Exchange Board of India (Issue and Listing of Non-Convertible Redeemable Preference Shares) Regulations, 2013;
(v) "offer document" shall have the same meaning assigned to it under clause (x) of sub-regulation (1) of regulation 2 of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, clause (j) of sub-regulation(1) of regulation 2 of the Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008, clause (p) of sub-regulation (1) of regulation 2 of the Securities and Exchange Board of India (Issue and Listing of Non-Convertible Redeemable Preference Shares) Regulations, 2013, clause (r) of regulation 2 of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and clause (l) of sub-regulation (1) of regulation 2 of the [
Securities and Exchange Board of India (Public Offer and Listing of Securitised Debt Instruments) Regulations, 2008,Securities and Exchange Board of India (Issue and Listing of Securitised Debt Instruments and Security Receipts) Regulations, 2008]4 as may be applicable;(w)"promoter" and "promoter group" shall have the same meaning as assigned to them respectively in clauses (za) and (zb) of sub-regulation (1) of regulation 2 of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009.
(x) "public" means public as defined under clause (d) of rule 2 of the Securities Contracts (Regulation) Rules, 1957;
(y) "public shareholding" means public shareholding as defined under clause (e) of rule 2 of the Securities Contracts (Regulation) Rules, 1957;
(z) “quarter” means the period of three months commencing on the first day of April, July, October or January of a financial year;
(za) "quarterly results" means the financial results prepared in accordance with these regulations in respect of a quarter;
(zb) “related party” means a related party as defined under sub-section (76) of section 2 of the Companies Act, 2013 or under the applicable accounting standards:
5[Provided that any person or entity belonging to the promoter or promoter group of the listed entity and holding 20% or more of shareholding in the listed entity shall be deemed to be a related party.]
Provided 6[further] that this definition shall not be applicable for the units issued by mutual funds which are listed on a recognised stock exchange(s);
(zc) “related party transaction” means a transfer of resources, services or obligations between a listed entity and a related party, regardless of whether a price is charged and a "transaction" with a related party shall be construed to include a single transaction or a group of transactions in a contract:
Provided that this definition shall not be applicable for the units issued by mutual funds which are listed on a recognised stock exchange(s);
(zd) “relative” means relative as defined under sub-section (77) of section 2 of the Companies Act, 2013 and rules prescribed there under:
Provided this definition shall not be applicable for the units issued by mutual fund which are listed on a recognised stock exchange(s);
(ze) "schedule" means a schedule annexed to these regulations;
(zf) "securities laws" means the Act, the Securities Contracts (Regulation) Act, 1956, the Depositories Act, 1996, and the provisions of the Companies Act, 1956 and Companies Act, 2013, and the rules, regulations, circulars or guidelines made thereunder.
7[(zg)
‘securitised debt instruments’ as defined in the Securities and Exchange Board of India (Public Offer and Listing of Securitised Debt Instruments) Regulations, 2008;“securitized debt instruments” shall have the meaning assigned to it under the Securities and Exchange Board of India (Issue and Listing of Securitised Debt Instruments and Security Receipts) Regulations, 2008;][(zga) “security receipts” shall have the meaning assigned to it under the Securities and Exchange Board of India (Issue and Listing of Securitised Debt Instruments and Security Receipts) Regulations, 2008;]8
(zh) “servicer” means servicer as defined under clause(t) of sub-regulation (1) of regulation 2 of the 9[
Securities and Exchange Board of India (Public Offer And Listing Of Securitised Debt Instruments) Regulations, 2008;Securities and Exchange Board of India (Issue and Listing of Securitised Debt Instruments and Security Receipts) Regulations, 2008;](zi) "small and medium enterprises" or "SME" shall mean an entity which has issued specified securities in accordance with the provisions of Chapter XB of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009;
(zj) “SME Exchange” means an SME exchange as defined under clause (c) of sub-regulation (1) of regulation 106N of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009;
(zk) "stock exchange" means a recognised stock exchange as defined under clause (f) of section 2 of the Securities Contracts (Regulation) Act, 1956;
(zl) ‘specified securities’ means ‘equity shares’ and ‘convertible securities’ as defined under clause (zj) of sub-regulation (1) of regulation 2 of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009;
(zm) “subsidiary” means a subsidiary as defined under sub-section(87) of section 2 of the Companies Act, 2013;
(2) All other words and expressions used but not defined in these regulations, but defined in the Act or the Companies Act, 2013, the Securities Contracts (Regulation) Act, 1956, the Depositories Act, 1996 and/or the rules and regulations made thereunder shall have the same meaning as respectively assigned to them in such Acts or rules or regulations or any statutory modification or re-enactment thereto, as the case may be.
Applicability of the regulations
3. Unless otherwise provided, these regulations shall apply to the listed entity who has listed any of the following designated securities on the recognized stock exchange(s):
(a) specified securities listed on main board or SME Exchange or institutional trading platform;
(b) non-convertible debt securities, non-convertible redeemable preference shares, perpetual debt instrument, perpetual non-cumulative preference shares;
(c) Indian depository receipts;
(d) securitised debt instruments;
10[(da) security receipts;]
(e) units issued by mutual funds;
(f) any other securities as may be specified by the Board.
Amendments
6. Inserted ibid.
- Chapter II- Principles Governing Disclosures And Obligations Of Listed Entity
PRINCIPLES GOVERNING DISCLOSURES AND OBLIGATIONS OF LISTED ENTITY
Principles governing disclosures and obligations
4. (1) The listed entity which has listed securities shall make disclosures and abide by its obligations under these regulations, in accordance with the following principles:
(a) Information shall be prepared and disclosed in accordance with applicable standards of accounting and financial disclosure.
(b) The listed entity shall implement the prescribed accounting standards in letter and spirit in the preparation of financial statements taking into consideration the interest of all stakeholders and shall also ensure that the annual audit is conducted by an independent, competent and qualified auditor.
(c) The listed entity shall refrain from misrepresentation and ensure that the information provided to recognised stock exchange(s) and investors is not misleading.
(d) The listed entity shall provide adequate and timely information to recognised stock exchange(s) and investors.
(e) The listed entity shall ensure that disseminations made under provisions of these regulations and circulars made thereunder, are adequate, accurate, explicit, timely and presented in a simple language.
(f) Channels for disseminating information shall provide for equal, timely and cost efficient access to relevant information by investors.
(g) The listed entity shall abide by all the provisions of the applicable laws including the securities laws and also such other guidelines as may be issued from time to time by the Board and the recognised stock exchange(s) in this regard and as may be applicable.
(h) The listed entity shall make the specified disclosures and follow its obligations in letter and spirit taking into consideration the interest of all stakeholders.
(i) Filings, reports, statements, documents and information which are event based or are filed periodically shall contain relevant information.
(j) Periodic filings, reports, statements, documents and information reports shall contain information that shall enable investors to track the performance of a listed entity over regular intervals of time and shall provide sufficient information to enable investors to assess the current status of a listed entity.
(2) The listed entity which has listed its specified securities shall comply with the corporate governance provisions as specified in chapter IV which shall be implemented in a manner so as to achieve the objectives of the principles as mentioned below:
(a) The rights of shareholders: The listed entity shall seek to protect and facilitate the exercise of the following rights of shareholders:
(i) right to participate in, and to be sufficiently informed of, decisions concerning fundamental corporate changes.
(ii) opportunity to participate effectively and vote in general shareholder meetings.
(iii) being informed of the rules, including voting procedures that govern general shareholder meetings.
(iv) opportunity to ask questions to the board of directors, to place items on the agenda of general meetings, and to propose resolutions, subject to reasonable limitations.
(v) effective shareholder participation in key corporate governance decisions, such as the nomination and election of members of board of directors.
(vi) exercise of ownership rights by all shareholders, including institutional investors.
(vii) adequate mechanism to address the grievances of the shareholders.
(viii) protection of minority shareholders from abusive actions by, or in the interest of, controlling shareholders acting either directly or indirectly, and effective means of redress.
(b) Timely information: The listed entity shall provide adequate and timely information to shareholders, including but not limited to the following:
(i) sufficient and timely information concerning the date, location and agenda of general meetings, as well as full and timely information regarding the issues to be discussed at the meeting.
(ii) capital structures and arrangements that enable certain shareholders to obtain a degree of control disproportionate to their equity ownership.
(iii) rights attached to all series and classes of shares, which shall be disclosed to investors before they acquire shares.
(c) Equitable treatment: The listed entity shall ensure equitable treatment of all shareholders, including minority and foreign shareholders, in the following manner:
(i) All shareholders of the same series of a class shall be treated equally.
(ii) Effective shareholder participation in key corporate governance decisions, such as the nomination and election of members of board of directors, shall be facilitated.
(iii)Exercise of voting rights by foreign shareholders shall be facilitated.
(iv)The listed entity shall devise a framework to avoid insider trading and abusive self-dealing.
(v) Processes and procedures for general shareholder meetings shall allow for equitable treatment of all shareholders.
(vi)Procedures of listed entity shall not make it unduly difficult or expensive to cast votes.
(d) Role of stakeholders in corporate governance: The listed entity shall recognise the rights of its stakeholders and encourage co-operation between listed entity and the stakeholders, in the following manner:
(i) The listed entity shall respect the rights of stakeholders that are established by law or through mutual agreements.
(ii) Stakeholders shall have the opportunity to obtain effective redress for violation of their rights.
(iii)Stakeholders shall have access to relevant, sufficient and reliable information on a timely and regular basis to enable them to participate in corporate governance process.
(iv)The listed entity shall devise an effective whistle blower mechanism enabling stakeholders, including individual employees and their representative bodies, to freely communicate their concerns about illegal or unethical practices.
(e) Disclosure and transparency: The listed entity shall ensure timely and accurate disclosure on all material matters including the financial situation, performance, ownership, and governance of the listed entity, in the following manner:
(i) Information shall be prepared and disclosed in accordance with the prescribed standards of accounting, financial and non-financial disclosure.
(ii) Channels for disseminating information shall provide for equal, timely and cost efficient access to relevant information by users.
(iii) Minutes of the meeting shall be maintained explicitly recording dissenting opinions, if any.
(f) Responsibilities of the board of directors: The board of directors of the listed entity shall have the following responsibilities:
(i) Disclosure of information:
(1) Members of board of directors and key managerial personnel shall disclose to the board of directors whether they, directly, indirectly, or on behalf of third parties, have a material interest in any transaction or matter directly affecting the listed entity.
(2) The board of directors and senior management shall conduct themselves so as to meet the expectations of operational transparency to stakeholders while at the same time maintaining confidentiality of information in order to foster a culture of good decision-making.
(ii) Key functions of the board of directors-
(1) Reviewing and guiding corporate strategy, major plans of action, risk policy, annual budgets and business plans, setting performance objectives, monitoring implementation and corporate performance, and overseeing major capital expenditures, acquisitions and divestments.
(2) Monitoring the effectiveness of the listed entity’s governance practices and making changes as needed.
(3) Selecting, compensating, monitoring and, when necessary, replacing key managerial personnel and overseeing succession planning.
(4) Aligning key managerial personnel and remuneration of board of directors with the longer term interests of the listed entity and its shareholders.
(5) Ensuring a transparent nomination process to the board of directors with the diversity of thought, experience, knowledge, perspective and gender in the board of directors.
(6) Monitoring and managing potential conflicts of interest of management, members of the board of directors and shareholders, including misuse of corporate assets and abuse in related party transactions.
(7) Ensuring the integrity of the listed entity’s accounting and financial reporting systems, including the independent audit, and that appropriate systems of control are in place, in particular, systems for risk management, financial and operational control, and compliance with the law and relevant standards.
(8) Overseeing the process of disclosure and communications.
(9) Monitoring and reviewing board of director’s evaluation framework.
(iii) Other responsibilities:
(1) The board of directors shall provide strategic guidance to the listed entity, ensure effective monitoring of the management and shall be accountable to the listed entity and the shareholders.
(2) The board of directors shall set a corporate culture and the values by which executives throughout a group shall behave.
(3) Members of the board of directors shall act on a fully informed basis, in good faith, with due diligence and care, and in the best interest of the listed entity and the shareholders.
(4) The board of directors shall encourage continuing directors training to ensure that the members of board of directors are kept up to date.
(5) Where decisions of the board of directors may affect different shareholder groups differently, the board of directors shall treat all shareholders fairly.
(6) The board of directors shall maintain high ethical standards and shall take into account the interests of stakeholders.
(7) The board of directors shall exercise objective independent judgement on corporate affairs.
(8) The board of directors shall consider assigning a sufficient number of non -executive members of the board of directors capable of exercising independent judgement to tasks where there is a potential for conflict of interest.
(9) The board of directors shall ensure that, while rightly encouraging positive thinking, these do not result in over-optimism that either leads to significant risks not being recognised or exposes the listed entity to excessive risk.
(10)The board of directors shall have ability to ‘step back’ to assist executive management by challenging the assumptions underlying: strategy, strategic initiatives (such as acquisitions), risk appetite, exposures and the key areas of the listed entity’s focus.
(11)When committees of the board of directors are established, their mandate, composition and working procedures shall be well defined and disclosed by the board of directors.
(12) Members of the board of directors shall be able to commit themselves effectively to their responsibilities.
(13)In order to fulfil their responsibilities, members of the board of directors shall have access to accurate, relevant and timely information.
(14)The board of directors and senior management shall facilitate the independent directors to perform their role effectively as a member of the board of directors and also a member of a committee of board of directors.
(3) In case of any ambiguity or incongruity between the principles and relevant regulations, the principles specified in this Chapter shall prevail.
- Chapter III-Common Obligations Of Listed Entities
COMMON OBLIGATIONS OF LISTED ENTITIES
General obligation of compliance
5. The listed entity shall 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.
Compliance Officer and his Obligations
6. (1) A listed entity shall appoint a qualified company secretary as the compliance officer.
(2) The compliance officer of the listed entity shall be responsible for-
(a) ensuring conformity with the regulatory provisions applicable to the listed entity in letter and spirit.
(b) co-ordination with and reporting to the Board, recognised stock exchange(s) and depositories with respect to compliance with rules, regulations and other directives of these authorities in manner as specified from time to time.
(c) 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.
(d) monitoring email address of grievance redressal division as designated by the listed entity for the purpose of registering complaints by investors:
Provided that the requirements of this regulation shall not be applicable in the case of units issued by mutual funds which are listed on recognised stock exchange(s) but shall be governed by the provisions of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996.
Share Transfer Agent
7. (1) The listed entity shall appoint a share transfer agent or manage the share transfer facility in-house:
Provided that, in the case of in-house share transfer facility, as and when the total number of holders of securities of the listed entity exceeds one lakh, the listed entity shall either register with the Board as a Category II share transfer agent or appoint Registrar to an issue and share transfer agent registered with the Board.
(2) The listed entity shall ensure that all activities in relation to 11[
both physical and electronic] share transfer facility are maintained either in house or by Registrar to 12 an issue and share transfer agent registered with the Board.(3) The listed entity shall submit a compliance certificate to the exchange, duly signed by both the compliance officer of the listed entity and the authorized representative of the share transfer agent, wherever applicable, within one month of end of each half of the financial year, certifying compliance with the requirements of sub- regulation (2).
(4) In case of any change or appointment of a new share transfer agent, the listed entity shall enter into a tripartite agreement between the existing share transfer agent, the new share transfer agent and the listed entity, in the manner as specified by the Board from time to time:
Provided that in case the existing share transfer facility is managed in-house, the agreement referred above shall be entered into between the listed entity and the new share transfer agent.
(5) The listed entity shall intimate such appointment, referred to in sub-regulation (4), to the stock exchange(s) within seven days of entering into the agreement.
(6) The agreement referred to in sub-regulation (4) shall be placed in the subsequent meeting of the board of directors:
Provided that the requirements of this regulation shall not be applicable to the units issued by mutual funds that are listed on recognised stock exchange(s). Co-operation with intermediaries registered with the Board.
8. The listed entity, wherever applicable, shall co-operate with and submit correct and adequate information to the intermediaries registered with the Board such as credit rating agencies, registrar to an issue and share transfer agents, debenture trustees etc, within timelines and procedures specified under the Act, regulations and circulars issued there under:
Provided that requirements of this regulation shall not be applicable to the units issued by mutual funds listed on a recognised stock exchange(s) for which the provisions of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 shall be applicable.
Preservation of documents
9. The listed entity shall have a policy for preservation of documents, approved by its board of directors, classifying them in at least two categories as follows-
(a) documents whose preservation shall be permanent in nature ;
(b) documents with preservation period of not less than eight years after completion of the relevant transactions:
Provided that the listed entity may keep documents specified in clauses (a) and (b) in electronic mode.
Filing of information
10. (1) The listed entity shall file the reports, statements, documents, filings and any other information with the recognised stock exchange(s) on the electronic platform as specified by the Board or the recognised stock exchange(s).
(2) The listed entity shall put in place infrastructure as required for compliance with sub-regulation (1).
Scheme of Arrangement
11. The listed entity shall ensure that any scheme of arrangement /amalgamation /merger /reconstruction /reduction of capital etc. to be presented to any Court or Tribunal does not in any way violate, override or limit the provisions of securities laws or requirements of the stock exchange(s):
Provided that this regulation shall not be applicable for the units issued by Mutual Fund which are listed on a recognised stock exchange(s).
Payment of dividend or interest or redemption or repayment
12. The listed entity shall use any of the electronic mode of payment facility approved by the Reserve Bank of India, in the manner specified in Schedule I, for the payment of the following:
(a) dividends;
(b) interest;
(c) redemption or repayment amounts:
Provided that where it is not possible to use electronic mode of payment, ‘payable-at-par’ warrants or cheques may be issued:
Provided further that where the amount payable as dividend exceeds one thousand and five hundred rupees, the ‘payable-at-par’ warrants or cheques shall be sent by speed post.
Grievance Redressal Mechanism
13. (1) The listed entity shall ensure that adequate steps are taken for expeditious redressal of investor complaints.
(2) The listed entity shall ensure that it is registered on the SCORES platform or such other electronic platform or system of the Board as shall be mandated from time to time, in order to handle investor complaints electronically in the manner specified by the Board.
(3) The listed entity shall file with the recognised stock exchange(s) on a quarterly basis, within twenty one days from the end of each quarter, a statement giving the number of investor complaints pending at the beginning of the quarter, those received during the quarter, disposed of during the quarter and those remaining unresolved at the end of the quarter.
(4) The statement as specified in sub-regulation (3) shall be placed, on quarterly basis, before the board of directors of the listed entity.
Fees and other charges to be paid to the recognized stock exchange(s)
14. The listed entity shall pay all such fees or charges, as applicable, to the recognised stock exchange(s), in the manner specified by the Board or the recognised stock exchange(s).
Amendments
- Chapter IV- Obligations Of Listed Entity Which Has Listed Its Specified Securities
OBLIGATIONS OF LISTED ENTITY WHICH HAS LISTED ITS SPECIFIED SECURITIES
Applicability
15. (1) The provisions of this chapter shall apply to a listed entity which has listed its specified securities on any recognised stock exchange(s) either on the main board or on SME Exchange or on institutional trading platform:
(2) The compliance with the corporate governance provisions as specified in regulations 17, 12[17A], 18, 19, 20, 21,22, 23, 24, 13[24A], 25, 26, 27 and clauses (b) to (i) of sub-regulation (2) of regulation 46 and para C , D and E of Schedule V shall not apply, in respect of -
(a) the listed entity having paid up equity share capital not exceeding rupees ten crore and net worth not exceeding rupees twenty five crore, as on the last day of the previous financial year:
Provided that where the provisions of the regulations specified in this regulation becomes applicable to a listed entity at a later date, such listed entity shall comply with the requirements those regulations within six months from the date on which the provisions became applicable to the listed entity.
(b) the listed entity which has listed its specified securities on the SME Exchange:
Provided that for other listed entities which are not companies, but body corporate or are subject to regulations under other statues, the provisions of corporate governance provisions as specified in regulation 17, 14[17A], 18, 19, 20, 21,22, 23, 24, 15[24A], 25, 26, 27 and clauses (b) to (i) of sub-regulation (2) of regulation 46 and para C , D and 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.
[(2A) The provisions as specified in regulation 17 shall not be applicable during the insolvency resolution process period in respect of a listed entity which is undergoing corporate insolvency resolution process under the Insolvency Code:
Provided that the role and responsibilities of the board of directors as specified under regulation 17 shall be fulfilled by the interim resolution professional or resolution professional in accordance with sections 17 and 23 of the Insolvency Code.
(2B) The provisions as specified in regulations 18, 19, 20 and 21 shall not be applicable during the insolvency resolution process period in respect of a listed entity which is undergoing corporate insolvency resolution process under the Insolvency Code:
Provided that the roles and responsibilities of the committees specified in the respective regulations shall be fulfilled by the interim resolution professional or resolution professional.]16
(3) Notwithstanding sub-regulation (2) above, the provisions of Companies Act, 2013 shall continue to apply, wherever applicable.
Definitions
16. (1) For the purpose of this chapter , unless the context otherwise requires -
(a) "control" shall have the same meaning as assigned to it under the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011;
(b) "independent director" means a non-executive director, other than a nominee director of the listed entity:
(i) who, in the opinion of the board of directors, is a person of integrity and possesses relevant expertise and experience;
(ii) who is or was not a promoter of the listed entity or its holding, subsidiary or associate company 17[or member of the promoter group of the listed entity];
(iii) who is not related to promoters or directors in the listed entity, its holding, subsidiary or associate company;
(iv) who, apart from receiving director's remuneration, has or had no material pecuniary relationship with the listed entity, its holding, subsidiary or associate company, or their promoters, or directors, during the two immediately preceding financial years or during the current financial year;
(v) none of whose relatives has or had pecuniary relationship or transaction with the listed entity, its holding, subsidiary or associate company, or their promoters, or directors, amounting to two per cent. or more of its gross turnover or total income or fifty lakh rupees or such higher amount as may be prescribed from time to time, whichever is lower, during the two immediately preceding financial years or during the current financial year;
(vi) who, neither himself, nor whose relative(s) -
(A) holds or has held the position of a key managerial personnel or is or has been an employee of the listed entity or its holding, subsidiary or associate company in any of the three financial years immediately preceding the financial year in which he is proposed to be appointed;
(B) is or has been an employee or proprietor or a partner, in any of the three financial years immediately preceding the financial year in which he is proposed to be appointed, of -
(1) a firm of auditors or company secretaries in practice or cost auditors of the listed entity or its holding, subsidiary or associate company; or
(2) any legal or a consulting firm that has or had any transaction with the listed entity, its holding, subsidiary or associate company amounting to ten per cent or more of the gross turnover of such firm;
(C) holds together with his relatives two per cent or more of the total voting power of the listed entity; or
(D) is a chief executive or director, by whatever name called, of any non-profit organisation that receives twenty-five per cent or more of its receipts or corpus from the listed entity, any or its promoters, directors or its holding, subsidiary or associate company or that holds two per cent or more of the total voting power of the listed entity;
(E) is a material supplier, service provider or customer or a lessor or lessee of the listed entity;
(vii) who is not less than 21 years of age.
18[(viii) who is not a non-independent director of another company on the board of which any non-independent director of the listed entity is an independent director:]
(c) ''material subsidiary'' shall mean a subsidiary, whose income or net worth exceeds 19[
twentyten] percent of the consolidated income or net worth respectively, of the listed entity and its subsidiaries in the immediately preceding accounting year.Explanation - The listed entity shall formulate a policy for determining 'material' subsidiary.
(d) ''senior management'' shall mean officers/personnel of the listed entity who are members of its core management team excluding board of directors and normally this shall comprise all members of management one level below the 20[
executive directors, including all functional headschief executive officer/managing director/whole-time director/manager (including chief executive officer/manager, in case they are not part of the board) and shall specifically include company secretary and chief financial officer.]Board of Directors
17. (1) The composition of board of directors of the listed entity shall be as follows:
(a) board of directors shall have an optimum combination of executive and non-executive directors with at least one woman director and not less than fifty per cent. of the board of directors shall comprise of non-executive directors;
21[Provided that the Board of directors of the top 500 listed entities shall have at least one independent woman director by April 1, 2019 and the Board of directors of the top 1000 listed entities shall have at least one independent woman director by April 1, 2020;
Explanation: The top 500 and 1000 entities shall be determined on the basis of market capitalisation, as at the end of the immediate previous financial year.]
(b) where the chairperson of the board of directors is a non-executive director, at least one-third of the board of directors shall comprise of independent directors and where the listed entity does not have a regular non-executive chairperson, at least half of the board of directors shall comprise of independent directors:
Provided that where the regular non-executive chairperson is a promoter of the listed entity or is related to any promoter or person occupying management positions at the level of board of director or at one level below the board of directors, at least half of the board of directors of the listed entity shall consist of independent directors.
Explanation.- For the purpose of this clause, the expression ''related to any promoter'' shall have the following meaning:
(i) if the promoter is a listed entity, its directors other than the independent directors, its employees or its nominees shall be deemed to be related to it;
(ii) if the promoter is an unlisted entity, its directors, its employees or its nominees shall be deemed to be related to it.
22[(c) The board of directors of the top 1000 listed entities (with effect from April 1, 2019) and the top 2000 listed entities (with effect from April 1, 2020) shall comprise of not less than six directors.
Explanation: The top 1000 and 2000 entities shall be determined on the basis of market capitalisation as at the end of the immediate previous financial year.]
23[(d) where the listed company has outstanding SR equity shares, atleast half of the board of directors shall comprise of independent directors.]
24[(1A) No listed entity shall appoint a person or continue the directorship of any person as a non-executive director who has attained the age of seventy five years unless a special resolution is passed to that effect, in which case the explanatory statement annexed to the notice for such motion shall indicate the justification for appointing such a person.]
25[(1B). With effect from 26[
April 1, 2020April 1, 2022,] the top 500 listed entities shall ensure that the Chairperson of the board of such listed entity shall -(a) be a non-executive director;
(b) not be related to the Managing Director or the Chief Executive Officer as per the definition of the term “relative” defined under the Companies Act, 2013:
Provided that this sub-regulation shall not be applicable to the listed entities which do not have any identifiable promoters as per the shareholding pattern filed with stock exchanges.
Explanation - The top 500 entities shall be determined on the basis of market capitalisation, as at the end of the immediate previous financial year.]
(2) The board of directors shall meet at least four times a year, with a maximum time gap of one hundred and twenty days between any two meetings.
27[(2A) The quorum for every meeting of the board of directors of the top 1000 listed entities with effect from April 1, 2019 and of the top 2000 listed entities with effect from April 1, 2020 shall be one-third of its total strength or three directors, whichever is higher, including at least one independent director.
Explanation I – For removal of doubts, it is clarified that the participation of the directors by video conferencing or by other audio-visual means shall also be counted for the purposes of such quorum.
Explanation II - The top 1000 and 2000 entities shall be determined on the basis of market capitalisation, as at the end of the immediate previous financial year.]
(3) The board of directors shall periodically review compliance reports pertaining to all laws applicable to the listed entity, prepared by the listed entity as well as steps taken by the listed entity to rectify instances of non-compliance.
(4) The board of directors of the listed entity shall satisfy itself that plans are in place for orderly succession for appointment to the board of directors and senior management.
(5) (a) The board of directors shall lay down a code of conduct for all members of board of directors and senior management of the listed entity.
(b) The code of conduct shall suitably incorporate the duties of independent directors as laid down in the Companies Act, 2013.
(6) (a) The board of directors shall recommend all fees or compensation, if any, paid to non-executive directors, including independent directors and shall require approval of shareholders in general meeting.
(b) The requirement of obtaining approval of shareholders in general meeting shall not apply to payment of sitting fees to non-executive directors, if made within the limits prescribed under the Companies Act, 2013 for payment of sitting fees without approval of the Central Government.
(c) The approval of shareholders mentioned in clause (a), shall specify the limits for the maximum number of stock options that may be granted to non-executive directors, in any financial year and in aggregate.
28[(ca) The approval of shareholders by special resolution shall be obtained every year, in which the annual remuneration payable to a single non-executive director exceeds fifty per cent of the total annual remuneration payable to all non-executive directors, giving details of the remuneration thereof.]
(d) Independent directors shall not be entitled to any stock option.
29[(e) The fees or compensation payable to executive directors who are promoters or members of the promoter group, shall be subject to the approval of the shareholders by special resolution in general meeting, if-
(i) the annual remuneration payable to such executive director exceeds rupees 5 crore or 2.5 per cent of the net profits of the listed entity, whichever is higher; or
(ii) where there is more than one such director, the aggregate annual remuneration to such directors exceeds 5 per cent of the net profits of the listed entity:
Provided that the approval of the shareholders under this provision shall be valid only till the expiry of the term of such director.
Explanation: For the purposes of this clause, net profits shall be calculated as per section 198 of the Companies Act, 2013.]
(7) The minimum information to be placed before the board of directors is specified in Part A of Schedule II.
(8) The chief executive officer and the chief financial officer shall provide the compliance certificate to the board of directors as specified in Part B of Schedule II.
(9) (a) The listed entity shall lay down procedures to inform members of board of directors about risk assessment and minimization procedures.
(b) The board of directors shall be responsible for framing, implementing and monitoring the risk management plan for the listed entity.
30[(10)
The performance evaluation of independent directors shall be done by the entire board of directors:Provided that in the above evaluation the directors who are subject to evaluation shall not participate:The evaluation of independent directors shall be done by the entire board of directors which shall include -
(a) performance of the directors; and
(b) fulfillment of the independence criteria as specified in these regulations and their independence from the management:
Provided that in the above evaluation, the directors who are subject to evaluation shall not participate.]
31[(11). The statement to be annexed to the notice as referred to in sub-section (1) of section 102 of the Companies Act, 2013 for each item of special business to be transacted at a general meeting shall also set forth clearly the recommendation of the board to the shareholders on each of the specific items.]
32[ Maximum number of directorships.
17A. The directors of listed entities shall comply with the following conditions with respect to the maximum number of directorships, including any alternate directorships that can be held by them at any point of time -
(1) A person shall not be a director in more than eight listed entities with effect from April 1, 2019 and in not more than seven listed entities with effect from April 1, 2020:
Provided that a person shall not serve as an independent director in more than seven listed entities.
(2) Notwithstanding the above, any person who is serving as a whole-time director/managing director in any listed entity shall serve as an independent director in not more than three listed entities.
For the purpose of this sub-regulation, the count for the number of listed entities on which a person is a director / independent director shall be only those whose equity shares are listed on a stock exchange.]
Audit Committee
18. (1) Every listed entity shall constitute a qualified and independent audit committee in accordance with the terms of reference, subject to the following:
(a) The audit committee shall have minimum three directors as members.
(b) Two-thirds of the members of audit committee shall be independent directors 33[and in case of a listed entity having outstanding SR equity shares, the audit committee shall only comprise of independent directors].
(c) All members of audit committee shall be financially literate and at least one member shall have accounting or related financial management expertise.
Explanation (1) - For the purpose of this regulation, ''financially literate'' shall mean the ability to read and understand basic financial statements i.e. balance sheet, profit and loss account, and statement of cash flows.
Explanation (2) - For the purpose of this regulation, a member shall be considered to have accounting or related financial management expertise if he or she possesses experience in finance or accounting, or requisite professional certification in accounting, or any other comparable experience or background which results in the individual's financial sophistication, including being or having been a chief executive officer, chief financial officer or other senior officer with financial oversight responsibilities.
(d) The chairperson of the audit committee shall be an independent director and he shall be present at Annual general meeting to answer shareholder queries.
(e) The Company Secretary shall act as the secretary to the audit committee.
(f) The audit committee at its discretion shall invite the finance director or head of the finance function, head of internal audit and a representative of the statutory auditor and any other such executives to be present at the meetings of the committee:
Provided that occasionally the audit committee may meet without the presence of any executives of the listed entity.
(2) The listed entity shall conduct the meetings of the audit committee in the following manner:
(a) The audit committee shall meet at least four times in a year and not more than one hundred and twenty days shall elapse between two meetings.
(b) The quorum for audit committee meeting shall either be two members or one third of the members of the audit committee, whichever is greater, with at least two independent directors.
(c) The audit committee shall have powers to investigate any activity within its terms of reference, seek information from any employee, obtain outside legal or other professional advice and secure attendance of outsiders with relevant expertise, if it considers necessary.
(3) The role of the audit committee and the information to be reviewed by the audit committee shall be as specified in Part C of Schedule II.
Nomination and remuneration committee
19. (1) The board of directors shall constitute the nomination and remuneration committee as follows:
(a) the committee shall comprise of at least three directors ;
(b) all directors of the committee shall be non-executive directors; and
(c) at least fifty percent of the directors shall be independent directors 34[and in case of a listed entity having outstanding SR equity shares, two thirds of the nomination and remuneration committee shall comprise of independent directors].
(2) The Chairperson of the nomination and remuneration committee shall be an independent director:
Provided that the chairperson of the listed entity, whether executive or non-executive, may be appointed as a member of the Nomination and Remuneration Committee and shall not chair such Committee.
35[(2A) The quorum for a meeting of the nomination and remuneration committee shall be either two members or one third of the members of the committee, whichever is greater, including at least one independent director in attendance.]
(3) The Chairperson of the nomination and remuneration committee may be present at the annual general meeting, to answer the shareholders' queries; however, it shall be up to the chairperson to decide who shall answer the queries.
36[(3A) The nomination and remuneration committee shall meet at least once in a year.]
(4) The role of the nomination and remuneration committee shall be as specified as in Part D of the Schedule II.
Stakeholders Relationship Committee
20. (1) The listed entity shall constitute a Stakeholders Relationship Committee to specifically look into 37[
the mechanism of redressal of grievancesvarious aspects of interest] of shareholders, debenture holders and other security holders.(2) The chairperson of this committee shall be a non-executive director.
38[(2A) At least three directors, with at least one being an independent director, shall be members of the Committee 39[and in case of a listed entity having outstanding SR equity shares, at least two-thirds of the Stakeholders Relationship Committee shall comprise of independent directors].]
40[ (3)
The board of directors shall decide other members of this committeeThe Chairperson of the Stakeholders Relationship Committee shall be present at the annual general meetings to answer queries of the security holders.]41[(3A) The stakeholders relationship committee shall meet at least once in a year.]
(4) The role of the Stakeholders Relationship Committee shall be as specified as in Part D of the Schedule II.
Risk Management Committee.
21. (1) The board of directors shall constitute a Risk Management Committee.
(2) The majority of members of Risk Management Committee shall consist of members of the board of directors 42[and in case of a listed entity having outstanding SR equity shares, at least two thirds of the Risk Management Committee shall comprise of independent directors]..
(3) The Chairperson of the Risk management committee shall be a member of the board of directors and senior executives of the listed entity may be members of the committee.
43[(3A) The risk management committee shall meet at least once in a year.]
(4) The board of directors shall define the role and responsibility of the Risk Management Committee and may delegate monitoring and reviewing of the risk management plan to the committee and such other functions as it may deem fit 44[such function shall specifically cover cyber security].
(5) The provisions of this regulation shall be applicable to top 45[
100500] listed entities, determined on the basis of market capitalisation, as at the end of the immediate previous financial year.Vigil mechanism
22. (1) The listed entity shall formulate a vigil mechanism for directors and employees to report genuine concerns.
(2) The vigil mechanism shall provide for adequate safeguards against victimization of director(s) or employee(s) or any other person who avail the mechanism and also provide for direct access to the chairperson of the audit committee in appropriate or exceptional cases.
Related party transactions
23. (1) The listed entity shall formulate a policy on materiality of related party transactions and on dealing with related party transactions 46[including clear threshold limits duly approved by the board of directors and such policy shall be reviewed by the board of directors at least once every three years and updated accordingly]::
Explanation - 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 ten percent of the annual consolidated turnover of the listed entity as per the last audited financial statements of the listed entity.
47[(1A) Notwithstanding the above, [with effect from July 01, 2019]48 a transaction involving payments made to a related party with respect to brand usage or royalty shall be considered material if the transaction(s) to be entered into individually or taken together with previous transactions during a financial year, exceed 49[
twofive] percent of the annual consolidated turnover of the listed entity as per the last audited financial statements of the listed entity.](2) All related party transactions shall require prior approval of the audit committee.
(3) Audit committee may grant omnibus approval for related party transactions proposed to be entered into by the listed entity subject to the following conditions, namely-
(a) the audit committee shall lay down the criteria for granting the omnibus approval in line with the policy on related party transactions of the listed entity and such approval shall be applicable in respect of transactions which are repetitive in nature;
(b) the audit committee shall satisfy itself regarding the need for such omnibus approval and that such approval is in the interest of the listed entity;
(c) the omnibus approval shall specify:
(i) the name(s) of the related party, nature of transaction, period of transaction, maximum amount of transactions that shall be entered into,
(ii) the indicative base price / current contracted price and the formula for variation in the price if any; and
(iii) such other conditions as the audit committee may deem fit:
Provided that where the need for related party transaction cannot be foreseen and aforesaid details are not available, audit committee may grant omnibus approval for such transactions subject to their value not exceeding rupees one crore per transaction.
(d) the audit committee shall review, at least on a quarterly basis, the details of related party transactions entered into by the listed entity pursuant to each of the omnibus approvals given.
(e) Such omnibus approvals shall be valid for a period not exceeding one year and shall require fresh approvals after the expiry of one year:
(4) All material related party transactions shall require approval of the shareholders through resolution and 50[
the related parties shall abstain from voting onno related party shall vote to approve] such resolutions whether the entity is a related party to the particular transaction or not.[Provided that the requirements specified under this sub-regulation shall not apply in respect of a resolution plan approved under section 31 of the Insolvency Code, subject to the event being disclosed to the recognized stock exchanges within one day of the resolution plan being approved;]51
(5) The provisions of sub-regulations (2), (3) and (4) shall not be applicable in the following cases:
(a) transactions entered into between two government companies;
(b) transactions entered into between a holding company and its wholly owned subsidiary whose accounts are consolidated with such holding company and placed before the shareholders at the general meeting for approval.
Explanation - For the purpose of clause (a), "Government Company (ies) means Government company as defined in sub-section (45) of section 2 of the Companies Act, 2013.
(6) The provisions of this regulation shall be applicable to all prospective transactions.
(7) For the purpose of this regulation, all entities falling under the definition of related parties shall 52[
abstain from votingnot vote to approve the relevant transaction] irrespective of whether the entity is a party to the particular transaction or not.(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.
53[(9) The listed entity shall submit within 30 days from the date of publication of its standalone and consolidated financial results for the half year, disclosures of related party transactions on a consolidated basis, in the format specified in the relevant accounting standards for annual results to the stock exchanges and publish the same on its website.]
Corporate governance requirements with respect to subsidiary of listed entity
24. 54[(1)
At least one independent director on the board of directors of the listed entity shall be a director on the board of directors of an unlisted material subsidiary, incorporated in India.At least one independent director on the board of directors of the listed entity shall be a director on the board of directors of an unlisted material subsidiary, whether incorporated in India or not.
Explanation - For the purposes of this provision, notwithstanding anything to the contrary contained in regulation 16, the term “material subsidiary” shall mean a subsidiary, whose income or net worth exceeds twenty percent of the consolidated income or net worth respectively, of the listed entity and its subsidiaries in the immediately preceding accounting year.]
(2) The audit committee of the listed entity shall also review the financial statements, in particular, the investments made by the unlisted subsidiary.
(3) The minutes of the meetings of the board of directors of the unlisted subsidiary shall be placed at the meeting of the board of directors of the listed entity.
(4) The management of the unlisted subsidiary shall periodically bring to the notice of the board of directors of the listed entity, a statement of all significant transactions and arrangements entered into by the unlisted subsidiary.
Explanation- For the purpose of this regulation, the term ''significant transaction or arrangement'' shall mean any individual transaction or arrangement that exceeds or is likely to exceed ten percent of the total revenues or total expenses or total assets or total liabilities, as the case may be, of the unlisted 55[
material] subsidiary for the immediately preceding accounting year.(5) A listed entity shall not dispose of shares in its material subsidiary resulting in reduction of its shareholding (either on its own or together with other subsidiaries) to less than fifty percent or cease the exercise of control over the subsidiary without passing a special resolution in its General Meeting except in cases where such divestment is made under a scheme of arrangement duly approved by a Court/Tribunal [,or under a resolution plan duly approved under section 31 of the Insolvency Code and such an event is disclosed to the recognized stock exchanges within one day of the resolution plan being approved]56.
(6) Selling, disposing and leasing of assets amounting to more than twenty percent of the assets of the material subsidiary on an aggregate basis during a financial year shall require prior approval of shareholders by way of special resolution, unless the sale/disposal/lease is made under a scheme of arrangement duly approved by a Court/Tribunal. [, or under a resolution plan duly approved under section 31 of the Insolvency Code and such an event is disclosed to the recognized stock exchanges within one day of the resolution plan being approved]57.
(7) Where a listed entity has a listed subsidiary, which is itself a holding company, the provisions of this regulation shall apply to the listed subsidiary in so far as its subsidiaries are concerned.
58[Secretarial Audit.
24A. Every listed entity and its material unlisted subsidiaries incorporated in India shall undertake secretarial audit and shall annex with its annual report, a secretarial audit report, given by a company secretary in practice, in such form as may be specified with effect from the year ended March 31, 2019.]Obligations with respect to independent directors
25. (1) 59[
A person shall not serve as an independent director in more than seven listed entities:Provided that any person who is serving as a whole time director in any listed entity shall serve as an independent director in not more than three listed entities.No person shall be appointed or continue as an alternate director for an independent director of a listed entity with effect from October 1, 2018.]
(2) The maximum tenure of independent directors shall be in accordance with the Companies Act, 2013 and rules made thereunder, in this regard, from time to time.
(3) The independent directors of the listed entity shall hold at least one meeting in a year, without the presence of non-independent directors and members of the management and all the independent directors shall strive to be present at such meeting.
(4) The independent directors in the meeting referred in sub-regulation (3) shall, inter alia-
(a) review the performance of non-independent directors and the board of directors as a whole;
(b) review the performance of the chairperson of the listed entity, taking into account the views of executive directors and non-executive directors;
(c) assess the quality, quantity and timeliness of flow of information between the management of the listed entity and the board of directors that is necessary for the board of directors to effectively and reasonably perform their duties.
(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.
(6) An independent director who resigns or is removed from the board of directors of the listed entity shall be replaced by a new independent director by listed entity at the earliest but not later than the immediate next meeting of the board of directors or three months from the date of such vacancy, whichever is later:
Provided that where the listed entity fulfils the requirement of independent directors in its board of directors without filling the vacancy created by such resignation or removal, the requirement of replacement by a new independent director shall not apply.
(7) The listed entity shall familiarise the independent directors through various programmes about the listed entity, including the following:
(a) nature of the industry in which the listed entity operates;
(b) business model of the listed entity;
(c) roles, rights, responsibilities of independent directors; and
(d) any other relevant information.
60[(8) Every independent director shall, at the first meeting of the board in which he participates as a director and thereafter at the first meeting of the board in every financial year or whenever there is any change in the circumstances which may affect his status as an independent director, submit a declaration that he meets the criteria of independence as provided in clause (b) of sub-regulation (1) of regulation 16 and that he is not aware of any circumstance or situation, which exist or may be reasonably anticipated, that could impair or impact his ability to discharge his duties with an objective independent judgment and without any external influence.
(9) The board of directors of the listed entity shall take on record the declaration and confirmation submitted by the independent director under sub-regulation (8) after undertaking due assessment of the veracity of the same.
(10) With effect from October 1, 2018, the top 500 listed entities by market capitalization calculated as on March 31 of the preceding financial year, shall undertake Directors and Officers insurance (‘D and O insurance’) for all their independent directors of such quantum and for such risks as may be determined by its board of directors.]
61[
Obligations with respect to directors and senior managementObligations with respect to employees including senior management, key managerial persons, directors and promoters]26. (1) A director shall not be a member in more than ten committees or act as chairperson of more than five committees across all listed entities in which he is a director which shall be determined as follows:
(a) the limit of the committees on which a director may serve in all public limited companies, whether listed or not, shall be included and all other companies including private limited companies, foreign companies and companies under Section 8 of the Companies Act, 2013 shall be excluded;
(b) for the purpose of determination of limit, chairpersonship and membership of the audit committee and the Stakeholders' Relationship Committee alone shall be considered.
(2) Every director shall inform the listed entity about the committee positions he or she occupies in other listed entities and notify changes as and when they take place.
(3) All members of the board of directors and senior management personnel shall affirm compliance with the code of conduct of board of directors and senior management on an annual basis.
(4) Non-executive directors shall disclose their shareholding, held either by them or on a beneficial basis for any other persons in the listed entity in which they are proposed to be appointed as directors, in the notice to the general meeting called for appointment of such director.
(5) Senior management shall make disclosures to the board of directors relating to all material, financial and commercial transactions, where they have personal interest that may have a potential conflict with the interest of the listed entity at large.
Explanation.- For the purpose of this sub-regulation, conflict of interest relates to dealing in the shares of listed entity, commercial dealings with bodies, which have shareholding of management and their relatives etc.
62[(6) No employee including key managerial personnel or director or promoter of a listed entity shall enter into any agreement for himself or on behalf of any other person, with any shareholder or any other third party with regard to compensation or profit sharing in connection with dealings in the securities of such listed entity, unless prior approval for the same has been obtained from the Board of Directors as well as public shareholders by way of an ordinary resolution:
Provided that such agreement, if any, whether subsisting or expired, entered during the preceding three years from the date of coming into force of this sub-regulation, shall be disclosed to the stock exchanges for public dissemination:
Provided further that subsisting agreement, if any, as on the date of coming into force of this sub-regulation shall be placed for approval before the Board of Directors in the forthcoming Board meeting:
Provided further that if the Board of Directors approve such agreement, the same shall be placed before the public shareholders for approval by way of an ordinary resolution in the forthcoming general meeting:
Provided further that all interested persons involved in the transaction covered under the agreement shall abstain from voting in the general meeting.
Explanation - For the purposes of this sub-regulation, ‘interested person’ shall mean any person holding voting rights in the listed entity and who is in any manner, whether directly or indirectly, interested in an agreement or proposed agreement, entered into or to be entered into by such a person or by any employee or key managerial personnel or director or promoter of such listed entity with any shareholder or any other third party with respect to compensation or profit sharing in connection with the securities of such listed entity.]
Other corporate governance requirements
27. (1) The listed entity may, at its discretion, comply with requirements as specified in Part E of Schedule II.
(2) (a) The listed entity shall submit a quarterly compliance report on corporate governance in the format as specified by the Board from time to time to the recognised stock exchange(s) within fifteen days from close of the quarter.
(b) Details of all material transactions with related parties shall be disclosed along with the report mentioned in clause (a) of sub-regulation (2).
(c) The report mentioned in clause (a) of sub-regulation (2) shall be signed either by the compliance officer or the chief executive officer of the listed entity.
In-principle approval of recognized stock exchange(s)
28. (1) The listed entity, before issuing securities, shall obtain an 'in-principle' approval from recognised stock exchange(s) in the following manner:
(a) where the securities are listed only on recognised stock exchange(s) having nationwide trading terminals, from all such stock exchange(s);
(b) where the securities are not listed on any recognised stock exchange having nationwide trading terminals, from all the stock exchange(s) in which the securities of the issuer are proposed to be listed;
(c) where the securities are listed on recognised stock exchange(s) having nationwide trading terminals as well as on the recognised stock exchange(s) not having nationwide trading terminals, from all recognized stock exchange(s) having nationwide trading terminals.
(2) The requirement of obtaining in-principle approval from recognised stock exchange(s), shall not be applicable for securities issued pursuant to the scheme of arrangement for which the listed entity has already obtained No-Objection Letter from recognised stock exchange(s) in accordance with regulation 37.
Prior Intimations
29. (1) The listed entity shall give prior intimation to stock exchange about the meeting of the board of directors in which any of the following proposals is due to be considered:
(a) financial results viz. quarterly, half yearly, or annual, as the case may be;
(b) proposal for buyback of securities;
(c) proposal for voluntary delisting by the listed entity from the stock exchange(s);
(d) fund raising by way of further public offer, rights issue, American Depository Receipts/Global Depository Receipts/Foreign Currency Convertible Bonds, qualified institutions placement, debt issue, preferential issue or any other method and for determination of issue price:
Provided that intimation shall also be given in case of any annual general meeting or extraordinary general meeting or postal ballot that is proposed to be held for obtaining shareholder approval for further fund raising indicating type of issuance.
(e) declaration/recommendation of dividend, issue of convertible securities including convertible debentures or of debentures carrying a right to subscribe to equity shares or the passing over of dividend.
(f) the proposal for declaration of bonus securities where such proposal is communicated to the board of directors of the listed entity as part of the agenda papers:
63
[Provided that in case the declaration of bonus by the listed entity is not on the agenda of the meeting of board of directors, prior intimation is not required to be given to the stock exchange(s).](2) The intimation required under sub-regulation (1), shall be given at least two working days in advance, excluding the date of the intimation and date of the meeting:
Provided that intimation regarding item specified in clause (a) of sub-regulation (1), to be discussed at the meeting of board of directors shall be given at least five days in advance (excluding the date of the intimation and date of the meeting), and such intimation shall include the date of such meeting of board of directors.
(3) The listed entity shall give intimation to the stock exchange(s) at least eleven working days before any of the following proposal is placed before the board of directors -
(a) any alteration in the form or nature of any of its securities that are listed on the stock exchange or in the rights or privileges of the holders thereof.
(b) 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.
Disclosure of events or information
30. (1) Every listed entity shall make disclosures of any events or information which, in the opinion of the board of directors of the listed company, is material.
(2) Events specified in Para A of Part A of Schedule III are deemed to be material events and listed entity shall make disclosure of such events.
(3) The listed entity shall make disclosure of events specified in Para B of Part A of Schedule III, based on application of the guidelines for materiality, as specified in sub-regulation (4).
(4) (i) The listed entity shall consider the following criteria for determination of materiality of events/ information:
(a) the omission of an event or information, which is likely to result in discontinuity or alteration of event or information already available publicly; or
(b)the 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)In case where the criteria specified in sub-clauses (a) and (b) are not applicable, an event/information may be treated as being material if in the opinion of the board of directors of listed entity, the event / information is considered material.
(ii) The listed entity shall frame a policy for determination of materiality, based on criteria specified in this sub-regulation, duly approved by its board of directors, which shall be disclosed on its website.
(5) The board of directors of the listed entity shall authorize one or more Key Managerial Personnel for the purpose of determining materiality of an event or information and for the purpose of making disclosures to stock exchange(s) under this regulation and the contact details of such personnel shall be also disclosed to the stock exchange(s) and as well as on the listed entity's website.
(6) The listed entity shall first disclose to stock exchange(s) of all events, as specified in Part A of Schedule III, or information as soon as reasonably possible and not later than twenty four hours from the occurrence of event or information:
Provided that in case the disclosure is made after twenty four hours of occurrence of the event or information, the listed entity shall, along with such disclosures provide explanation for delay:
Provided further that disclosure with respect to events specified in sub-para 4 of Para A of Part A of Schedule III shall be made within thirty minutes of the conclusion of the board meeting.
(7) The listed entity shall, with respect to disclosures referred to in this regulation, make disclosures updating material developments on a regular basis, till such time the event is resolved/closed, with relevant explanations.
(8) The listed entity shall disclose on its website all such events or information which has been disclosed to stock exchange(s) under this regulation, and such disclosures shall be hosted on the website of the listed entity for a minimum period of five years and thereafter as per the archival policy of the listed entity, as disclosed on its website.
(9) The listed entity shall disclose all events or information with respect to subsidiaries which are material for the listed entity.
(10) The listed entity shall provide specific and adequate reply to all queries raised by stock exchange(s) with respect to any events or information:
Provided that the stock exchange(s) shall disseminate information andclarification as soon as reasonably practicable.
(11) The listed entity may on its own initiative also, confirm or deny any reported event or information to stock exchange(s).
(12) In case where an event occurs or an information is available with the listed entity, which has not been indicated in Para A or B of Part A of Schedule III, but which may have material effect on it, the listed entity is required to make adequate disclosures in regard thereof.
Holding of specified securities and shareholding pattern
31. (1) The listed entity shall submit to the stock exchange(s) a statement showing holding of securities and shareholding pattern separately for each class of securities, in the format specified by the Board from time to time within the following timelines -
(a) one day prior to listing of its securities on the stock exchange(s);
(b) on a quarterly basis, within twenty one days from the end of each quarter; and,
(c) within ten days of any capital restructuring of the listed entity resulting in a change exceeding two per cent of the total paid-up share capital:
Provided that in case of listed entities which have listed their specified securities on SME Exchange, the above statements shall be submitted on a half yearly basis within twenty one days from the end of each half year.
(2) The listed entity shall ensure that hundred percent of shareholding of promoter(s) and promoter group is in dematerialized form and the same is maintained on a continuous basis in the manner as specified by the Board.
(3) The listed entity shall comply with circulars or directions issued by the Board from time to time with respect to maintenance of shareholding in dematerialized form.
64[(4) All entities falling under promoter and promoter group shall be disclosed separately in the shareholding pattern appearing on the website of all stock exchanges having nationwide trading terminals where the specified securities of the entity are listed, in accordance with the formats specified by the Board.]
65[
Disclosure of Class of shareholders and Conditions for Reclassification31A. (1) All entities falling under promoter and promoter group shall be disclosed separately in the shareholding pattern appearing on the website of all stock exchanges having nationwide trading terminals where the specified securities of the entity are listed, in accordance with the formats specified by SEBI.(2) The stock exchange, specified in sub-regulation (1), 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 all relevant evidence and on being satisfied with the compliance of conditions mentioned in this regulation.(3) In case of entities listed on more than one stock exchange, the concerned stock exchanges shall jointly decide on the application of the entity/ shareholders, as specified in sub-regulation(2).(4) In case of transmission/succession/inheritance, the inheritor shall be classified as promoter.(5) When a new promoter replaces the previous promoter subsequent to an open offer or in any other manner, re-classification may be permitted subject to approval of shareholders in the general meeting and compliance of the following conditions:(a)Such promoter along with the promoter group and the Persons Acting in Concert shall not hold more than ten per cent of the paid-up equity capital of the entity.(b) Such promoter shall not continue to have any special rights through formal or informal arrangements. All shareholding agreements granting special rights to such entities shall be terminated.(c) Such promoters and their relatives shall not act as key managerial person for a period of more than three years from the date of shareholders' approval:Provided that the resolution of the said shareholders' meeting must specifically grant approval for such promoter to act as key managerial person.(6) 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 approval of the shareholders in a general meeting.Explanation- For the purposes of this sub-regulation an entity may be considered as professionally managed, if-(i) No person or group along with persons acting in concert taken together shall hold more than one per cent paid-up equity capital of the entity including any holding of convertibles/outstanding warrants/ Depository Receipts:Provided that any mutual fund, bank, insurance company, financial institution, foreign portfolio investor may individually hold up to ten percent paid-up equity capital of the entity including any holding of convertibles/outstanding warrants/Depository Receipts.(ii) The promoters seeking reclassification and their relatives may act as key managerial personnel in the entity only subject to shareholders' approval and for a period not exceeding three years from the date of shareholders' approval.(iii) The promoter seeking reclassification along with his promoter group entities and the persons acting in concert shall not have any special right through formal or informal arrangements. All shareholding agreements granting special rights to such outgoing entities shall be terminated.(7) Without prejudice to sub-regulations (5) and (6), re-classification of promoter as public shareholders shall be subject to the following conditions:(a) Such promoter shall not, directly or indirectly, exercise control, over the affairs of the entity.(b) Increase in the level of public shareholding pursuant to re-classification of promoter shall not be counted towards achieving compliance with minimum public shareholding requirement under rule 19A of the Securities Contracts (Regulation) Rules, 1957, and the provisions of these regulations.(c) The event of re-classification shall be disclosed to the stock exchanges as a material event in accordance with the provisions of these regulations.(d) Board may relax any condition for re-classification in specific cases, if it is satisfied about non-exercise of control by the outgoing promoter or its persons acting in concert.(8) If any public shareholder seeks to re-classify itself as promoter, it shall be required to make an open offer in accordance with the provisions of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.Conditions for re-classification of any person as promoter/public
31A (1) For the purpose of this regulation:
(a) ''promoter(s) seeking re-classification'' shall mean all such promoters/persons belonging to the promoter group seeking reclassification of status as public.
(b) ''persons related to the promoter(s) seeking re-classification'' shall mean such persons with respect to that promoter(s) seeking re-classification who fall under sub-clauses (ii), (iii) and (iv) of clause (pp) of sub-regulation (1) of regulation 2 of Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018.
(2) Re-classification of the status of any person as a promoter or public shall be permitted by the stock exchanges only upon receipt of an application from the listed entity along with all relevant documents subject to compliance with conditions specified in these regulations;
Provided that in case of entities listed on more than one stock exchange, the concerned stock exchanges shall jointly decide on the application.
(3) Re-classification of status of a promoter/ person belonging to promoter group to public shall be permitted by the stock exchanges only upon satisfaction of the following conditions:
(a) an application for re-classification to the stock exchanges has been made by the listed entity consequent to the following procedures and not later than thirty days from the date of approval by shareholders in general meeting:
(i) the promoter(s) seeking re-classification shall make a request for re-classification to the listed entity which shall include rationale for seeking such re-classification and how the conditions specified in clause (b) below are satisfied;
(ii) the board of directors of the listed entity shall analyze the request and place the same before the shareholders in a general meeting for approval along with the views of the board of directors on the request:
Provided that there shall be a time gap of at least three months but not exceeding six months between the date of board meeting and the shareholder’s meeting considering the request of the promoter(s) seeking re-classification.
(iii) the request of the promoter(s) seeking re-classification shall be approved in the general meeting by an ordinary resolution in which the promoter(s) seeking re-classification and persons related to the promoter(s) seeking re-classification shall not vote to approve such re-classification request.
(b) the promoter(s) seeking re-classification and persons related to the promoter(s) seeking re-classification shall not:
(i) together, hold more than ten percent of the total voting rights in the listed entity;
(ii) exercise control over the affairs of the listed entity directly or indirectly;
(iii) have any special rights with respect to the listed entity through formal or informal arrangements including through any shareholder agreements;
(iv) be represented on the board of directors (including not having a nominee director) of the listed entity;
(v) act as a key managerial person in the listed entity;
(vi) be a ‘wilful defaulter’ as per the Reserve Bank of India Guidelines;
(vii) be a fugitive economic offender.
(c) the listed entity shall:
(i) be compliant with the requirement for minimum public shareholding as required under regulation 38 of these regulations;
(ii) not have trading in its shares suspended by the stock exchanges;
(iii) not have any outstanding dues to the Board, the stock exchanges or the depositories.
(4) The promoter(s) seeking re-classification, subsequent to re-classification as public, shall comply with the following conditions:
(a) he shall continue to comply with conditions mentioned at sub-clauses (i), (ii) and (iii) of clause (b) of sub-regulation 3 as specified above at all times from the date of such re-classification failing which, he shall automatically be reclassified as promoter/ persons belonging to promoter group, as applicable;
(b) he shall comply with conditions mentioned at sub-clauses (iv) and (v) of clause (b) of sub-regulation 3 for a period of not less than three years from the date of such re-classification failing which, he shall automatically be reclassified as promoter/ persons belonging to promoter group, as applicable.
(5) If any public shareholder seeks to re-classify itself as promoter, it shall be required to make an open offer in accordance with the provisions of Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.
(6) In case of transmission, succession, inheritance and gift of shares held by a promoter/ person belonging to the promoter group:
(a) immediately on such event, the recipient of such shares shall be classified as a promoter/ person belonging to the promoter group, as applicable.
(b) subsequently, in case the recipient classified as a promoter/person belonging to the promoter group proposes to seek re-classification of status as public, it may do so subject to compliance with conditions specified in sub-regulation (3) above.
(c) in case of death of a promoter/person belonging to the promoter group, such person shall automatically cease to be included as a promoter/person belonging to the promoter group.
(7) A listed entity shall be considered as ‘listed entity with no promoters’ if due to re-classification or otherwise, the entity does not have any promoter;
(8) The following events shall deemed to be material events and shall be disclosed by the listed entity to the stock exchanges as soon as reasonably possible and not later than twenty four hours from the occurrence of the event:
(a) receipt of request for re-classification by the listed entity from the promoter(s) seeking re-classification;
(b) minutes of the board meeting considering such request which would include the views of the board on the request;
(c) submission of application for re-classification of status as promoter/public by the listed entity to the stock exchanges;
(d) decision of the stock exchanges on such application as communicated to the listed entity;
(9) The provisions of sub-regulations 3, 4 and clauses (a) and (b) of sub-regulation 8 of this regulation shall not apply, if re-classification of promoter(s)/ promoter group of the listed entity is as per the resolution plan approved under section 31 of the Insolvency Code, subject to the condition that such promoter(s) seeking re-classification shall not remain in control of the listed entity.”]
Statement of deviation(s) or variation(s)
32. (1) The listed entity shall submit to the stock exchange the following statement(s) on a quarterly basis for public issue, rights issue, preferential issue etc.,-
(a) indicating deviations, if any, in the use of proceeds from the objects stated in the offer document or explanatory statement to the notice for the general meeting, as applicable;
(b) indicating category wise variation (capital expenditure, sales and marketing, working capital etc.) between projected utilisation of funds made by it in its offer document or explanatory statement to the notice for the general meeting, as applicable and the actual utilisation of funds.
(2) The statement(s) specified in sub-regulation (1), shall be continued to be given till such time the issue proceeds have been fully utilised or the purpose for which these proceeds were raised has been achieved.
(3) The statement(s) specified in sub-regulation (1), shall be placed before the audit committee for review and after such review, shall be submitted to the stock exchange(s).
(4) The listed entity shall furnish an explanation for the variation specified in sub-regulation (1), in the directors' report in the annual report.
(5) The listed entity shall prepare an annual statement of funds utilized for purposes other than those stated in the offer document/prospectus/notice, certified by the statutory auditors of the listed entity, and place it before the audit committee till such time the full money raised through the issue has been fully utilized.
(6) Where the listed entity has appointed a monitoring agency to monitor utilisation of proceeds of a public or rights issue, the listed entity shall submit to the stock exchange(s) any comments or report received from the monitoring agency.
(7) Where the listed entity has appointed a monitoring agency to monitor the utilisation of proceeds of a public or rights issue, the monitoring report of such agency shall be placed before the audit committee on an annual basis, promptly upon its receipt.
Explanation - For the purpose of this sub-regulation, ''monitoring agency'' shall mean the monitoring agency specified in regulation 16 of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009.
66[(7A) Where an entity has raised funds through preferential allotment or qualified institutions placement, the listed entity shall disclose every year, the utilization of such funds during that year in its Annual Report until such funds are fully utilized.]
(8) For the purpose of this regulation, any reference to ''quarterly/quarter'' in case of listed entity which have listed their specified securities on SME Exchange shall respectively be read as ''half yearly/half year''.
Financial results
33. (1) While preparing financial results, the listed entity shall comply with the following:
(a) The financial results shall be prepared on the basis of accrual accounting policy and shall be in accordance with uniform accounting practices adopted for all the periods.
(b) The quarterly and year to date results shall be prepared in accordance with the recognition and measurement principles laid down in Accounting Standard 25 or Indian Accounting Standard 31 (AS 25/ Ind AS 34 - Interim Financial Reporting), as applicable, specified in Section 133 of the Companies Act, 2013 read with relevant rules framed thereunder or as specified by the Institute of Chartered Accountants of India, whichever is applicable.
(c) The standalone financial results and consolidated financial results shall be prepared as per Generally Accepted Accounting Principles in India:
Provided that in addition to the above, the listed entity may also submit the financial results, as per the International Financial Reporting Standards notified by the International Accounting Standards Board.
(d) The listed entity shall ensure that the limited review or audit reports submitted to the stock exchange(s) on a quarterly or annual basis are to be given only by an auditor who has subjected himself to the peer review process of Institute of Chartered Accountants of India and holds a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.
(e) The listed entity shall make the disclosures specified in Part A of Schedule IV.
(2) The approval and authentication of the financial results shall be done by listed entity in the following manner:
(a) The quarterly financial results submitted shall be approved by the board of directors:
Provided that while placing the financial results before the board of directors, the chief executive officer and chief financial officer of the listed entity shall certify 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.
(b) The financial results submitted to the stock exchange shall be signed by the chairperson or managing director, or a whole time director or in the absence of all of them; it shall be signed by any other director of the listed entity who is duly authorized by the board of directors to sign the financial results.
(c) The limited review report shall be placed before the board of directors, at its meeting which approves the financial results, before being submitted to the stock exchange(s).
(d) The annual audited financial results shall be approved by the board of directors of the listed entity and shall be signed in the manner specified in clause (b) of sub-regulation (2).
(3) The listed entity shall submit the financial results in the following manner:
(a) The listed entity shall submit quarterly and year-to-date standalone financial results to the stock exchange within forty-five days of end of each quarter, other than the last quarter.
(b) In case the listed entity has subsidiaries, in addition to the requirement at clause (a) of sub-regulation (3), the listed entity 67[
mayshall] also submit quarterly/year-to-date consolidated financial results 68[subject to following:.]69[
(i) the listed entity shall intimate to the stock exchange, whether or not listed entity opts to additionally submit quarterly/year-to-date consolidated financial results in the first quarter of the financial year and this option shall not be changed during the financial year.Provided that this option shall also be applicable to listed entity that is required to prepare consolidated financial results for the first time at the end of a financial year in respect of the quarter during the financial year in which the listed entity first acquires the subsidiary.(ii) in case the listed entity changes its option in any subsequent year, it shall furnish comparable figures for the previous year in accordance with the option exercised for the current financial year.](c) The quarterly and year-to-date financial results may be either audited or unaudited subject to the following:
(i) In case the listed entity opts to submit unaudited financial results, they shall be subject to limited review by the statutory auditors of the listed entity and shall be accompanied by the limited review report.
Provided that in case of public sector undertakings this limited review may be undertaken by any practicing Chartered Accountant.
(ii) In case the listed entity opts to submit audited financial results, they shall be accompanied by the audit report.
(d) The listed entity shall submit 70[annual] audited standalone financial results for the financial year, within sixty days from the end of the financial year along with the audit report and 71[
either Form A (for audit report with unmodified opinion) or Form BStatement on Impact of Audit Qualifications (applicable only] for audit report with modified opinion):Provided that if the listed entity has subsidiaries, it shall, while submitting annual audited standalone financial results also submit annual audited consolidated financial results along with the audit report and 72[
either Form A (for audit report with unmodified opinion) or Form BStatement on Impact of Audit Qualifications (applicable only] for audit report with modified opinion) [.:]7374[Provided further that, in case of audit reports with unmodified opinion(s), the listed entity shall furnish a declaration to that effect to the Stock Exchange(s) while publishing the annual audited financial results.]
(e) The listed entity shall also submit the audited 75[or limited reviewed] financial results in respect of the last quarter along-with the results for the entire financial year, with a note stating that the figures of last quarter are the balancing figures between audited figures in respect of the full financial year and the published year-to-date figures upto the third quarter of the current financial year.
(f) The listed entity shall also submit as part of its standalone or consolidated financial results for the half year, by way of a note, a statement of assets and liabilities as at the end of the half-year.
76[(g) The listed entity shall also submit as part of its standalone and consolidated financial results for the half year, by way of a note, statement of cash flows for the half-year.
(h) The listed entity shall ensure that, for the purposes of quarterly consolidated financial results, at least eighty percent of each of the consolidated revenue, assets and profits, respectively, shall have been subject to audit or in case of unaudited results, subjected to limited review.
(i) The listed entity shall disclose, in the results for the last quarter in the financial year, by way of a note, the aggregate effect of material adjustments made in the results of that quarter which pertain to earlier periods.]
(4) The applicable formats of the financial results and 77[
Form A (for audit report with unmodified opinion) & Form B (for audit report with modified opinion)Statement on Impact of Audit Qualifications (for audit report with modified opinion)] shall be in the manner as specified by the Board 78[from time to time].(5) For the purpose of this regulation, any reference to ''quarterly/quarter'' in case of listed entity which has listed their specified securities on SME Exchange shall be respectively read as ''half yearly/half year'' and the requirement of submitting ''year-to-date'' financial results shall not be applicable for a listed entity which has listed their specified securities on SME Exchange.
(6) The 79[
Form BStatement on Impact of Audit Qualifications (for audit report with modified opinion)] and the accompanying annual audit report submitted in terms of clause (d) of sub-regulation (3) shall be reviewed by the stock exchange(s) 80[and Qualified Audit Report Review Committee in manner as specified in Schedule VIII.]81[
(7) The listed entity shall on the direction issued by the Board, carry out the necessary steps, for rectification of modified opinion and/or submission of revised pro-forma financial results, in the manner specified in Schedule VIII.]82[(8) The statutory auditor of a listed entity shall undertake a limited review of the audit of all the entities/ companies whose accounts are to be consolidated with the listed entity as per AS 21 in accordance with guidelines issued by the Board on this matter.]
Annual Report
34. 83[
(1) The listed entity shall submit the annual report to the stock exchange within twenty one working days of it being approved and adopted in the annual general meeting as per the provisions of the Companies Act, 2013.The listed entity shall submit to the stock exchange and publish on its website-
(a) a copy of the annual report sent to the shareholders along with the notice of the annual general meeting not later than the day of commencement of dispatch to its shareholders;
(b) in the event of any changes to the annual report, the revised copy along with the details of and explanation for the changes shall be sent not later than 48 hours after the annual general meeting.]
(2) The annual report shall contain the following:
(a) audited financial statements i.e. balance sheets, profit and loss accounts etc 84[
;and Statement on Impact of Audit Qualifications as stipulated in regulation 33(3)(d), if applicable; ](b) consolidated financial statements audited by its statutory auditors;
(c) cash flow statement presented only under the indirect method as prescribed in Accounting Standard-3 or Indian Accounting Standard 7, as applicable, specified in Section 133 of the Companies Act, 2013 read with relevant rules framed thereunder or as specified by the Institute of Chartered Accountants of India, whichever is applicable;
(d) directors report;
(e) management discussion and analysis report - either as a part of directors report or addition thereto;
(f) for the top 85[
five hundredone thousand] listed entities based on market capitalization (calculated as on March 31 of every financial year), business responsibility report describing the initiatives taken by them from an environmental, social and governance perspective, in the format as specified by the Board from time to time:Provided that listed entities other than top 86[
five hundredone thousand] listed companies based on market capitalization and listed entities which have listed their specified securities on SME Exchange, may include these business responsibility reports on a voluntary basis in the format as specified.(3) The annual report shall contain any other disclosures specified in Companies Act, 2013 along with other requirements as specified in Schedule V of these regulations.
Annual Information Memorandum
35. The listed entity shall submit to the stock exchange(s) an Annual Information Memorandum in the manner specified by the Board from time to time.
Documents & Information to shareholders
36. (1) The listed entity shall send the annual report in the following manner to the shareholders:
(a) Soft copies of full annual report to all those shareholder(s) who have registered their email address(es) 87[
for the purpose]; 88[either with the listed entity or with any depository];(b) Hard copy of statement containing the salient features of all the documents, as prescribed in Section 136 of Companies Act, 2013 or rules made thereunder to those shareholder(s) who have not so registered;
(c) Hard copies of full annual reports to those shareholders, who request for the same.
(2) The listed entity shall send annual report referred to in sub-regulation (1), to the holders of securities, not less than twenty-one days before the annual general meeting.
(3) In case of the appointment of a new director or re-appointment of a director the shareholders must be provided with the following information:
(a) a brief resume of the director;
(b) nature of his expertise in specific functional areas;
(c) disclosure of relationships between directors inter-se;
(d) names of listed entities in which the person also holds the directorship and the membership of Committees of the board; and
(e) shareholding of non-executive directors.
89[(4) The disclosures made by the listed entity with immediate effect from date of notification of these amendments-
(a) to the stock exchanges shall be in XBRL format in accordance with the guidelines specified by the stock exchanges from time to time; and
(b) to the stock exchanges and on its website, shall be in a format that allows users to find relevant information easily through a searching tool:
Provided that the requirement to make disclosures in searchable formats shall not apply in case there is a statutory requirement to make such disclosures in formats which may not be searchable, such as copies of scanned documents.
(5) The notice being sent to shareholders for an annual general meeting, where the statutory auditor(s) is/are proposed to be appointed/re-appointed shall include the following disclosures as a part of the explanatory statement to the notice:
(a) Proposed fees payable to the statutory auditor(s) along with terms of appointment and in case of a new auditor, any material change in the fee payable to such auditor from that paid to the outgoing auditor along with the rationale for such change;
(b) Basis of recommendation for appointment including the details in relation to and credentials of the statutory auditor(s) proposed to be appointed.]
Draft Scheme of Arrangement & Scheme of Arrangement
37. (1) Without prejudice to provisions of regulation 11, the listed entity desirous of undertaking a scheme of arrangement or involved in a scheme of arrangement, shall file the draft scheme of arrangement, proposed to be filed before any Court or Tribunal under sections 391-394 and 101 of the Companies Act, 1956 or under Sections 230-234 and Section 66 of Companies Act, 2013, whichever applicable, 90[along with a non-refundable fee as specified in Schedule XI,] with the stock exchange(s) for obtaining Observation Letter or No-objection letter, before filing such scheme with any Court or Tribunal, in terms of requirements specified by the Board or stock exchange(s) from time to time.
(2) The listed entity shall not file any scheme of arrangement under sections 391-394 and 101 of the Companies Act, 1956 or under Sections 230-234 and Section 66 of Companies Act, 2013, whichever applicable, with any Court or Tribunal unless it has obtained observation letter or No-objection letter from the stock exchange(s).
(3) The listed entity shall place the Observation letter or No-objection letter of the stock exchange(s) before the Court or Tribunal at the time of seeking approval of the scheme of arrangement:
Provided that the validity of the 'Observation Letter' or No-objection letter of stock exchanges shall be six months from the date of issuance, within which the draft scheme of arrangement shall be submitted to the Court or Tribunal.
(4) The listed entity shall ensure compliance with the other requirements as may be prescribed by the Board from time to time.
(5) Upon sanction of the Scheme by the Court or Tribunal, the listed entity shall submit the documents, to the stock exchange(s), as prescribed by the Board and/or stock exchange(s) from time to time.
91[(6) Nothing contained in this regulation shall apply to draft schemes which solely provide for merger of a wholly owned subsidiary with its holding company:
Provided that such draft schemes shall be filed with the stock exchanges for the purpose of disclosures.]
92[(7) The requirements as specified under this regulation and under regulation 94 of these regulations shall not apply to a restructuring proposal approved as part of a resolution plan by the Tribunal under section 31 of the Insolvency Code, subject to the details being disclosed to the recognized stock exchanges within one day of the resolution plan being approved.]
Minimum Public Shareholding
38.The listed entity shall comply with the minimum public shareholding requirements specified in Rule 19(2) and Rule 19A of the Securities Contracts (Regulation) Rules, 1957 in the manner as specified by the Board from time to time:
Provided that provisions of this regulation shall not apply to entities listed on institutional trading platform without making a public issue.
Issuance of Certificates or Receipts/Letters/Advices for securities and dealing with unclaimed securities
39. (1) The listed entity shall comply with Rule 19(3) of Securities Contract (Regulations) Rules, 1957 in respect of Letter/Advices of Allotment, Acceptance or Rights, transfers, subdivision, consolidation, renewal, exchanges, issuance of duplicates thereof or any other purpose.
(2) The listed entity shall issue certificates or receipts or advices, as applicable, of subdivision, split, consolidation, renewal, exchanges, endorsements, issuance of duplicates thereof or issuance of new certificates or receipts or advices, as applicable, in cases of loss or old decrepit or worn out certificates or receipts or advices, as applicable within a period of thirty days from the date of such lodgement.
(3) The listed entity shall submit information regarding loss of share certificates and issue of the duplicate certificates, to the stock exchange within two days of its getting information.
(4) The listed entity shall comply with the procedural requirements specified in Schedule VI while dealing with securities issued pursuant to the public issue or any other issue, physical or otherwise, which remain unclaimed and/or are lying in the escrow account, as applicable.
Transfer or transmission or transposition of securities
40. (1) Save as otherwise specified in provisions of securities laws or Companies Act, 2013 and rules made thereunder, the listed entity shall also comply with the requirements as specified in this regulation for effecting transfer of securities 93[
.:]94[Provided that, except in case of transmission or transposition of securities, requests for effecting transfer of securities shall not be processed unless the securities are held in the dematerialized form with a depository.]
(2) The board of directors of a listed entity may delegate the power of transfer of securities to a committee or to compliance officer or to the registrar to an issue and/or share transfer agent(s):
Provided that the board of directors and/or the delegated authority shall attend to the formalities pertaining to transfer of securities at least once in a fortnight:
Provided further that the delegated authority shall report on transfer of securities to the board of directors in each meeting.
(3) On receipt of proper documentation, the listed entity shall register transfers of its securities in the name of the transferee(s) and issue certificates or receipts or advices, as applicable, of transfers; or issue any valid objection or intimation to the transferee or transferor, as the case may be, within a period of fifteen days from the date of such receipt of request for transfer:
Provided that the listed entity shall ensure that transmission requests are processed for securities held in dematerialized mode and physical mode within seven days and twenty one days respectively, after receipt of the specified documents:
Provided further that proper verifiable dated records of all correspondence with the investor shall be maintained by the listed entity.
(4) The listed entity shall not register transfer when any statutory prohibition or any attachment or prohibitory order of a competent authority restrains it from transferring the securities from the name of the transferor(s).
(5) The listed entity shall not register the transfer of its securities in the name of the transferee(s) when the transferor(s) objects to the transfer:
Provided that the transferor serves on the listed entity, within sixty working days of raising the objection, a prohibitory order of a Court of competent jurisdiction.
(6) The listed entity shall not decline to, register or acknowledge any transfer of shares, on the ground of the transferor(s) being either alone or jointly with any other person or persons indebted to the listed entity on any account whatsoever.
(7) The listed entity shall comply with all procedural requirements as specified in Schedule VII with respect to transfer of securities.
(8) In case the listed entity has not effected transfer of securities within fifteen days or where the listed entity has failed to communicate to the transferee(s) any valid objection to the transfer, within the stipulated time period of fifteen days, the listed entity shall compensate the aggrieved party for the opportunity losses caused during the period of the delay:
Provided that during the intervening period on account of delay in transfer above, the listed entity shall provide all benefits, which have accrued, to the holder of securities in terms of provisions of Section 126 of Companies Act, 2013, and Section 27 of the Securities Contracts (Regulation) Act, 1956:
Provided further that in case of any claim, difference or dispute under this sub-regulation the same shall be referred to and decided by arbitration as provided in the bye-laws and/or regulations of the stock exchange(s).
(9) The listed entity shall ensure that the share transfer agent and/or the in-house share transfer facility, as the case may be, produces a certificate from a practicing company secretary within one month of the end of each half of the financial year, certifying that all certificates have been issued within thirty days of the date of lodgement for transfer, sub-division, consolidation, renewal, exchange or endorsement of calls/allotment monies.
(10) The listed entity shall ensure that certificate mentioned at sub-regulation (9), shall be filed with the stock exchange(s) simultaneously.
(11) In addition to transfer of securities, the provisions of this regulation shall also apply to the following:
(a) deletion of name of the deceased holder(s) of securities, where the securities are held in the name of two or more holders of securities ;
(b) transmission of securities to the legal heir(s), where deceased holder of securities was the sole holder of securities;
(c) transposition of securities, when there is a change in the order of names in which physical securities are held jointly in the names of two or more holders of securities.
Other provisions relating to securities
41. (1) The listed entity shall not exercise a lien on its fully paid shares and that in respect of partly paid shares it shall not exercise any lien except in respect of moneys called or payable at a fixed time in respect of such shares.
(2) The listed entity shall, in case of any amount to be paid in advance of calls on any shares stipulate that such amount may carry interest but shall not in respect thereof confer a right to dividend or to participate in profits.
95[(3)
The listed entity shall not issue shares in any manner which may confer on any person, superior rights as to voting or dividend vis-a-vis the rights on equity shares that are already listed.The listed entity shall not issue shares in any manner that may confer on any person; superior or inferior rights as to dividend vis-à-vis the rights on equity shares that are already listed or inferior voting rights vis-à-vis the rights on equity shares that are already listed:
Provided that, a listed entity having SR equity shares issued to its promoters/ founders, may issue SR equity shares to its SR shareholders only through a bonus, split or rights issue in accordance with the provisions of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 and the Companies Act, 2013.]
(4) The listed entity shall, issue or offer in the first instance all shares (including forfeited shares), securities, rights, privileges and benefits to subscribe pro rata basis , to the equity shareholders of the listed entity, unless the shareholders in the general meeting decide otherwise.
(5) Unless the terms of issue otherwise provide, the listed entity shall not select any of its listed securities for redemption otherwise than on pro-rata basis or by lot.
96[Other provisions relating to outstanding SR equity shares.
41A (1) The SR equity shares shall be treated at par with the ordinary equity shares in every respect, including dividends, except in the case of voting on resolutions.
(2) The total voting rights of SR shareholders (including ordinary shares) in the issuer upon listing, pursuant to an initial public offer, shall not at any point of time exceed seventy four percent.
(3) The SR equity shares shall be treated as ordinary equity shares in terms of voting rights (i.e. one SR share shall only have one vote) in the following circumstances -
i. appointment or removal of independent directors and/or auditor;
ii. where a promoter is willingly transferring control to another entity;
iii. related party transactions in terms of these regulations involving an SR shareholder;
iv. voluntary winding up of the listed entity;
v. changes to the Articles of Association or Memorandum of Association of the listed entity, except any change affecting the SR equity share;
vi. initiation of a voluntary resolution process under the Insolvency Code;
vii. utilization of funds for purposes other than business;
viii. substantial value transaction based on materiality threshold as specified under these regulations;
ix. passing of special resolution in respect of delisting or buy-back of shares; and
x. other circumstances or subject matter as may be specified by the Board, from time to time.
(4) The SR equity shares shall be converted into equity shares having voting rights same as that of ordinary shares on the fifth anniversary of listing of ordinary shares of the listed entity:
Provided that the SR equity shares may be valid for upto an additional five years, after a resolution to that effect has been passed, where the SR shareholders have not been permitted to vote:
Provided further that the SR shareholders may convert their SR equity shares into ordinary equity shares at any time prior to the period as specified in this sub-regulation.
(5) The SR equity shares shall be compulsorily converted into equity shares having voting rights same as that of ordinary shares on the occurrence of any of the following events -
i. demise of the promoter(s) or founder holding such shares;
ii. an SR shareholder resigns from the executive position in the listed entity;
iii. merger or acquisition of the listed entity having SR shareholder/s, where the control would no longer remain with the SR shareholder/s;
iv. the SR equity shares are sold by an SR shareholder who continues to hold such shares after the lock-in period but prior to the lapse of validity of such SR equity shares.]
Record Date or Date of closure of transfer books
42. (1) The listed entity shall intimate the record date 97[
to all the stock exchange(s) where it is listed for the following purposesfor the following events to all the stock exchange(s) where it is listed or where stock derivatives are available on the stock of the listed entity or where listed entity’s stock form part of an index on which derivatives are available:](a) declaration of dividend;
(b) issue of right or bonus shares;
(c) issue of shares for conversion of debentures or any other convertible security;
(d) shares arising out of rights attached to debentures or any other convertible security
(e) 98[
corporate actions like mergers, de-mergers, splits and bonus shares, where stock derivatives are available on the stock of listed entity or wherelisted entity's stocks form part of an index on which derivatives are available;corporate actions like mergers, de-mergers, splits, etc;](f) such other purposes as may be specified by the stock exchange(s).
(2) The listed entity shall give notice in advance of atleast seven working days (excluding the date of intimation and the record date) to stock exchange(s) of record date specifying the purpose of the record date.
99[Provided that in the case of rights issues, the listed entity shall give notice in advance of atleast three working days (excluding the date of intimation and the record date).]
(3) The listed entity 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.
(4) The listed entity shall ensure the time gap of at least thirty days between two record dates.
(5) For securities held in physical form, the listed entity may, announce dates of closure of its transfer books in place of record date for complying with requirements as specified in sub-regulations (1) to (4):
Provided that the listed entity shall ensure that there is a time gap of atleast thirty days between two dates of closure of its transfer books.
Dividends
43. (1) The listed entity shall declare and disclose the dividend on per share basis only.
(2) The listed entity shall not forfeit unclaimed dividends before the claim becomes barred by law and such forfeiture, if effected, shall be annulled in appropriate cases.
100[Dividend Distribution Policy.
43A (1) The top five hundred listed entities based on market capitalization (calculated as on March 31 of every financial year) shall formulate a dividend distribution policy which shall be disclosed in their annual reports and on their websites.
(2) The dividend distribution policy shall include the following parameters:
(a) the circumstances under which the shareholders of the listed entities may or may not expect dividend;
(b) the financial parameters that shall be considered while declaring dividend;
(c) internal and external factors that shall be considered for declaration of dividend;
(d) policy as to how the retained earnings shall be utilized; and
(e) parameters that shall be adopted with regard to various classes of shares:
Provided that if the listed entity proposes to declare dividend on the basis of parameters in addition to clauses (a) to (e) or proposes to change such additional parameters or the dividend distribution policy contained in any of the parameters, it shall disclose such changes along with the rationale for the same in its annual report and on its website.
(3) The listed entities other than top five hundred listed entities based on market capitalization may disclose their dividend distribution policies on a voluntary basis in their annual reports and on their websites.]
101[
Voting by shareholdersMeetings of shareholders and voting].44. (1) The listed entity shall provide the facility of remote e-voting facility to its shareholders, in respect of all shareholders' resolutions.
(2) The e-voting facility to be provided to shareholders in terms of sub-regulation (1), shall be provided in compliance with the conditions specified under the Companies (Management and Administration) Rules, 2014, or amendments made thereto.
(3) The listed entity shall submit to the stock exchange, within forty eight hours of conclusion of its General Meeting, details regarding the voting results in the format specified by the Board.
(4) The listed entity shall send proxy forms to holders of securities in all cases mentioning that a holder may vote either for or against each resolution.
102[(5) The top 100 listed entities by market capitalization, determined as on March 31st of every financial year, shall hold their annual general meetings within a period of five months from the date of closing of the financial year.
(6) The top 100 listed entities shall provide one-way live webcast of the proceedings of the annual general meetings.
Explanation: The top 100 entities shall be determined on the basis of market capitalisation, as at the end of the immediate previous financial year.]
Change in name of the listed entity
45. (1) The listed entity shall be allowed to change its name subject to compliance with the following conditions:
(a) a time period of at least one year has elapsed from the last name change;
(b) at least fifty percent. of the total revenue in the preceding one year period has been accounted for by the new activity suggested by the new name; or
(c) the amount invested in the new activity/project is atleast fifty percent. of the assets of the listed entity:
Provided that if any listed entity has changed its activities which are not reflected in its name, it shall change its name in line with its activities within a period of six months from the change of activities in compliance of provisions as applicable to change of name prescribed under Companies Act, 2013.
Explanation- For the purpose of this regulation, -
(i) 'assets' of the listed entity means the sum of fixed assets, advances, works in Progress / Inventories, investments, trade receivables, cash & cash equivalents;
(ii) 'advances' shall include only those amounts extended to contractors and suppliers towards execution of project, specific to new activity as reflected in the new name.
(2) On satisfaction of conditions at sub-regulation (1), the listed entity shall file an application for name availability with Registrar of Companies.
(3) On receipt of confirmation regarding name availability from Registrar of Companies, before filing the request for change of name with the Registrar of Companies in terms of provisions laid down in Companies Act, 2013 and rules made thereunder, the listed entity shall seek approval from Stock Exchange by submitting a certificate from chartered accountant stating compliance with conditions at sub-regulation (1).
Website
46. (1) The listed entity shall maintain a functional website containing the basic information about the listed entity.
(2) The listed entity shall disseminate the following information 103[
on its websiteunder a separate section on its website]:(a)details of its business;
(b)terms and conditions of appointment of independent directors;
(c)composition of various committees of board of directors;
(d)code of conduct of board of directors and senior management personnel;
(e)details of establishment of vigil mechanism/ Whistle Blower policy;
(f) criteria of making payments to non-executive directors , if the same has not been disclosed in annual report;
(g)policy on dealing with related party transactions;
(h)policy for determining 'material' subsidiaries;
(i) details of familiarization programmes imparted to independent directors including the following details:-
(i) number of programmes attended by independent directors (during the year and on a cumulative basis till date),
(ii)number of hours spent by independent directors in such programmes (during the year and on cumulative basis till date), and
(iii) other relevant details
(j) the email address for grievance redressal and other relevant details;
(k) contact information of the designated officials of the listed entity who are responsible for assisting and handling investor grievances;
(l) financial information including:
(i) notice of meeting of the board of directors where financial results shall be discussed;
(ii)financial results, on conclusion of the meeting of the board of directors where the financial results were approved;
(iii) complete copy of the annual report including balance sheet, profit and loss account, directors report, corporate governance report etc;
(m) shareholding pattern;
(n) details of agreements entered into with the media companies and/or their associates, etc;
(o) schedule of analyst or institutional investor meet and presentations made by the listed entity to analysts or institutional investors simultaneously with submission to stock exchange;
(p) new name and the old name of the listed entity for a continuous period of one year, from the date of the last name change;
(q) items in sub-regulation (1) of regulation 47 .
104[(r) With effect from October 1, 2018, all credit ratings obtained by the entity for all its outstanding instruments, updated immediately as and when there is any revision in any of the ratings.
(s) separate audited financial statements of each subsidiary of the listed entity in respect of a relevant financial year, uploaded at least 21 days prior to the date of the annual general meeting which has been called to inter alia consider accounts of that financial year.]
(3) (a) The listed entity shall ensure that the contents of the website are correct.
(b) The listed entity shall update any change in the content of its website within two working days from the date of such change in content.
Advertisements in Newspapers
47. (1) The listed entity shall publish the following information in the newspaper:
(a)notice of meeting of the board of directors where financial results shall be discussed.
(b) financial results, as specified in regulation 33, along-with the modified opinion(s) or reservation(s), if any, expressed by the auditor
Provided that if the listed entity has submitted both standalone and consolidated financial results, the listed entity shall publish consolidated financial results along-with (1) Turnover, (2) Profit before tax and (3) Profit after tax, on a stand-alone basis, as a foot note; and a reference to the places, such as the website of listed entity and stock exchange(s), where the standalone results of the listed entity are available.
(c)statements of deviation(s) or variation(s) as specified in sub-regulation (1) of regulation 32 on quarterly basis, after review by audit committee and its explanation in directors report in annual report;
(d) notices given to shareholders by advertisement.
(2) The listed entity shall give a reference in the newspaper publication, in sub-regulation (1), to link of the website of listed entity and stock exchange(s), where further details are available.
(3) The listed entity shall publish the information specified in sub-regulation (1) in the newspaper simultaneously with the submission of the same to the stock exchange(s).
Provided that financial results at clause (b) of sub-regulation (1), shall be published within 48 hours of conclusion of the meeting of board of directors at which the financial results were approved.
(4) The information at sub-regulation (1) shall be published in at least one English language national daily newspaper circulating in the whole or substantially the whole of India and in one daily newspaper published in the language of the region, where the registered office of the listed entity is situated:
Provided that the requirements of this regulation shall not be applicable in case of listed entities which have listed their specified securities on SME Exchange.
Accounting Standards
48. The listed entity shall comply with all the applicable and notified Accounting Standards from time to time.
Amendments
13, 15, 29, 31, 36, 41, 44, 46, 76, 102. Inserted ibid.
19 Inserted ibid w.e.f. 1.04.2019
48 Inserted by SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2019
53 Inserted ibid, w.e.f the half-year ending March 31, 2019.
60 Inserted ibid w.e.f. 1.4.2019 or the date specified in the provisions.
68 Substituted ibid
83 Substituted ibid, and applicable for Annual report filed for the year ended March 31, 2019, and thereafter.
88 Inserted ibid, applicable for Annual report filed for the year ended March 31, 2019 and thereafter.
- Chapter V- Obligations Of Listed Entity Which Has Listed Its Non-Convertible Debt Securities Or Non-Convertible Redeemable Preference Shares Or Both
OBLIGATIONS OF LISTED ENTITY WHICH HAS LISTED ITS NON-CONVERTIBLE DEBT SECURITIES OR NON-CONVERTIBLE REDEEMABLE PREFERENCE SHARES OR BOTH
Applicability
49. (1) The provisions of this chapter shall apply only to a listed entity which has listed its 'Non-convertible Debt Securities' and/or 'Non-Convertible Redeemable Preference Shares' on a recognised stock exchange in accordance with Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008 or Securities and Exchange Board of India (Issue and Listing of Non-Convertible Redeemable Preference Shares) Regulations, 2013 respectively.
(2) The provisions of this chapter shall also be applicable to ''perpetual debt instrument'' and "perpetual non-cumulative preference share'' listed by banks.
Explanation (1).- For the purpose of this chapter, ''Bank" means any bank included in the Second Schedule to the Reserve Bank of India Act, 1934.
Explanation (2).- For the purpose of this chapter, if the listed entity has listed its non-convertible redeemable preference shares:
(i) The reference to ''interest'' may also read as dividend;
(ii) The provisions concerning debenture trustees and security creation (or asset cover or charge on assets) shall not be applicable for ''non-convertible redeemable preference shares''
Intimation to stock exchange(s)
50. (1) The listed entity shall give prior intimation to the stock exchange(s) at least eleven working days before the date on and from which the interest on debentures and bonds, and redemption amount of redeemable shares or of debentures and bonds shall be payable.
(2) The listed entity shall intimate the stock exchange(s), its intention to raise funds through new non-convertible debt securities or non-convertible redeemable preference shares it proposes to list either through a public issue or on private placement basis, prior to issuance of such securities:
Provided that the above intimation may be given prior to the meeting of board of directors wherein the proposal to raise funds through new non convertible debt securities or non-convertible redeemable preference shares shall be considered.
(3) The listed entity shall intimate to the stock exchange(s), at least two working days in advance, excluding the date of the intimation and date of the meeting, regarding the meeting of its board of directors, at which the recommendation or declaration of issue of non convertible debt securities or any other matter affecting the rights or interests of holders of non convertible debt securities or non convertible redeemable preference shares is proposed to be considered.
Disclosure of information having bearing on performance/operation of listed entity and/or price sensitive information.
51. (1) The listed entity shall promptly inform the stock exchange(s) of all information having bearing on the performance/operation of the listed entity, price sensitive information or any action that shall affect payment of interest or dividend of non-convertible preference shares or redemption of non convertible debt securities or redeemable preference shares.
Explanation.- The expression ''promptly inform'', shall imply that the stock exchange must be informed as soon as practically possible and without any delay and that the information shall be given first to the stock exchange(s) before providing the same to any third party.
(2) Without prejudice to the generality of sub-regulation(1), the listed entity who has issued or is issuing non convertible debt securities and/or non-convertible redeemable preference shares shall make disclosures as specified in Part B of Schedule III.
Financial Results
52. (1)The listed entity shall prepare and submit un-audited or audited financial results on a half yearly basis in the format as specified by the Board within forty five days from the end of the half year to the recognised stock exchange(s).
105[Provided that in case of entities which have listed their equity shares and debt securities, a copy of the financial results submitted to stock exchanges shall be provided to Debenture Trustees on the same day the information is submitted to stock exchanges.]
(2) The listed entity shall comply with following requirements with respect to preparation, approval, authentication and publication of annual and half-yearly financial results:
(a) Un-audited financial results shall be accompanied by limited review report prepared by the statutory auditors of the listed entity or in case of public sector undertakings, by any practising Chartered Accountant, in the format as specified by the Board:
Provided that if the listed entity intimates in advance to the stock exchange(s) that it shall submit to the stock exchange(s) its annual audited results within sixty days from the end of the financial year, un-audited financial results for the last half year accompanied by limited review report by the auditors need not be submitted to stock exchange(s).
(b) Half-yearly results shall be taken on record by the board of directors and signed by the managing director / executive director.
(c) The audited results for the year shall be submitted to the recognized stock exchange(s) in the same format as is applicable for half-yearly financial results.
(d) If the listed entity opts to submit un-audited financial results for the last half year accompanied by limited review report by the auditors, it shall also submit audited financial results for the entire financial year, as soon as they are approved by the board of directors.
(e) Modified opinion(s) in audit reports that have a bearing on the interest payment/ dividend payment pertaining to non-convertible redeemable debentures/ redemption or principal repayment capacity of the listed entity shall be appropriately and adequately addressed by the board of directors while publishing the accounts for the said period.
(3) (a) The annual audited financial results shall be submitted along with the annual audit report and 106[
either Form A for audit report with unmodified opinion, or Form BStatement on Impact of Audit Qualifications (applicable only] for audit report with modified opinion [)]107 [.;]108109[Provided that, in case of audit reports with unmodified opinion, the listed entity shall furnish a declaration to that effect to the Stock Exchange(s) while publishing the annual audited financial results.]
(b) The 110[
Form BStatement on Impact of Audit Qualifications (for audit report with modified opinion] and the accompanying annual audit report submitted in terms of clause (a) shall be reviewed by the stock exchange(s) 111[and the Qualified Audit Report Review Committee in the manner specified in Schedule VIII]112[
(c)The listed entity shall on the direction issued by the Board, carry out the necessary steps, for rectification of modified opinion and/or submission of revised pro-forma financial results, in the manner specified in Schedule VIII.](d) The applicable 113[
formatsformat] of 114[Form A and Form BStatement on Impact of Audit Qualifications (for audit report with modified opinion)] shall be 115[in the manner as] specified by the Board 116[from time to time](4) The listed entity, while submitting half yearly / annual financial results, shall disclose the following line items along with the financial results:
(a) credit rating and change in credit rating (if any);
(b) asset cover available, in case of non convertible debt securities;
(c) debt-equity ratio;
(d) previous due date for the payment of interest/ dividend for non-convertible redeemable preference shares/ repayment of principal of non-convertible preference shares /non convertible debt securities and whether the same has been paid or not; and,
(e) next due date for the payment of interest/ dividend of non-convertible preference shares /principal along with the amount of interest/ dividend of non-convertible preference shares payable and the redemption amount;
(f) debt service coverage ratio;
(g) interest service coverage ratio;
(h) outstanding redeemable preference shares (quantity and value);
(i) capital redemption reserve/debenture redemption reserve;
(j) net worth;
(k) net profit after tax;
(l) earnings per share:
Provided that the requirement of disclosures of debt service coverage ratio, asset cover and interest service coverage ratio shall not be applicable for banks or non banking financial companies registered with the Reserve Bank of India.
Provided further that the requirement of this sub- regulation shall not be applicable in case of unsecured debt instruments issued by regulated financial sector entities eligible for meeting capital requirements as specified by respective regulators.
117[(5)
While submitting the information required under sub- regulation (4), the listed entity shall submit to stock exchange(s), a certificate signed by debenture trustee that it has taken note of the contents.The listed entity shall, within seven working days from the date of submission of the information required under sub- regulation (4), submit to stock exchange(s), a certificate signed by debenture trustee that it has taken note of the contents.]
(6) The listed entity which has listed its non convertible redeemable preference shares shall make the following additional disclosures as notes to financials:
(a) profit for the half year and cumulative profit for the year;
(b) free reserve as on the end of half year;
(c) securities premium account balance (if redemption of redeemable preference share is to be done at a premium, such premium may be appropriated from securities premium account):
Provided that disclosure on securities premium account balance may be provided only in the year in which non convertible redeemable preference shares are due for redemption;
(d) track record of dividend payment on non convertible redeemable preference shares:
Provided that in case the dividend has been deferred at any time, then the actual date of payment shall be disclosed;
(e) breach of any covenants under the terms of the non convertible redeemable preference shares:
Provided that in case a listed entity is planning a fresh issuance of shares whose end use is servicing of the non convertible redeemable preference shares (whether dividend or principle redemption), then the same shall be disclosed whenever the listed entity decided on such issuances.
(7) The listed entity shall submit to the stock exchange on a half yearly basis along with the half yearly financial results, a statement indicating material deviations, if any, in the use of proceeds of issue of non convertible debt securities and non-convertible redeemable preference shares from the objects stated in the offer document.
(8) The listed entity shall, within two calendar days of the conclusion of the meeting of the board of directors, publish the financial results and statement referred to in sub-regulation (4), in at least one English national daily newspaper circulating in the whole or substantially the whole of India.
Annual Report
53. The annual report of the listed entity shall contain disclosures as specified in Companies Act, 2013 along with the following:
(a) audited financial statements i.e. balance sheets, profit and loss accounts etc. 118[
;and Statement on Impact of Audit Qualifications as stipulated in regulation 52(3)(a), if applicable;](b) cash flow statement presented only under the indirect method as prescribed in Accounting Standard-3/ Indian Accounting Standard 7, mandated under Section 133 of the Companies Act, 2013 read with relevant rules framed thereunder or by the Institute of Chartered Accountants of India, whichever is applicable;
(c) auditors report;
(d) directors report;
(e) name of the debenture trustees with full contact details ;
(f) related party disclosures as specified in Para A of Schedule V.
Asset Cover
54. 119[(1)
In respect of its listed non-convertible debt securities, the listed entity shall maintain hundred per cent. asset cover sufficient to discharge the principal amount at all times for the non-convertible debt securities issued.In respect of its listed non-convertible debt securities, the listed entity shall maintain hundred per cent. asset cover or asset cover as per the terms of offer document/Information Memorandum and/or Debenture Trust Deed, sufficient to discharge the principal amount at all times for the non-convertible debt securities issued.]
(2) The listed entity shall disclose to the stock exchange in quarterly, half-yearly, year-to-date and annual financial statements, as applicable, the extent and nature of security created and maintained with respect to its secured listed non-convertible debt securities.
120[
(3) The requirement specified in sub-regulation (1), shall not be applicable in case of unsecured debt securities issued by regulated financial sector entities eligible for meeting capital requirements as specified by respective regulators.]Credit Rating
55. Each rating obtained by the listed entity with respect to non-convertible debt securities shall be reviewed at least once a year by a credit rating agency registered by the Board.
Documents and Intimation to Debenture Trustees
56. (1) The listed entity shall forward the following to the debenture trustee promptly:
(a) a copy of the annual report at the same time as it is issued along with a copy of certificate from the listed entity's auditors in respect of utilisation of funds during the implementation period of the project for which the funds have been raised:
Provided that in the case of debentures or preference shares issued for financing working capital or general corporate purposes or for capital raising purposes the copy of the auditor's certificate may be submitted at the end of each financial year till the funds have been fully utilised or the purpose for which these funds were intended has been achieved.
(b) a copy of all notices, resolutions and circulars relating to-
(i) new issue of non convertible debt securities at the same time as they are sent to shareholders/ holders of non convertible debt securities;
(ii) the meetings of holders of non-convertible debt securities at the same time as they are sent to the holders of non convertible debt securities or advertised in the media including those relating to proceedings of the meetings;
(c) intimations regarding :
(i) any revision in the rating;
(ii) any default in timely payment of interest or redemption or both in respect of the non convertible debt securities;
(iii) failure to create charge on the assets;
121[(iv) all covenants of the issue (including side letters, accelerated payment clause, etc.)]
122[(d)
a half-yearly certificate regarding maintenance of hundred percent. asset cover in respect of listed non convertible debt securities, by either a practicing company secretary or a practicing chartered accountant, along with the half yearly financial results:Provided that submission of such half yearly certificates is not applicable in cases where a listed entity is a bank or non banking financial companies registered with Reserve Bank of India or where bonds are secured by a Government guarantee.a half-yearly certificate regarding maintenance of hundred percent asset cover or asset cover as per the terms of offer document/ Information Memorandum and/or Debenture Trust Deed, including compliance with all the covenants, in respect of listed non-convertible debt securities, by the statutory auditor, along with the half-yearly financial results:
Provided that the submission of half yearly certificate is not applicable where bonds are secured by a Government guarantee.]
(2) The listed entity shall forward to the debenture trustee any such information sought and provide access to relevant books of accounts as required by the debenture trustee.
(3) The listed entity may, subject to the consent of the debenture trustee, send the information stipulated in sub-regulation (1), in electronic form/fax.
Other submissions to stock exchange(s)
57. (1) The listed entity shall submit a certificate to the stock exchange within two days of the interest or principal or both becoming due that it has made timely payment of interests or principal obligations or both in respect of the non convertible debt securities.
(2) The listed entity shall provide an undertaking to the stock exchange(s) on annual basis stating that all documents and intimations required to be submitted to Debenture Trustees in terms of Trust Deed and Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008 have been complied with.
(3) The listed entity shall forward to the stock exchange any other information in the manner and format as specified by the Board from time to time.
Documents and information to holders of non - convertible debt securities and non-convertible preference shares
58. (1) The listed entity shall send the following documents:
(a) Soft copies of full annual reports to all the holders of non convertible preference share who have registered their email address(es) for the purpose;
(b) Hard copy of statement containing the salient features of all the documents, as specified in Section 136 of Companies Act, 2013 and rules made thereunder to those holders of non convertible preference share who have not so registered;
(c) Hard copies of full annual reports to those holders of non convertible debt securities and non convertible preference share, who request for the same.
(d) Half yearly communication as specified in sub-regulation (4) and (5) of regulation 52, to holders of non convertible debt securities and non convertible preference shares;
(2) The listed entity shall send the notice of all meetings of holders of non convertible debt securities and holders of non-convertible redeemable preference shares specifically stating that the provisions for appointment of proxy as mentioned in Section 105 of the Companies Act, 2013, shall be applicable for such meeting.
(3) The listed entity shall send proxy forms to holders of non convertible debt securities and non-convertible redeemable preference shares which shall be worded in such a manner that holders of these securities may vote either for or against each resolution.
Structure of non convertible debt securities and non convertible redeemable preference shares
59. (1) The listed entity shall not make material modification without prior approval of the stock exchange(s) where the non convertible debt securities or non-convertible redeemable preference shares, as applicable, are listed, to :
(a)the structure of the debenture in terms of coupon, conversion, redemption, or otherwise.
(b)the structure of the non-convertible redeemable preference shares in terms of dividend of non-convertible preference shares payable, conversion, redemption, or otherwise.
(2) The approval of the stock exchange referred to in sub-regulation (1) shall be made only after:
(a)approval of the board of directors and the debenture trustee in case of non-convertible debt securities and
(b) after complying with the provisions of Companies Act, 2013 including approval of the consent of requisite majority of holders of that class of securities.
Record Date
60. (1) The listed entity shall fix a record date for purposes of payment of interest, dividend and payment of redemption or repayment amount or for such other purposes as specified by the stock exchange.
(2) The listed entity shall give notice in advance of at least seven working days (excluding the date of intimation and the record date) to the recognised stock exchange(s) of the record date or of as many days as the stock exchange(s) may agree to or require specifying the purpose of the record date.
Terms of non convertible debt securities and non convertible redeemable preference shares
61. (1) The listed entity shall ensure timely payment of interest or dividend of non-convertible redeemable preference shares or redemption payment:
Provided that the listed entity shall not declare or distribute any dividend wherein it has defaulted in payment of interest on debt securities or redemption thereof or in creation of security as per the terms of the issue of debt securities:
Provided further that this requirement shall not be applicable in case of unsecured debt securities issued by regulated financial sector entities eligible for meeting capital requirements as specified by respective regulators.
(2) The listed entity shall not forfeit unclaimed interest/dividend and such unclaimed interest/dividend shall be transferred to the 'Investor Education and Protection Fund' set up as per Section 125 of the Companies Act, 2013.
(3) Unless the terms of issue provide otherwise, the listed entity shall not select any of its listed securities for redemption otherwise than pro rata basis or by lot.
(4) The listed entity shall comply with requirements as specified in regulation 40 for transfer of securities including procedural requirements specified in Schedule VII.
Website
62. (1) The listed entity shall maintain a functional website containing the following information about the listed entity:-
(a) details of its business;
(b) financial information including complete copy of the annual report including balance sheet, profit and loss account, directors report etc;
(c) contact information of the designated officials of the listed entity who are responsible for assisting and handling investor grievances;
(d) email address for grievance redressal and other relevant details;
(e) name of the debenture trustees with full contact details;
(f) the information, report, notices, call letters, circulars, proceedings, etc concerning non-convertible redeemable preference shares or non convertible debt securities;
(g) all information and reports including compliance reports filed by the listed entity;
(h) information with respect to the following events:
(i) default by issuer to pay interest on or redemption amount;
(ii) failure to create a charge on the assets;
(iii) revision of rating assigned to the non convertible debt securities:
(2) The listed entity may also issue a press release with respect to the events specified in sub-regulation (1).
(3) The listed entity shall ensure that the contents of the website are correct and updated at any given point of time.
Amendments
- Chapter VI-Obligations Of Listed Entity Which Has Listed Its Specified Securities And Either Non-Convertible Debt Securities Or Non-Convertble Redeemable Preference Shares or both
OBLIGATIONS OF LISTED ENTITY WHICH HAS LISTED ITS SPECIFIED SECURITIES AND EITHER NON-CONVERTIBLE DEBT SECURITIES OR NON-CONVERTIBLE REDEEMABLE PREFERENCE SHARES OR BOTH
Applicability of Chapters IV and V
63. (1) Entity which has listed its 'specified securities' and 'non-convertible debt securities' or 'non-convertible redeemable preference shares' or both on any recognised stock exchange, shall be bound by the provisions in Chapter IV of these regulations.
(2) The listed entity described in sub-regulation (1) shall additionally comply with the following regulations in Chapter V:
(a) regulation 50(2),(3);
(b) regulation 51;
(c) regulation 52(3), (4), (5) and (6);
(d) regulation 53
(e) regulation 54
(f) regulation 55
(g) regulation 56
(h) regulation 57
(i) regulation 58
(j) regulation 59
(k) regulation 60
(l) regulation 61:
Provided that the listed entity which has submitted any information to the stock exchange in compliance with the disclosure requirements under Chapter IV of these regulations, need not re-submit any such information under the provisions of this regulations without prejudice to any power conferred on the Board or the stock exchange or any other authority under any law to seek any such information from the listed entity:
Provided further that the listed entity, which has satisfied certain obligations in compliance with other chapters, shall not separately satisfy the same conditions under this chapter.
Delisting.
64. (1) In the event specified securities of the listed entity are delisted from the stock exchange, the listed entity shall comply with all the provisions in Chapter V of these regulations.
(2) In the event that non-convertible debt securities and non-convertible redeemable preference shares' of the listed entity do not remain listed on the stock exchange, the listed entity shall comply with all the provisions in Chapter IV of these regulations.
- Chapter VII-Obligations Of Listed Entity Which Has Listed Its Indian Depository Receipts
OBLIGATIONS OF LISTED ENTITY WHICH HAS LISTED ITS INDIAN DEPOSITORY RECEIPTS
Applicability
65. The provisions of this chapter shall apply to listed entity whose securities market regulators are signatories to the Multilateral Memorandum of Understanding of International Organization of Securities Commission issuing 'Indian Depository Receipts' as defined under Rule 13 of the Companies (Registration of Foreign Companies) Rules, 2014.
Definitions
66. For the purpose of this chapter , unless the context otherwise requires -
(a) ''IDR Holder(s)'' shall mean holder(s) of Indian Depository Receipts.
(b) ''Depository Agreement'' shall mean an agreement between the listed entity and the domestic depository.
(c) ''Home Country'' or ''country of origin'' shall mean the country or parent country where the listed entity is incorporated and listed.
(d) ''Security holder'' shall mean holder of the security or equity shares of the listed entity in the home country.
General Obligations of listed entity
67. (1) All correspondences filed with the stock exchange(s) and those sent to the IDR Holders shall be in English.
(2) The listed entity shall comply, at all times, with the rules/regulations/laws of the country of origin.
(3) The listed entity shall undertake that the competent Courts, Tribunals and regulatory authorities in India shall have jurisdiction in the event of any dispute, either with the stock exchange or any investor, concerning the India Depository Receipts offered or subscribed or bought in India.
(4) The listed entity shall forward, on a continuous basis, any information requested by the stock exchange, in the interest of investors from time to time.
(5) In case of any claim, difference or dispute under the provisions of this chapter and other provisions of these regulations applicable to the listed entity, the same shall be referred to and decided by arbitration as provided in the bye-laws and regulations of the stock exchange(s).
Disclosure of material events or information
68. (1) The listed entity shall promptly inform to the stock exchange(s) of all events which are material, all information which is price sensitive and/or have bearing on performance/operation of the listed entity.
(2) Without prejudice to the generality of sub-regulation (1), the listed entity shall make the disclosures as specified in Part C of Schedule III.
Indian Depository Receipt holding pattern & Shareholding details
69. (1) The listed entity shall file with the stock exchange the Indian Depository Receipt holding pattern on a quarterly basis within fifteen days of end of the quarter in the format specified by the Board.
(2) The listed entity shall file the following details with the stock exchange as is required to be filed in compliance with the disclosure requirements of the listing authority or stock exchange in its home country or any other jurisdiction where the securities of the listed entity are listed:
(a) Shareholding Pattern;
(b) Pre and post arrangement share holding pattern and Capital Structure in case of any corporate restructuring like mergers / amalgamations.
Periodical Financial Results
70. (1) The listed entity shall file periodical financial results with the stock exchange in such manner and within such time and to the extent that it is required to file as per the listing requirements of the home country.
(2) The listed entity shall comply with the requirements with respect to preparation and disclosures in financial results as specified in Part B of Schedule IV.
Annual Report
71. (1) The listed entity shall submit to stock exchange an annual report at the same time as it is disclosed to the security holder in its home country or in other jurisdictions where such securities are listed.
(2) The annual report shall contain the following:
(a) Report of board of directors;
(b) Balance Sheet;
(c) Profit and Loss Account;
(d) Auditors Report;
(e) All periodical and special reports( if applicable);
(f) Any such other report which is required to be sent to security holders annually.
(3) The listed entity shall comply with the requirements with respect to preparation and disclosures in financial results in annual report as specified in Part B of Schedule IV.
Corporate Governance
72. (1) The listed entity shall comply with the corporate governance provisions as applicable in its home country and other jurisdictions in which its equity shares are listed.
(2)The listed entity shall submit to stock exchange a comparative analysis of the corporate governance provisions that are applicable in its home country and in the other jurisdictions in which its equity shares are listed along with the compliance of the same vis-a-vis the corporate governance requirements applicable under regulation 17 to regulation 27, to other listed entities.
Documents and Information to IDR Holder
73. The listed entity shall disclose/send the following documents to IDR Holders, at the same time and to the extent that it discloses to security holders in its home country or in other jurisdictions where its securities are listed:
(a) Soft copies of the annual report to all the IDR holders who have registered their email address(es) for the purpose.
(b) Hard copy of the annual report to those IDR holders who request for the same either through domestic depository or Compliance Officer.
(c) the pre and post arrangement capital structure and share holding pattern in case of any corporate restructuring like mergers / amalgamations and other schemes.
Equitable Treatment to IDR Holders
74. (1)If the listed entity's equity shares or other securities representing equity shares are also listed on the stock exchange(s) in countries other than its home country, it shall ensure that IDR Holders are treated in a manner equitable with security holders in home country.
(2) The listed entity shall ensure that for all corporate actions, except those which are not permitted by Indian laws, it shall treat IDR holders in a manner equitable with security holders in the home country.
(3) In case of take-over or delisting or buy-back of its equity shares, the listed entity shall, while following the laws applicable in its home country, give equitable treatment to IDR holders vis-a-vis security holder in home country.
(4) The listed entity shall ensure protection of interests of IDR holders particularly with respect to all corporate benefits permissible under Indian laws and the laws of its home country and shall address all investor grievances adequately.
Advertisements in Newspaper
75. (1)The listed entity shall publish the following information in the newspaper :
(a)periodical financial results required to be disclosed;
(b)Notices given to its IDR Holders by advertisement;
(2) The information specified in sub-regulation (1) shall be issued in at one English national daily newspaper circulating in the whole or substantially the whole of India and in one Hindi national daily newspaper in India.
Terms of Indian Depository Receipts
76. (1) The listed entity shall pay the dividend as per the timeframe applicable in its home country or other jurisdictions where its securities are listed, whichever is earlier, so as to reach the IDR Holders on or before the date fixed for payment of dividend to holders of its equity share or other securities.
(2) The listed entity shall not forfeit unclaimed dividends before the claim becomes barred by law in the home country of the listed entity, as may be applicable, and that such forfeiture, when effected, shall be annulled in appropriate cases.
(3) The Indian Depository Receipts shall have two-way fungibility in the manner specified by the Board from time to time.
Structure of Indian Depository Receipts
77. (1) The listed entity shall ensure that the underlying shares of IDRs shall rank pari-passu with the existing shares of the same class and the fact of having different classes of shares based on different criteria, if any, shall be disclosed by the listed entity in the annual report.
(2) The listed entity shall not exercise a lien on the fully paid underlying shares, against which the IDRs are issued, and that in respect of partly paid underlying shares, against which the IDRs are issued and shall also not exercise any lien except in respect of moneys called or payable at a fixed time in respect of such underlying shares.
(3) The listed entity, subject to the requirements under the laws and regulations of its home country, if any amount be paid up in advance of calls on any underlying shares against which the IDRs are issued, shall stipulate that such amount may carry interest but shall not in respect thereof confer a right to dividend or to participate in profits.
Record Date
78. (1) The listed entity, where it is required so to do in its home country or other jurisdictions where its securities may be listed, shall fix the record date for the purpose of payment of dividends or distribution of any other corporate benefits to IDR Holders.
(2) The listed entity shall give notice in advance of at least four working days to the recognised stock exchange(s) of record date specifying the purpose of the record date.
Voting
79. (1) The listed entity shall, either directly or through an agent, send out proxy forms to IDR Holders in all cases mentioning that a security holder may vote either for or against each resolution.
(2) Voting rights of the IDR Holders shall be exercised in accordance with the depository agreement.
Delisting of Indian Depository Receipt
80. (1) The listed entity shall, if it decides to delist Indian Depository Receipts, give fair and reasonable treatment to IDR holders.
(2) The listed entity shall comply with such norms and conditions for delisting Indian Depository Receipts as specified by the Board or stock exchange in this regard.
(3) The listed entity shall, in case underlying equity shares are delisted, shall delist and cancel the Indian Depository Receipts.
- Chapter VIII-Obligations Of Listed Entity Which Has Listed Its Securitised Debt Instruments
OBLIGATIONS OF LISTED ENTITY WHICH HAS LISTED ITS SECURITISED DEBT INSTRUMENTS
Applicability
81. (1) The provisions of this chapter shall apply to Special Purpose Distinct Entity issuing securitised debt instruments and trustees of Special Purpose Distinct Entity shall ensure compliance with each of the provisions of these regulations.
(2) The expressions "asset pool", "clean up call option", "credit enhancement", "debt or receivables", "investor", "liquidity provider", "obligor", "originator", "regulated activity", "scheme", "securitization", "securitized debt instrument", "servicer", "special purpose distinct entity", "sponsor" and "trustee" shall have the same meaning as assigned to them under 123[
Securities and Exchange Board of India (Public Offer and Listing of Securitised Debt Instruments) Regulations, 2008; Securities and Exchange Board of India (Issue and Listing of Securitised Debt Instruments and Security Receipts) Regulations, 2008];Intimation and filings with stock exchange(s)
82. (1) The listed entity shall intimate the Stock exchange, of its intention to issue new securitized debt instruments either through a public issue or on private placement basis (if it proposes to list such privately placed debt securities on the Stock exchange) prior to issuing such securities.
(2) The listed entity shall intimate to the stock exchange(s), at least two working days in advance, excluding the date of the intimation and date of the meeting, regarding the meeting of its board of trustees, at which the recommendation or declaration of issue of securitized debt instruments or any other matter affecting the rights or interests of holders of securitized debt instruments is proposed to be considered.
(3) The listed entity shall submit such statements, reports or information including financial information pertaining to Schemes to stock exchange within seven days from the end of the month/ actual payment date, either by itself or through the servicer, on a monthly basis in the format as specified by the Board from time to time:
Provided that where periodicity of the receivables is not monthly, reporting shall be made for the relevant periods.
(4) The listed entity shall provide the stock exchange, either by itself or through the servicer, loan level information, without disclosing particulars of individual borrowers, in manner specified by stock exchange.
Disclosure of information having bearing on performance/operation of listed entity and/or price sensitive information
83. (1) The listed entity shall promptly inform the stock exchange(s) of all information having bearing on the on performance/operation of the listed entity and price-sensitive information.
(2) Without prejudice to the generality of sub-regulation(1), the listed entity shall make the disclosures specified in Part D of Schedule III.
Explanation.- The expression 'promptly inform', shall imply that the stock exchange must be informed must as soon as practically possible and without any delay and that the information shall be given first to the stock exchange(s) before providing the same to any third party.
Credit Rating
84. (1) Every rating obtained by the listed entity with respect to securitised debt instruments shall be periodically reviewed, preferably once a year, by a credit rating agency registered by the Board.
(2) Any revision in rating(s) shall be disseminated by the stock exchange(s).
Information to Investors
85. (1) The listed entity shall provide either by itself or through the servicer, loan level information without disclosing particulars of individual borrower to its investors.
(2) The listed entity shall provide information regarding revision in rating as a result of credit rating done periodically in terms of regulation 84 above to its investors.
(3) The information at sub-regulation (1) and (2) may be sent to investors in electronic form/fax if so consented by the investors
(4) The listed entity shall display the email address of the grievance redressal division and other relevant details prominently on its website and in the various materials/pamphlets/ advertisement campaigns initiated by it for creating investor awareness.
Terms of Securitized Debt Instruments
86. (1) The listed entity shall ensure that no material modification shall be made to the structure of the securitized debt instruments in terms of coupon, conversion, redemption, or otherwise without prior approval of the recognized stock exchange(s) where the securitized debt instruments are listed and the listed entity shall make an application to the recognised stock exchange(s) only after the approval by Trustees.
(2) The listed entity shall ensure timely interest/ redemption payment.
(3) The listed entity shall ensure that where credit enhancement has been provided for, it shall make credit enhancement available for listed securitized debt instruments at all times.
(4) The listed entity shall not forfeit unclaimed interest and principal and such unclaimed interest and principal shall be, after a period of seven years, transferred to the Investor Protection and Education Fund established under the Securities and Exchange Board of India (Investor Protection and Education Fund) Regulations, 2009.
(5) Unless the terms of issue provide otherwise, the listed entity shall not select any of its listed securitized debt instruments for redemption otherwise than on pro rata basis or by lot and shall promptly submit to the recognised stock exchange(s) the details thereof.
(6) The listed entity shall remain listed till the maturity or redemption of securitized debt instruments or till the same are delisted as per the procedure laid down by the Board.
Provided that the provisions of this sub-regulation shall not restrict the right of the recognised stock exchange(s) to delist, suspend or remove the securities at any time and for any reason which the recognised stock exchange(s) considers proper in accordance with the applicable legal provisions.
Record Date
87. (1) The listed entity shall fix a record date for payment of interest and payment of redemption or repayment amount or for such other purposes as specified by the recognised stock exchange(s).
(2) The listed entity shall give notice in advance of atleast seven working days (excluding the date of intimation and the record date) to the recognised stock exchange(s) of the record date or of as many days as the Stock Exchange may agree to or require specifying the purpose of the record date.
Amendments
- Chapter VIII A-Obligations of Listed Entity which has listed its security receipts
124[Applicability.
87A. (1) The provisions of this chapter shall apply to the issuer of security receipts which has listed its security receipts and the issuer and its sponsor shall ensure compliance with each of the provisions of these Regulations.(2) The expressions “asset reconstruction company”, "investor", “issue”, “issuer”, “offer for sale”, “private placement offer”, “qualified buyer”, "scheme", “security receipts”, "sponsor", and “valuer” shall have the same meaning as assigned to them under Securities and Exchange Board of India (Issue and Listing of Securitised Debt Instruments and Security Receipts) Regulations, 2008.
Intimations and Disclosure of events or information to Stock Exchanges.
87B. (1) The listed entity shall first disclose to stock exchange(s) of all events or information, as specified in Part E of Schedule III, as soon as reasonably possible but not later than twenty-four hours from occurrence of the event or information:
Provided that in case the disclosure is made after twenty-four hours of occurrence of the event or information, the listed entity shall, along with such disclosures provide explanation for the delay.
(2) The listed entity with respect to disclosures referred to in this regulation, shall provide updates related to such disclosures on a regular basis, till such time the event is resolved/closed, with relevant explanations.
(3) The listed entity shall provide specific and adequate reply to all queries raised by stock exchange(s) with respect to any events or information.
Provided that the stock exchange(s) shall disseminate information and clarification as soon as reasonably practicable.
(4) The listed entity, suo moto, may confirm or deny any reported event or information to stock exchange(s).
(5) The listed entity shall disclose on its website or on the website of the sponsor all such events or information which has been disclosed to stock exchange(s) under this regulation, and such disclosures shall be hosted on the website of the listed entity for a minimum period of five years and thereafter as per the archival policy of the listed entity, as disclosed on its website.
Valuation, Rating and NAV disclosure.
87C. (1) An issuer whose security receipts are listed on a stock exchange shall ensure that:
(i) the listed security receipts are valued at the end of each quarter i.e. as on March 31, June 30, September 30 and December 31 of every year;
(ii) valuation is conducted by an independent valuer; and
(iii) the net asset value is calculated on the basis of such independent valuation and the same is declared by the asset reconstruction company within fifteen days of the end of the quarter.
(2) The issuer shall also comply with the extant Reserve Bank of India requirement of obtaining credit rating of security receipts at half yearly interval and declaration of the net asset value thereafter and/or any other requirement as prescribed by the Reserve Bank of India from time to time.
Provided that in those two quarters in a year, where both external valuation and credit rating are required, issuer shall disclose lower of the two calculated Net Asset Value.
Terms of Security Receipts.
87D. (1) Any security receipt issued would be transferable only in favour of qualified buyers in terms of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.
(2) Unless the terms of issue provide otherwise, the listed entity shall not select any of its listed security receipts for payments otherwise than on pro rata basis or by lot and shall promptly submit to the stock exchange(s) the details thereof.
Record Date.
87E. (1) The listed entity shall fix a record date for payment to holders of security receipts or for such other purposes as specified by the stock exchange(s).
(2) The listed entity shall give notice in advance of at least seven working days (excluding the date of intimation and the record date) to the stock exchange(s) of the record date or of as many days as the stock exchange may agree to or require specifying the purpose of the record date.]
Amendment
- Chapter IX-Obligations Of Listed Entity Which Has Listed Its Mutual Fund Units
OBLIGATIONS OF LISTED ENTITY WHICH HAS LISTED ITS MUTUAL FUND UNITS
Applicability
88. (1) The provisions of this chapter shall apply to the asset management company managing the mutual fund scheme whose units are listed on the recognised stock exchange(s).
(2) Notwithstanding anything contained in this chapter, the provisions of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and directions issued thereunder shall apply on the listed entity and to the schemes whose units are listed on the recognised stock exchange(s).
Definitions
89. The expressions "Asset Management Company", "Net Asset Value" , "Scheme" , "Unit" and "Unit Holder" shall have the same meaning as assigned to them under Securities and Exchange Board of India (Mutual Funds) Regulations, 1996;
Submission of Documents
90. (1) The listed entity shall intimate to the recognised stock exchange(s) the information relating to daily Net Asset Value, monthly portfolio, half yearly portfolio of those schemes whose units are listed on the recognised stock exchange(s) in the format as specified under Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and directions issued there under.
(2) The listed entity shall intimate to the recognised stock exchange(s) in the manner specified by the recognised stock exchange(s) of:
(a) movement in unit capital of those schemes whose units are listed on the recognised stock exchange(s);
(b) rating of the scheme whose units are listed on the recognised stock exchange(s) and any changes in the rating thereof (wherever applicable);
(c) imposition of penalties and material litigations against the listed entity and Mutual Fund;
(d) any prohibitory orders restraining the listed entity from transferring units registered in the name of the unit holders.
Dissemination on the website of stock exchange(s)
91. The listed entity shall submit such information and documents, which are required to be disseminated on the listed entity's website in terms of Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and directions issued there under, to the recognised stock exchange for dissemination.
- Chapter X-Duties And Obligations Of The Recognised...
DUTIES AND OBLIGATIONS OF THE RECOGNISED STOCK EXCHANGE(S)
Dissemination
92. (1) Upon receipt of relevant intimations, information, filings, reports, statements, documents or any other submissions in terms of these regulations, from the listed entity the recognised stock exchange(s) shall immediately disseminate the same on its website.
(2) The disseminations by the recognised stock exchange(s) as mentioned in sub-regulation (1) shall be made in organised, user friendly and easily referable manner including by providing hyperlinks for easy accessibility.
Transferability
93. The recognised stock exchange(s) shall coordinate with Depositories to ensure compliance with the applicable laws or directions of the Board or any competent court with regard to freezing / unfreezing, lock-in/ release of lock-in with respect to securities issued or managed by the listed entity.
Draft Scheme of Arrangement & Scheme of Arrangement
94. (1) The designated stock exchange, upon receipt of draft schemes of arrangement and the documents prescribed by the Board, as per sub-regulation (1) of regulation 37, shall forward the same to the Board, in the manner prescribed by the Board.
(2) The stock exchange(s) shall submit to the Board its Objection Letter or No-Objection Letter on the draft scheme of arrangement after inter-alia ascertaining whether the draft scheme of arrangement is in compliance with securities laws within thirty days of receipt of draft scheme of arrangement or within seven days of date of receipt of satisfactory reply on clarifications from
the listed entity and/or opinion from independent chartered accountant, if any, sought by stock exchange(s), as applicable.
(3) The stock exchange(s), shall issue Observation Letter or No-objection letter to the listed entity within seven days of receipt of comments from the Board, after suitably incorporating such comments in the Observation Letter or No-objection letter:
Provided that the validity of the 'Observation Letter' or No-objection letter of stock exchanges shall be six months from the date of issuance.
(4) The stock exchange(s) shall bring the observations or objections, as the case may be, to the notice of Court or Tribunal at the time of approval of the scheme of arrangement.
(5) Upon sanction of the Scheme by the Court or Tribunal, the designated stock exchange shall forward its recommendations to the Board on the documents submitted by the listed entity in terms of sub-regulation (5) of regulation 37.
125[
Form Baccompanying Annual Audit ReportStatement on Impact of Audit Qualifications accompanying Annual Audit Report.95.
The recognised stock exchange(s) shall review the Form B and the accompanying annual audit report, submitted in terms of clause (d) of sub-regulation (3) of regulation 33 and clause (a) of sub-regulation (3) of regulation 52, in the manner specified in Schedule VIII.The recognised stock exchange(s) shall review the Statement on Impact of Audit Qualifications and the accompanying annual audit report submitted in terms of clause (d) of sub-regulation (3) of regulation33 and clause (a) of sub-regulation (3) of regulation 52.]
Grievance Redressal
96. The recognised stock exchange(s) shall redress/facilitate redressal of complaints of holders of listed securities from time to time.
Monitoring of Compliance/Non-Compliance & Adequacy/ Accuracy of the disclosures
97. (1) The recognised stock exchange(s) shall monitor compliance by the listed entity with provisions of these regulations.
(2) The recognised stock exchange(s) shall also monitor adequacy/ accuracy of the disclosures made by listed entity with respect to provisions of these regulations.
(3) The recognised stock exchange(s) shall submit a report to the Board, with respect to the obligations specified in sub-regulations (1) and (2), in the manner specified by the Board.
(4) The recognised stock exchange(s) shall put in place appropriate framework including adequate manpower and such infrastructure as may be required to comply with the provisions of this regulation.
Amendments
- Chapter XI-Procedure For Action In Case Of Default
PROCEDURE FOR ACTION IN CASE OF DEFAULT
Liability for contravention of the Act, rules or the regulations
98. (1) The listed entity or any other person thereof who contravenes any of the provisions of these regulations, shall, in addition to liability for action in terms of the securities laws, be liable for the following actions by the respective stock exchange(s), in the manner specified in circulars or guidelines issued by the Board:
(a) imposition of fines;
(b) suspension of trading;
(c) freezing of promoter/promoter group holding of designated securities, as may be applicable, in coordination with depositories.
(d) any other action as may be specified by the Board from time to time
(2) The manner of revocation of actions specified in clauses (b) and (c) of sub-regulation (1), shall be as specified in circulars or guidelines issued by the Board.
Failure to pay fine
99. If listed entity fails to pay any fine imposed on it within such period as specified from time to time, by the recognised stock exchange(s), after a notice in writing has been served on it, the stock exchange may initiate action.
- Chapter XI A- Power to relax strict enforcement of the regulations
126[Exemption from enforcement of the regulations in special cases.
99A. (1) The Board may, exempt any person or class of persons from the operation of all or any of the provisions of these regulations for a period as may be specified but not exceeding twelve months, for furthering innovation in technological aspects relating to testing new products, processes, services, business models, etc. in live environment of regulatory sandbox in the securities markets.
(2) Any exemption granted by the Board under sub-regulation (1) shall be subject to the applicant satisfying such conditions as may be specified by the Board including conditions to be complied with on a continuous basis.
Explanation. — For the purposes of these regulations, "regulatory sandbox" means a live testing environment where new products, processes, services, business models, etc. may be deployed on a limited set of eligible customers for a specified period of time, for furthering innovation in the securities market, subject to such conditions as may be specified by the Board.]
Amendment
126. Inserted by the SEBI (Regulatory Sandbox) (Amendment) Regulation, w.e.f. 17-04-2020.
- Chapter XII-Miscellaneous
MISCELLANEOUS
Amendments to other regulations
100. The regulations specified in the Schedule IX to these regulations shall be amended in the manner and to the extent stated therein.
Power to remove difficulties
101. (1) In order to remove any difficulties in the application or interpretation of these regulations, the Board may issue clarifications through guidance notes or circulars after recording reasons in writing.
(2) In particular, and without prejudice to the generality of the foregoing power, such guidance notes or circulars may provide for all or any of the following matters, namely:
(a) procedural aspects including intimation to be given, documents to be submitted;
(b) disclosure requirements;
(c) listing conditions.
Power to relax strict enforcement of the regulations
102. 127[(1)] The Board may in the interest of investors and securities market and for the development of the securities market, relax the strict enforcement of any requirement of these regulations, if the Board is satisfied that:
(a) any provision of Act(s), Rule(s), regulation(s) under which the listed entity is established or is governed by, is required to be given precedence to; or
(b) the requirement may cause undue hardship to investors; or
(c) the disclosure requirement is not relevant for a particular industry or class of listed entities; or
(d) the requirement is technical in nature; or
(e) the non-compliance is caused due to factors affecting a class of entities but being beyond the control of the entities.
128[(2) For seeking relaxation under sub-regulation (1), an application, giving details and the grounds on which such relaxation has been sought, shall be filed with the Board.
(3) The application referred to under sub-regulation (2) shall be accompanied by a non-refundable fee of rupees one lakh payable by way of direct credit in the bank account through NEFT/ RTGS/ IMPS or any other mode allowed by Reserve Bank of India or by way of a demand draft in favour of the Board payable in Mumbai.]
Repeal and Savings
103. (1) On and from the commencement of these regulations, all circulars stipulating or modifying the provisions of the listing agreements including those specified in Schedule X, shall stand rescinded.
(2) Notwithstanding such rescission, anything done or any action taken or purported to have been done or taken including any enquiry or investigation commenced or show cause notice issued in respect of the circulars specified in sub-regulation (1) or the Listing Agreements, entered into between stock exchange(s) and listed entity, in force prior to the commencement of these regulations, shall be deemed to have been done or taken under the corresponding provisions of these regulations.
Amendments
- Schedules
- Schedule I-Terms Of Securities
SCHEDULE I – TERMS OF SECURITIES
[See Regulation 12]
The listed entity shall use the facility of electronic clearing services or real time gross settlement or national electronic funds transfer as follows:-
(1) the listed entity either directly 129[or through the depositories] or through their Registrar to an Issue and/or Share Transfer Agent, shall use electronic clearing services (local, regional or national), direct credit, real-time gross settlement, national electronic funds transfer etc for making payment of dividend/interest on securities issued/redemption or repayment amount.
(2) the listed entity or Share Transfer Agent shall maintain bank details of their investors as follows -
(a) for investors holding securities in dematerialized mode, by seeking the same from the depositories.
(b) for investors holding securities in physical mode, by updating bank details of the investors at their end.
(3) In cases where either the bank details such as Magnetic Ink Character Recognition, Indian Financial System Code, etc. that are required for making electronic payment are not available or the electronic payment instructions have failed or have been rejected by the bank, listed entity or share transfer agent shall issue ‘payable-at-par’ warrants/ cheques for making payments: Provided that the listed entity shall mandatorily print the bank account details of the investors on such payment instruments and in cases where the bank details of investors are not available, the listed entity shall mandatorily print the address of the investor on such payment instructions.
Amendment
- Schedule II- Corporate Governances
SCHEDULE II: CORPORATE GOVERNANCE
PART A: MINIMUM INFORMATION TO BE PLACED BEFORE BOARD OF DIRECTORS
[See Regulation 17(7)]
A. Annual operating plans and budgets and any updates.
B. Capital budgets and any updates.
C. Quarterly results for the listed entity and its operating divisions or business segments.
D. Minutes of meetings of audit committee and other committees of the board of directors.
E. The information on recruitment and remuneration of senior officers just below the level of board of directors, including appointment or removal of Chief Financial Officer and the Company Secretary.
F. Show cause, demand, prosecution notices and penalty notices, which are materially important.
G. Fatal or serious accidents, dangerous occurrences, any material effluent or pollution problems.
H. Any material default in financial obligations to and by the listed entity, or substantial non-payment for goods sold by the listed entity.
I. Any issue, which involves possible public or product liability claims of substantial nature, including any judgement or order which, may have passed strictures on the conduct of the listed entity or taken an adverse view regarding another enterprise that may have negative implications on the listed entity.
J. Details of any joint venture or collaboration agreement.
K.Transactions that involve substantial payment towards goodwill, brand equity, or intellectual property.
L. Significant labour problems and their proposed solutions. Any significant development in Human Resources/ Industrial Relations front like signing of wage agreement, implementation of Voluntary Retirement Scheme etc.
M. Sale of investments, subsidiaries, assets which are material in nature and not in normal course of business.
N. Quarterly details of foreign exchange exposures and the steps taken by management to limit the risks of adverse exchange rate movement, if material.
O. Non-compliance of any regulatory, statutory or listing requirements and shareholders service such as non-payment of dividend, delay in share transfer etc.
PART B: COMPLIANCE CERTIFICATE
[See Regulation 17(8)]
The following compliance certificate shall be furnished by chief executive officer and chief financial officer:
A. They have reviewed financial statements and the cash flow statement for the year and that to the best of their knowledge and belief:
(1) these statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading;
(2) these statements together present a true and fair view of the listed entity's affairs and are in compliance with existing accounting standards, applicable laws and regulations.
B. There are, to the best of their knowledge and belief, no transactions entered into by the listed entity during the year which are fraudulent, illegal or violative of the listed entity's code of conduct.
C. They accept responsibility for establishing and maintaining internal controls for financial reporting and that they have evaluated the effectiveness of internal control systems of the listed entity pertaining to financial reporting and they have disclosed to the auditors and the audit committee, deficiencies in the design or operation of such internal controls, if any, of which they are aware and the steps they have taken or propose to take to rectify these deficiencies.
D. They have indicated to the auditors and the Audit committee
(1) significant changes in internal control over financial reporting during the year;
(2) significant changes in accounting policies during the year and that the same have been disclosed in the notes to the financial statements; and
(3) instances of significant fraud of which they have become aware and the involvement therein, if any, of the management or an employee having a significant role in the listed entity's internal control system over financial reporting.
PART C: ROLE OF THE AUDIT COMMITTEE AND REVIEW OF INFORMATION BY AUDIT COMMITTEE
[See Regulation 18(3)]
A. The role of the audit committee shall include the following:
(1) oversight of the listed entity's financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible;
(2) recommendation for appointment, remuneration and terms of appointment of auditors of the listed entity;
(3) approval of payment to statutory auditors for any other services rendered by the statutory auditors;
(4) reviewing, with the management, the annual financial statements and auditor's report thereon before submission to the board for approval, with particular reference to:
(a) matters required to be included in the director's responsibility statement to be included in the board's report in terms of clause (c) of sub-section (3) of Section 134 of the Companies Act, 2013;
(b) changes, if any, in accounting policies and practices and reasons for the same;
(c) major accounting entries involving estimates based on the exercise of judgment by management;
(d) significant adjustments made in the financial statements arising out of audit findings;
(e) compliance with listing and other legal requirements relating to financial statements;
(f) disclosure of any related party transactions; (g) modified opinion(s) in the draft audit report;
(5) reviewing, with the management, the quarterly financial statements before submission to the board for approval;
(6) reviewing, with the management, the statement of uses / application of funds raised through an issue (public issue, rights issue, preferential issue, etc.), the statement of funds utilized for purposes other than those stated in the offer document / prospectus / notice and the report submitted by the monitoring agency monitoring the utilisation of proceeds of a public or rights issue, and making appropriate recommendations to the board to take up steps in this matter;
(7) reviewing and monitoring the auditors independence and performance, and effectiveness of audit process;
(8) approval or any subsequent modification of transactions of the listed entity with related parties;
(9) scrutiny of inter-corporate loans and investments;
(10) valuation of undertakings or assets of the listed entity, wherever it is necessary;
(11) evaluation of internal financial controls and risk management systems; (12) reviewing, with the management, performance of statutory and internal auditors, adequacy of the internal control systems;
(13) reviewing the adequacy of internal audit function, if any, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit;
(14) discussion with internal auditors of any significant findings and follow up there on;
(15) reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the board;
(16) discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern;
(17) to look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of non-payment of declared dividends) and creditors;
(18) to review the functioning of the whistle blower mechanism;
(19) approval of appointment of chief financial officer after assessing the qualifications, experience and background, etc. of the candidate;
(20) Carrying out any other function as is mentioned in the terms of reference of the audit committee.
130[(21) reviewing the utilization of loans and/ or advances from/investment by the holding company in the subsidiary exceeding rupees 100 crore or 10% of the asset size of the subsidiary, whichever is lower including existing loans / advances / investments existing as on the date of coming into force of this provision.]
B. The audit committee shall mandatorily review the following information:
(1) management discussion and analysis of financial condition and results of operations;
(2) statement of significant related party transactions (as defined by the audit committee), submitted by management;
(3) management letters/letters of internal control weaknesses issued by the statutory auditors;
(4) internal audit reports relating to internal control weaknesses; and
(5) the appointment, removal and terms of remuneration of the chief internal auditor shall be subject to review by the audit committee.
(6) statement of deviations:
(a) quarterly statement of deviation(s) including report of monitoring agency, if applicable, submitted to stock exchange(s) in terms of Regulation 32(1).
(b) annual statement of funds utilized for purposes other than those stated in the offer document/prospectus/notice in terms of Regulation 32(7).
PART D: ROLE OF COMMITTEES (OTHER THAN AUDIT COMMITTEE)
[See Regulation 19(4) and 20(4)]
A. ROLE OF NOMINATION AND REMUNERATION COMMITTEE :
Role of committee shall, inter-alia, include the following:
(1) formulation of the criteria for determining qualifications, positive attributes and independence of a director and recommend to the board of directors a policy relating to, the remuneration of the directors, key managerial personnel and other employees;
(2) formulation of criteria for evaluation of the performance of independent directors and the board of directors;
(3) devising a policy on diversity of board of directors;
(4) identifying persons who are qualified to become directors and who may be appointed in senior management in accordance with the criteria laid down, and recommend to the board of directors their appointment and removal.
(5) whether to extend or continue the term of appointment of the independent director, on the basis of the report of performance evaluation of independent directors.
131[(6) recommend to the board, all remuneration, in whatever form, payable to senior management.]
B. Stakeholders Relationship Committee
132[
The Committee shall consider and resolve the grievances of the security holders of the listed entity including complaints related to transfer of shares, non-receipt of annual report and non-receipt of declared dividends.The role of the committee shall inter-alia include the following:
(1) Resolving the grievances of the security holders of the listed entity including complaints related to transfer/transmission of shares, non-receipt of annual report, non-receipt of declared dividends, issue of new/duplicate certificates, general meetings etc.
(2) Review of measures taken for effective exercise of voting rights by shareholders.
(3) Review of adherence to the service standards adopted by the listed entity in respect of various services being rendered by the Registrar & Share Transfer Agent.
(4) Review of the various measures and initiatives taken by the listed entity for reducing the quantum of unclaimed dividends and ensuring timely receipt of dividend warrants/annual reports/statutory notices by the shareholders of the company.]
PART E: DISCRETIONARY REQUIREMENTS
[See Regulation 27(1)]
A. The Board
A non-executive chairperson may be entitled to maintain a chairperson's office at the listed entity's expense and also allowed reimbursement of expenses incurred in performance of his duties.
B. Shareholder Rights
A half-yearly declaration of financial performance including summary of the significant events in last six-months, may be sent to each household of shareholders.
C. Modified opinion(s) in audit report
The listed entity may move towards a regime of financial statements with unmodified audit opinion.
133[
D. Separate posts of chairperson and chief executive officerThe listed entity may appoint separate persons to the post of chairperson and managing director or chief executive officer.]E. Reporting of internal auditor
The internal auditor may report directly to the audit committee.
Amendments
131. Inserted ibid
133. Omitted ibid w.e.f. 01.04.2020
- Schedule III- Disclosure Of Information
SCHEDULE III
PART A: DISCLOSURES OF EVENTS OR INFORMATION: SPECIFIED SECURITIES [See Regulation 30]
The following shall be events/information, upon the occurrence of which listed entity shall make disclosure to stock exchange(s):
A. Events which shall be disclosed without any application of the guidelines for materiality as specified in sub-regulation (4) of regulation (30):
1. 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 or any other restructuring.
Explanation :- For the purpose of this sub-para, the word 'acquisition' shall mean,-
(i) acquiring control, whether directly or indirectly; or,
(ii) acquiring or agreeing to acquire shares or voting rights in, a company, whether directly or indirectly, such that -
(a) the listed entity holds shares or voting rights aggregating to five percent or more of the shares or voting rights in the said company, or;
(b) there has been a change in holding from the last disclosure made under sub-clause (a) of clause (ii) of the Explanation to this sub-para and such change exceeds two percent of the total shareholding or voting rights in the said company.
2. Issuance or forfeiture of securities, split or consolidation of shares, buyback of securities, any restriction on transferability of securities or alteration in terms or structure of existing securities including forfeiture, reissue of forfeited securities, alteration of calls, the redemption of securities etc.
3. Revision in Rating(s).
4. Outcome of Meetings of the board of directors: The listed entity shall disclose to the Exchange(s), within 30 minutes of the closure of the meeting, held to consider the following:
a) dividends and/or cash bonuses recommended or declared or the decision to pass any dividend and the date on which dividend shall be paid/dispatched;
b) any cancellation of dividend with reasons thereof;
c) the decision on buyback of securities;
d) the decision with respect to fund raising proposed to be undertaken
e) increase in capital by issue of bonus shares through capitalization including the date on which such bonus shares shall be credited/dispatched;
f) reissue of forfeited shares or securities, or the issue of shares or securities held in reserve for future issue or the creation in any form or manner of new shares or securities or any other rights, privileges or benefits to subscribe to;
g) short particulars of any other alterations of capital, including calls;
h) financial results;
i) decision on voluntary delisting by the listed entity from stock exchange(s).
5. Agreements (viz. shareholder agreement(s), joint venture agreement(s), family settlement agreement(s) (to the extent that it impacts management and control of the listed entity), agreement(s)/treaty(ies)/contract(s) with media companies) which are binding and not in normal course of business, revision(s) or amendment(s) and termination(s) thereof.
6. Fraud/defaults by promoter or key managerial personnel or by listed entity or arrest of key managerial personnel or promoter.
7. Change in directors, key managerial personnel (Managing Director, Chief Executive Officer, Chief Financial Officer, Company Secretary etc.), Auditor and Compliance Officer.
134[(7A) In case of resignation of the auditor of the listed entity, detailed reasons for resignation of auditor, as given by the said auditor, shall be disclosed by the listed entities to the stock exchanges as soon as possible but not later than twenty four hours of receipt of such reasons from the auditor.
(7B) Resignation of auditor including reasons for resignation: In case of resignation of an independent director of the listed entity, within seven days from the date of resignation, the following disclosures shall be made to the stock exchanges by the listed entities:
i. Detailed reasons for the resignation of independent directors as given by the said director shall be disclosed by the listed entities to the stock exchanges.
ii. The independent director shall, along with the detailed reasons, also provide a confirmation that there is no other material reasons other than those provided.
iii. The confirmation as provided by the independent director above shall also be disclosed by the listed entities to the stock exchanges along with the detailed reasons as specified in sub-clause (i) above.]
8. Appointment or discontinuation of share transfer agent.
9. Corporate debt restructuring.
10. One time settlement with a bank.
11. Reference to BIFR and winding-up petition filed by any party /creditors.
12. Issuance of Notices, call letters, resolutions and circulars sent to shareholders, debenture holders or creditors or any class of them or advertised in the media by the listed entity.
13. Proceedings of Annual and extraordinary general meetings of the listed entity.
14. Amendments to memorandum and articles of association of listed entity, in brief.
15. Schedule of Analyst or institutional investor meet and presentations on financial results made by the listed entity to analysts or institutional investors;
135[16. The following events in relation to the corporate insolvency resolution process (CIRP) of a listed corporate debtor under the Insolvency Code:
a) Filing of application by the corporate applicant for initiation of CIRP, also specifying the amount of default;
b) Filing of application by financial creditors for initiation of CIRP against the corporate debtor, also specifying the amount of default;
c) Admission of application by the Tribunal, along with amount of default or rejection or withdrawal, as applicable ;
d) Public announcement made pursuant to order passed by the Tribunal under section 13 of Insolvency Code;
e) List of creditors as required to be displayed by the corporate debtor under regulation 13(2)(c) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016;
f) Appointment/ Replacement of the Resolution Professional;
g) Prior or post-facto intimation of the meetings of Committee of Creditors;
h) Brief particulars of invitation of resolution plans under section 25(2)(h) of Insolvency Code in the Form specified under regulation 36A(5) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016;
i) Number of resolution plans received by Resolution Professional;
j) Filing of resolution plan with the Tribunal;
m) Approval of resolution plan by the Tribunal or rejection, if applicable;
k) Salient features, not involving commercial secrets, of the resolution plan approved by the Tribunal, in such form as may be specified;
l) Any other material information not involving commercial secrets.]
136[17. Initiation of Forensic audit: In case of initiation of forensic audit, (by whatever name called), the following disclosures shall be made to the stock exchanges by listed entities:
a) The fact of initiation of forensic audit along-with name of entity initiating the audit and reasons for the same, if available;
b) Final forensic audit report (other than for forensic audit initiated by regulatory / enforcement agencies) on receipt by the listed entity along with comments of the management, if any.]B. Events which shall be disclosed upon application of the guidelines for materiality referred sub-regulation (4) of regulation (30):
1. Commencement or any postponement in the date of commencement of commercial production or commercial operations of any unit/division.
2. 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).
3. Capacity addition or product launch.
4. Awarding, bagging/ receiving, amendment or termination of awarded/bagged orders/contracts not in the normal course of business.
5. Agreements (viz. loan agreement(s) (as a borrower) or any other agreement(s) which are ind g and not in normal course of business) and revision(s) or amendment(s) or termination(s) thereof.
6. 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.
7. Effect(s) arising out of change in the regulatory framework applicable to the listed entity
8. Litigation(s) / dispute(s) / regulatory action(s) with impact.
9. Fraud/defaults etc. by directors (other than key managerial personnel) or employees of listed entity.
10. Options to purchase securities including any ESOP/ESPS Scheme.
11. Giving of guarantees or indemnity or becoming a surety for any third party.
12. Granting, withdrawal , surrender , cancellation or suspension of key licenses or regulatory approvals.
C. Any other information/event viz. major development that is likely to affect business, e.g. emergence of new technologies, expiry of patents, any change of accounting policy that may have a significant impact on the accounts, etc. and brief details thereof and any other information which is exclusively known to the listed entity which may be necessary to enable the holders of securities of the listed entity to appraise its position and to avoid the establishment of a false market in such securities.
D. Without prejudice to the generality of para (A), (B) and (C) above, the listed entity may make disclosures of event/information as specified by the Board from time to time.
PART B: DISCLOSURE OF INFORMATION HAVING BEARING ON PERFORMANCE/OPERATION OF LISTED ENTITY AND/OR PRICE SENSITIVE INFORMATION: NON-CONVERTIBLE DEBT SECURITIES & NON-CONVERTIBLE REDEEMABLE PREFERENCE SHARES
[See Regulation 51(2)]
A. The listed entity shall promptly inform to the stock exchange(s) of all information which shall have bearing on performance/operation of the listed entity or is price sensitive or shall affect payment of interest or dividend of non-convertible preference shares or redemption of non convertible debt securities or redeemable preference shares including :
(1) expected default in timely payment of interests/preference dividend or redemption or repayment amount or both in respect of the non-convertible debt securities and non-convertible redeemable preference shares and also default in creation of security for debentures as soon as the same becomes apparent;
(2) any attachment or prohibitory orders restraining the listed entity from transferring non-convertible debt securities or non-convertible redeemable preference shares from the account of the registered holders along-with the particulars of the numbers of securities so affected , the names of the registered holders and their demat account details;
(3) any action which shall result in the redemption, conversion, cancellation, retirement in whole or in part of any non-convertible debt securities or reduction, redemption, cancellation, retirement in whole or in part of any non-convertible redeemable preference shares;
(4) any action that shall affect adversely payment of interest on non-convertible debt securities or payment of dividend on non-convertible redeemable preference shares including default by issuer to pay interest on non-convertible debt securities or redemption amount and failure to create a charge on the assets;
(5) any change in the form or nature of any of its non-convertible debt securities or non-convertible redeemable preference shares that are listed on the stock exchange(s) or in the rights or privileges of the holders thereof and make an application for listing of the securities as changed, if the stock exchange(s) so require;
(6) any changes in the general character or nature of business / activities, disruption of operation due to natural calamity, and commencement of commercial production / commercial operations;
(7) any events such as strikes and lockouts. which have a bearing on the interest payment/ dividend payment / principal repayment capacity;
(8) details of any letter or comments made by debenture trustees regarding payment/non-payment of interest on due dates, payment/non-payment of principal on the due dates or any other matter concerning the security, listed entity and /or the assets along with its comments thereon, if any;
(9) delay/ default in payment of interest or dividend/principal amount/redemption for a period of more than three months from the due date;
(10) failure to create charge on the assets within the stipulated time period;
(11) any instance(s) of default/delay in timely repayment of interests or principal obligations or both in respect of the debt securities including, any proposal for re-scheduling or postponement of the repayment programmes of the dues/debts of the listed entity with any investor(s)/lender(s).
Explanation:- For the purpose of this sub-para, 'default' shall mean Non-payment of interest or principal amount in full on the pre-agreed date and shall be recognized at the first instance of delay in servicing of any interest or principal on debt.
(12) any major change in composition of its board of directors, which may amount to change in control as defined in Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011;
(13) any revision in the rating;
(14) the following approvals by board of directors in their meeting:-
(a) the decision to pass any interest payment;
(b) short particulars of any increase of capital whether by issue of bonus securities through capitalization, or by way of right securities to be offered to the debenture holders, or in any other way;
(15) all the information, report, notices, call letters, circulars, proceedings, etc concerning non-convertible redeemable preference shares or non convertible debt securities;
(16) any other change that shall affect the rights and obligations of the holders of non-convertible debt securities / non-convertible redeemable preference shares, any other information not in the public domain necessary to enable the holders of the listed securities to clarify its position and to avoid the creation of a false market in such listed securities or any other information having bearing on the operation/performance of the listed entity as well as price sensitive information.
PART C: DISCLOSURES OF MATERIAL EVENTS OR INFORMATION: INDIAN DEPOSITORY RECEIPTS
[See Regulation 68(2)]
A. The listed entity shall promptly inform to the stock exchange(s) of all events which are material and/or all information which are price sensitive or have bearing on performance/operation of the listed entity at the same time and to the extent it intimates to the listing authority or any other authority in its home country or other jurisdictions where its securities may be listed or other stock exchange(s) in its home country or other jurisdictions where its securities may be listed including:
(1) any action or investigations initiated by any regulatory or statutory authority and the purpose for which it was initiated.
(2) any attachment or prohibitory orders restraining the listed entity from transferring securities out of the names of the registered holders and particulars of the registered holders thereof.
(3) the meeting of the board of directors which has been held to consider or decide on the following :
(a) all dividends and/or cash bonuses recommended or declared or the decision to pass any dividend or cash bonus;
(b) the total turnover, gross profit/loss, provision for depreciation, tax provisions and net profits for the year (with comparison with the previous year) and the amounts appropriated from reserves, capital profits, accumulated profits of past years or other special source to provide wholly or partly for any dividend, even if this calls for qualification that such information is provisional or subject to audit;
(c) the recommendation or declaration of dividend or rights issue or issue of convertible debentures or of debentures carrying a right to subscribe to equity shares or the passing over of the dividend
(d) any decision on buy back of equity shares of the listed entity,;
(4) Change in
(a) board of directors of listed entity by death, resignation, removal or otherwise;
(b) managing director;
(c) auditors appointed to audit the books and accounts;
(d) the compliance officer;
(e) the registrar to an issue and/or share transfer agent, domestic depository or the overseas custodian bank;
(5) any change in the rights attaching to any class of equity shares into which the Indian Depository Receipts are exchangeable;
(6) short particulars of any increase of capital whether by issue of bonus shares through capitalization, or by rights issue of equity shares, or in any other manner;
(7) short particulars of the reissues of forfeited shares or securities, or the issue of shares or securities held in reserve for future issue or the creation in any form or manner of new shares or securities or any other rights, privileges or benefits to subscribe thereto;
(8) short particulars of any other alterations of capital, including calls;
(9) in the event of the listed entity granting any options to purchase any Indian Depository Receipts the following particulars::
(a) the number of Indian Depository Receipts covered by such options, terms thereof and the time within which they may be exercised;
(b) any subsequent changes or cancellation or exercise of such options;
(10) Notices, resolutions, circulars, call letters or any other circulars etc.issued or advertised anywhere with respect to:
(a) proceedings at all annual and extraordinary general meetings of the listed entity, including notices of meetings and proceedings of meeting;
(b) amendments to its constitutional documents as soon as they have been approved by the listed entity in general meeting;
(c) compliance with requirements in home country or in other jurisdictions where such securities are listed;
(d) any merger, amalgamation, re-construction, reduction of capital, scheme or arrangement involving the listed entity including meetings of equity shareholders, IDR Holders or any class of them and proceedings at all such meetings;
(11) any other information necessary to enable the IDR Holders to appraise the listed entity's position and to avoid the establishment of a false market in IDRs;
B. The listed entity shall, apart from complying with all specific requirements as above, intimate the stock exchange(s) immediately of events such as strikes, lock outs, closure on account of power cuts, etc. and other material events or price sensitive information or events which shall have a material bearing on the performance / operations of the listed entity both at the time of occurrence of the event and subsequently after the cessation of the event at the same time and as to the extent that it discloses to holders of securities in its home country or in other jurisdictions where such securities are listed;
C. In addition to above, the listed entity shall disclose to the stock exchange(s), any information which is disclosed to any other overseas stock exchange(s) or made public in any other overseas securities market, on which its securities may be listed or quoted, simultaneously with such disclosure or publication, or as soon thereafter as may be reasonably practicable;
D.The listed entity shall submit to the stock exchange(s) on request any other information concerning the listed entity as the stock exchange(s) may reasonably require;
PART-D: DISCLOSURE OF INFORMATION HAVING BEARING ON PERFORMANCE/ OPERATION OF LISTED ENTITY AND/OR PRICE SENSITIVE INFORMATION: SECURITISED DEBT INSTRUMENT
[See Regulation 83(2)]
A. The listed entity shall promptly inform the stock exchange(s) of all information having bearing on the performance/operation of the listed entity and price sensitive information including:
(1) any attachment or prohibitory orders restraining the listed entity from transferring securitized debt instruments from the account of then registered holders and particulars of the numbers of securitized debt instruments so affected and the names of the registered holders and their demat account details;
(2) any action that shall result in the redemption, conversion, cancellation, retirement in whole or in part of any securitized debt instruments;
(3) any action that shall affect adversely payment of interest on securitized debt instruments;
(4) any change in the form or nature of any of its securitized debt instruments that are listed on the stock exchange(s) or in the rights or privileges of the holders thereof and to make an application for listing of the said securities as changed, if the stock exchange(s) so requires;
(5) expected default in timely payment of interest or redemption or repayment amount or both in respect of the securitized debt instruments listed on the recognised stock exchange(s) as soon as the same becomes apparent;
(6) changes in the General Character or nature of business / activities, disruption of operation due to natural calamity etc;
(7) revision in rating as a result of credit rating done periodically;
(8) delay/ default in payment of interest/principal amount to the investors for a period of more than three months from the due date; and
(9) any other change that shall affect the rights and obligations of the holders of securitized debt instruments, any other information not in the public domain necessary to enable the holders of the listed securitized debt instruments to clarify its position and to avoid the creation of a false market in such listed securities or any other information having bearing on the operation/performance of the listed entity as well as price sensitive information.
137[PART E: DISCLOSURE OF EVENTS OR INFORMATION TO STOCK EXCHANGES: SECURITY RECEIPTS
[See Regulation 87B (1)]
A. The following events/information shall be disclosed by the listed entity without any application of guidelines of materiality as soon as reasonably possible but not later than twenty four hours from occurrence of event or information:
(1) any delay or expected delay in cash flows from the due date or pre- agreed date if any;
(2) any change in value of cash-flows as disclosed if any;
(3) any receipt of cash flow or expected cash flow along with quantum so received;
(4) any change in credit enhancement measures;
(5) periodic rating obtained from credit rating agency or any revision in the rating or any expected revision in rating;
(6) periodic Net Asset Value;
(7) any proposal to change or change of credit rating agency or Valuer;
(8) any change in profile of the assets by way of accretion to or realisation of assets from the existing pool;
(9) any proposal for acquisition of assets including terms of acquisition;
(10) any expected non-realisation or non-realisation of the financial assets and remedial measures proposed to be undertaken;
(11) any change in nature of charge on the underlying assets.
(12) any proposal to change or any change in terms of security receipts including rights or privileges or nature or form etc.;
(13) any proposal or action with respect to exercising call/put option (right to redeem) or any similar option by the listed entity;
(14) any breach of covenant(s) under the terms of security receipts;
(15) any proposal or action for forfeiture of unclaimed cash flow or forfeiture of any security receipts;
(16) any change in resolution plan;
(17) any change in percentage holding of non-performing loans across other banks;
(18) any change in the general character or nature of business / activities, disruption of operation due to natural calamity etc. of the listed entity;
(19) any attachment or prohibitory orders restraining the listed entity from transferring security receipts;
(20) initiation or status update with respect to reference to National Company Law Tribunal under the Insolvency and Bankruptcy Code 2016 of any underlying assets;
(21) intimation in advance of the meeting of its board of directors, at which the recommendation or declaration of issue of security receipts or any other matter affecting the rights or interests of holders of security receipts is proposed to be considered and also outcome of such meetings;
(22) fraud or defaults by sponsor or key managerial personnel or arrest of key managerial personnel or sponsor;
(23) change in directors, key managerial personnel (Managing Director, Chief Executive Officer, Chief Financial Officer , Company Secretary etc.), Auditor and Compliance Officer of the Sponsor;
(24) in addition to the above, the listed entity shall provide all such disclosures to the Stock Exchange(s) as it is required to make before the Reserve Bank of India as per the extant requirement and/or any other disclosure(s) as prescribed by Reserve Bank of India from time to time;
(25) in case where an event occurs or an information is available with the listed entity, which has not been indicated in these regulations, but which may be material, the listed entity is required to make adequate disclosures in this regard.]
Amendments
- Schedule IV- Disclosures In Financial Results
SCHEDULE IV
PART A: DISCLOSURES IN FINANCIAL RESULTS
[See Regulation 33(1)(e)]
The listed entity shall disclose the following while preparing the financial results:-
A. Changes in accounting policies, if any, shall be disclosed in accordance with Accounting Standard 5 or Indian Accounting Standard 8, as applicable, specified in Section 133 of the Companies Act, 2013 read with relevant rules framed thereunder or by the Institute of Chartered Accountants of India, whichever is applicable.
B. If the auditor has expressed any modified opinion(s) 138[
or other reservation(s)] in respect of audited financial results submitted or published under this para, the listed entity shall disclose such modified opinion(s) 139[or other reservation(s)] and cumulative impact of the same on profit or loss, net worth, total assets, turnover/total income, earning per share 140[, total expenditure, total liabilities] or any other financial item(s) which may be impacted due to modified opinion(s) 141[or other reservation(s)], while publishing or submitting such results.142[BA. If the auditor has expressed any modified opinion(s), the management of the listed entity has the option to explain its views on the audit qualifications and the same shall be included in the Statement on Impact of Audit Qualifications (for audit report with modified opinion).
BB. With respect to audit qualifications where the impact of the qualification is not quantifiable:
143[
i. The management shall make an estimate and the auditor shall review the same and report accordingly; orii. If the management is unable to make an estimate, it shall provide the reasons and the auditor shall review the same and report accordingly.The above shall be included in the statement on impact of audit qualifications (for audit report with modified opinion).i. The management shall mandatorily make an estimate which the auditor shall review and report accordingly.
ii. Notwithstanding the above, the management may be permitted to not provide estimate on matters like going concerns or sub-judice matters; in which case, the management shall provide the reasons and the auditor shall review the same and report accordingly.]]
C. If the auditor has expressed any modified opinion(s) or other reservation(s) in his audit report or limited review report in respect of the financial results of any previous financial year or quarter which has an impact on the profit or loss of the reportable period, the listed entity shall include as a note to the financial results:
(i) how the modified opinion(s) or other reservation(s) has been resolved; or
(ii) if the same has not been resolved, the reason thereof and the steps which the listed entity intends to take in the matter.
D. If the listed entity has changed its name suggesting any new line of business, it shall disclose the net sales or income, expenditure and net profit or loss after tax figures pertaining to the said new line of business separately in the financial results and shall continue to make such disclosures for the three years succeeding the date of change in name:
Provided that the tax expense shall be allocated between the said new line of business and other business of the listed entity in the ratio of the respective figures of net profit before tax, subject to any exemption, deduction or concession available under the tax laws.
E. If the listed entity had not commenced commercial production or commercial operations during the reportable period, the listed entity shall, instead of submitting financial results, disclose the following details:
(i) details of amount raised i.e. proceeds of any issue of shares or debentures made by the listed entity;
(ii) the portions thereof which is utilized and that remaining unutilized;
(iii) the details of investment made pending utilisation ;
(iv) brief description of the project which is pending completion;
(v) status of the project and
(vi) expected date of commencement of commercial production or commercial operations:
Provided that the details mentioned above shall be approved by the board of directors based on certification by the chief executive officer and chief financial officer.
F. All items of income and expenditure arising out of transactions of exceptional nature shall be disclosed.
G. Extraordinary items, if applicable, shall be disclosed in accordance with Accounting Standard 5 (AS 5 - Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies) or Companies (Accounting Standards) Rules, 2006, whichever is applicable.
H. The listed entity, whose revenues are subject to material seasonal variations, shall disclose the seasonal nature of their activities and the listed entity may supplement their financial results with information for the twelve month period ending on the last day of the quarter for the current and preceding years on a rolling basis.
I. The listed entity shall disclose any event or transaction which occurred during or before the quarter that is material to an understanding of the results for the quarter including but not limited to completion of expansion and diversification programmes, strikes and lock-outs, changes in management, change in capital structure and the listed entity shall also disclose similar material events or transactions that take place subsequent to the end of the quarter.
J. The listed entity shall disclose the following in respect of dividends paid or recommended for the year, including interim dividends :
(i) amount of dividend distributed or proposed for distribution per share; the amounts in respect of different classes of shares shall be distinguished and the nominal values of shares shall also be indicated;
(ii) where dividend is paid or proposed to be paid pro-rata for shares allotted during the year, the date of allotment and number of shares allotted, pro-rata amount of dividend per share and the aggregate amount of dividend paid or proposed to be paid on pro-rata basis.
K. The listed entity shall disclose the effect on the financial results of material changes in the composition of the listed entity, if any, including but not limited to business combinations, acquisitions or disposal of subsidiaries and long term investments, any other form of restructuring and discontinuance of operations.
L. The listed entity shall ensure that segment reporting is done in accordance with AS-17 or Indian Accounting Standard 108 as applicable, specified in Section 133 of the Companies Act, 2013 read with relevant rules framed thereunder or by the Institute of Chartered Accountants of India, whichever is applicable.
PART B: PREPARATION AND DISCLOSURES IN FINANCIAL RESULTS OF LISTED ENTITY WHICH HAS LISTED ITS INDIAN DEPOSITORY RECEIPTS
[See Regulation 70(2) and 71(3)]
The listed entity shall comply with the following requirements while preparing the financial results:-
A. Periodicity of Disclosure of Financial Results
(1) Financial results may be given on annual, half-yearly and/or quarterly basis, as required under the requirements of the home country.
B. Accounting Principle to be used in preparation and disclosure of financial Results:
(1) The listed entity may prepare and disclose its financial results in accordance with Indian GAAP or International Financial Reporting Standards IFRS or US GAAP
(2) In case the listed entity prepares and discloses the financial results as per US GAAP, a reconciliation statement vis-a-vis Indian GAAP and summary of significant differences between the Indian GAAP and US GAAP has to be annexed.
(3) If financial results are prepared in accordance with IFRS, then listed entity shall annex only the summary of significant differences between the Indian GAAP and IFRS.
(4) If the listed entity is shifting from IFRS to US GAAP or vice versa then the accounts relating to the previous period shall be properly restated for comparison;
(5) The Accounting / Reporting Standard followed for any interim results shall be consistent with that of the Annual results.
(6) The financial results so submitted shall be based on the same set of accounting policies as those followed in the previous year provided that in case, there are changes in the accounting policies, the results of previous year shall be restated as per the present accounting policies, to make it comparable with current year results;
C. Auditing/Limited Review
(1) In case the listed entity prepares and discloses the financial results as per Indian GAAP, the listed entity shall ensure that the annual, half-yearly and/or quarterly results, as required under the laws, rules or regulations of home country, shall be audited or subject to limited review by a Chartered Accountant in accordance with Auditing ad Assurance Standards.
(2) In case the listed entity prepares and discloses the financial results as per US GAAP or IFRS, the listed entity shall ensure that the annual, half-yearly and/or quarterly results, as required under the laws, rules or regulations of home country shall be audited or subject to limited review by professional accountant or certified public accountant in accordance with the International Standards on Auditing. The auditor's report shall also be prepared in accordance with the International Standards on Auditing.
D. Disclosures
(1) The listed entity shall disclose the audit qualification(s) or any other audit reservation(s) along with the financial results in addition to the explanatory statement as to how audit qualification(s) or any other audit reservation(s) in respect of the audited accounts of the previous accounting year have been addressed in the financial results;
(2) Format
(a) The listed entity shall ensure that, if Indian GAAP is followed in preparation of the financial results the format of the disclosure of financial results shall be as prescribed by the Board.
(b) In case if Indian GAAP is not followed, the format of such disclosure shall be as per the disclosure requirements of the listed entity in the home country where the listed entity is listed.
(3) The listed entity shall make disclosures of its financial information in its functional currency/reporting currency/national currency and the reporting currency shall be restricted to Sterling Pound/Euro/Yen/US Dollar.
(4) The listed entity shall provide convenient translation into Indian Rupees of the latest year's/periods statements (as the case may be) of consolidated profit and losses, assets and liabilities and cash flows, at the closing rate of exchange, as at the date on which the financial information is presented.
(5) The listed entity shall provide convenient translations in English and other notes such that the IDR Holders are able to understand such financial statements.
Amendments
- Schedule V-Annual Report
SCHEDULE V: ANNUAL REPORT
[See Regulation 34(3) and 53(f)]
The annual report shall contain the following additional disclosures: A. Related Party Disclosure:
1. The listed entity shall make disclosures in compliance with the Accounting Standard on ''Related Party Disclosures''
2. The disclosure requirements shall be as follows:
S.No In the Accounts of Disclosures of amounts at the year-end and the maximum amount of loans/ advances/ Investments outstanding during the year.
1. Holding Company
a) Loans and advances in the nature of loans to subsidiaries by name and amount.
b) Loans and advances in the nature of loans to associates by name and amount.
c) Loans and advances in the nature of loans to firms/companies in which directors are interested by name and amount.
2. Subsidiary Same disclosures as applicable to the parent company in the accounts of subsidiary company.
3. Holding Company
Investments by the loanee in the shares of parent company and subsidiary company, when the company has made a loan or advance in the nature of loan.
For the purpose of above disclosures directors' interest shall have the same meaning as given in Section184 of Companies Act, 2013.144[(2A) Disclosures of transactions of the listed entity with any person or entity belonging to the promoter/promoter group which hold(s) 10% or more shareholding in the listed entity, in the format prescribed in the relevant accounting standards for annual results.]
3. The above disclosures shall be applicable to all listed entities except for listed banks.
B. Management Discussion and Analysis:
1. This section shall include discussion on the following matters within the limits set by the listed entity's competitive position:
(a) Industry structure and developments.
(b) Opportunities and Threats.
(c) Segment-wise or product-wise performance.
(d) Outlook
(e) Risks and concerns.
(f) Internal control systems and their adequacy.
(g) Discussion on financial performance with respect to operational performance.
(h) Material developments in Human Resources / Industrial Relations front, including number of people employed.
145[(i) details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanations therefor, including:
(i) Debtors Turnover
(ii) Inventory Turnover
(iii) Interest Coverage Ratio
(iv) Current Ratio
(v) Debt Equity Ratio
(vi) Operating Profit Margin (%)
(vii) Net Profit Margin (%) or sector-specific equivalent ratios, as applicable.
(j) details of any change in Return on Net Worth as compared to the immediately previous financial year along with a detailed explanation thereof.]
2. Disclosure of Accounting Treatment: Where in the preparation of financial statements, a treatment different from that prescribed in an Accounting Standard has been followed, the fact shall be disclosed in the financial statements, together with the management's explanation as to why it believes such alternative treatment is more representative of the true and fair view of the underlying business transaction.
C. Corporate Governance Report: The following disclosures shall be made in the section on the corporate governance of the annual report.
(1) A brief statement on listed entity's philosophy on code of governance.
(2) Board of directors:
(a) composition and category of directors (e.g. promoter, executive,non-executive,independent non-executive, nominee director - institution represented and whether as lender or as equity investor);
(b) attendance of each director at the meeting of the board of directors and the last annual general meeting;
(c) number of other board of directors or committees in which a directors is a member or chairperson; 146[, and with effect from the Annual Report for the year ended 31st March 2019, including separately the names of the listed entities where the person is a director and the category of directorship]
(d) number of meetings of the board of directors held and dates on which held;
(e) disclosure of relationships between directors inter-se;
(f) number of shares and convertible instruments held by non-executive directors;
(g) weblink where details of familiarisation programmes imparted to independent directors is disclosed.
147[(h) A chart or a matrix setting out the skills/expertise/competence of the 99 board of directors specifying the following:
(i) With effect from the financial year ending March 31, 2019, the list of core skills/expertise/competencies identified by the board of directors as required in the context of its business(es) and sector(s) for it to function effectively and those actually available with the board; and
(ii) With effect from the financial year ended March 31, 2020, the names of directors who have such skills/expertise / competence
(i) confirmation that in the opinion of the board, the independent directors fulfill the conditions specified in these regulations and are independent of the management.
(j) detailed reasons for the resignation of an independent director who resigns before the expiry of his tenure along with a confirmation by such director that there are no other material reasons other than those provided.]
(3) Audit committee:
(a) brief description of terms of reference;
(b) composition, name of members and chairperson; (c) meetings and attendance during the year.
(4) Nomination and Remuneration Committee:
(a) brief description of terms of reference;
(b) composition, name of members and chairperson;
(c) meeting and attendance during the year;
(d) performance evaluation criteria for independent directors.
(5) Remuneration of Directors:
(a) all pecuniary relationship or transactions of the non-executive directors vis-a-vis the listed entity shall be disclosed in the annual report;
(b) criteria of making payments to non-executive directors. alternatively, this may be disseminated on the listed entity's website and reference drawn thereto in the annual report;
(c) disclosures with respect to remuneration: in addition to disclosures required under the Companies Act, 2013, the following disclosures shall be made:
(i) all elements of remuneration package of individual directors summarized under major groups,such as salary, benefits, bonuses, stock options, pension etc;
(ii) details of fixed component and performance-linked incentives, along with the performance criteria;
(iii) service contracts, notice period, severance fees;
(iv) stock option details, if any and whether issued at a discount as well as the period over which accrued and over which exercisable.
(6) Stakeholders' grievance committee:
(a) name of non-executive director heading the committee;
(b) name and designation of compliance officer;
(c) number of shareholders' complaints received so far; (d) number not solved to the satisfaction of shareholders; (e) number of pending complaints.
(7) General body meetings:
(a) location and time, where last three annual general meetings held;
(b) whether any special resolutions passed in the previous three annual general meetings;
(c) whether any special resolution passed last year through postal ballot - details of voting pattern;
(d) person who conducted the postal ballot exercise;
(e) whether any special resolution is proposed to be conducted through postal ballot;
(f) procedure for postal ballot.
(8) Means of communication:
(a) quarterly results;
(b) newspapers wherein results normally published; (c) any website, where displayed;
(d) whether it also displays official news releases; and
(e) presentations made to institutional investors or to the analysts.
(9) General shareholder information:
(a) annual general meeting - date, time and venue;
(b) financial year;
(c) dividend payment date;
(d) the name and address of each stock exchange(s) at which the listed entity's securities are listed and a confirmation about payment of annual listing fee to each of such stock exchange(s);
(e) stock code;
(f) market price data- high, low during each month in last financial year;
(g) performance in comparison to broad-based indices such as BSE sensex, CRISIL Index etc;
(h) in case the securities are suspended from trading, the directors report shall explain the reason thereof;
(i) registrar to an issue and share transfer agents;
(j) share transfer system;
(k) distribution of shareholding;
(l) dematerialization of shares and liquidity;
(m) outstanding global depository receipts or american depository receipts or warrants or any convertible instruments, conversion date and likely impact on equity;
(n) commodity price risk or foreign exchange risk and hedging activities;
(o) plant locations;
(p) address for correspondence.
148[(q) list of all credit ratings obtained by the entity along with any revisions thereto during the relevant financial year, for all debt instruments of such entity or any fixed deposit programme or any scheme or proposal of the listed entity involving mobilization of funds, whether in India or abroad.]
(10) Other Disclosures:
(a) disclosures on materially significant related party transactions that may have potential conflict with the interests of listed entity at large;
(b) details of non-compliance by the listed entity, penalties, strictures imposed on the listed entity by stock exchange(s) or the board or any statutory authority, on any matter related to capital markets, during the last three years;
(c) details of establishment of vigil mechanism, whistle blower policy, and affirmation that no personnel has been denied access to the audit committee;
(d) details of compliance with mandatory requirements and adoption of the non-mandatory requirements;
(e) weblink where policy for determining 'material' subsidiaries is disclosed;
(f) weblink where policy on dealing with related party transactions;
(g) disclosure of commodity price risks and commodity hedging activities.
149[(h) Details of utilization of funds raised through preferential allotment or qualified institutions placement as specified under Regulation 32 (7A).
(i) a certificate from a company secretary in practice that none of the directors on the board of the company have been debarred or disqualified from being appointed or continuing as directors of companies by the Board/Ministry of Corporate Affairs or any such statutory authority.
(j) where the board had not accepted any recommendation of any committee of the board which is mandatorily required, in the relevant financial year, the same to be disclosed along with reasons thereof:
Provided that the clause shall only apply where recommendation of / submission by the committee is required for the approval of the Board of Directors and shall not apply where prior approval of the relevant committee is required for undertaking any transaction under these Regulations.
(k) total fees for all services paid by the listed entity and its subsidiaries, on a consolidated basis, to the statutory auditor and all entities in the network firm/network entity of which the statutory auditor is a part.]
150[(l) disclosures in relation to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013:
a. number of complaints filed during the financial year
b. number of complaints disposed of during the financial year
c. number of complaints pending as on end of the financial year.]
(11) Non-compliance of any requirement of corporate governance report of sub-paras (2) to (10) above, with reasons thereof shall be disclosed.
(12) The corporate governance report shall also disclose the extent to which the discretionary requirements as specified in Part E of Schedule II have been adopted.
(13) The disclosures of the compliance with corporate governance requirements specified in regulation 17 to 27 and clauses (b) to (i) of sub-regulation (2) of regulation 46 shall be made in the section on corporate governance of the annual report.
D. Declaration signed by the chief executive officer stating that the members of board of directors and senior management personnel have affirmed compliance with the code of conduct of board of directors and senior management.
E. Compliance certificate from either the auditors or practicing company secretaries regarding compliance of conditions of corporate governance shall be annexed with the directors' report.
F. Disclosures with respect to demat suspense account/ unclaimed suspense account
(1) The listed entity shall disclose the following details in its annual report, as long as there are shares in the demat suspense account or unclaimed suspense account, as applicable :
(a) aggregate number of shareholders and the outstanding shares in the suspense account lying at the beginning of the year;
(b) number of shareholders who approached listed entity for transfer of shares from suspense account during the year;
(c) number of shareholders to whom shares were transferred from suspense account during the year;
(d) aggregate number of shareholders and the outstanding shares in the suspense account lying at the end of the year;
(e) that the voting rights on these shares shall remain frozen till the rightful owner of such shares claims the shares.
Amendment
146 Inserted ibid., w.e.f from the date specified in the provision
- Schedule VI- Manner Of Dealing With Unclaimed Shares
SCHEDULE VI: MANNER OF DEALING WITH UNCLAIMED SHARES
[See Regulation 39(4)]
A. The listed entity may delegate the following procedural requirements to a share transfer agent.
B. Reminders to be sent
(1) The listed entity shall send at least three reminders at the address as mentioned below:
(a) For shares in physical form, reminders shall be sent to the address given in the application form as well as last available address as per listed entity's record.
(b) For shares in demat form, reminders shall be sent to the address captured in depository's database or address given in the application form, in case of application made in physical form.
C. Procedure in case of non receipt of response to reminders
(1) For shares in demat form, the unclaimed shares shall be credited to a demat suspense account with one of the Depository Participants, opened by the listed entity for this purpose.
(2) For shares in physical form, the listed entity shall transfer all the shares into one folio in the name of ''Unclaimed Suspense Account'' and shall dematerialise the shares held in the Unclaimed Suspense Account with one of the Depository Participants.
(3) The listed entity shall maintain details of shareholding of each individual allottee whose shares are credited to such demat suspense account or unclaimed suspense account, as applicable.
(4) The demat suspense account or unclaimed suspense account, as applicable shall be held by the listed entity purely on behalf of the allottees who are entitled to the shares and the shares held in such suspense account shall not be transferred in any manner whatsoever except for the purpose of allotting the shares to the allottee as and when he/she approaches the listed entity.
Provided that all such shares, in respect of which unpaid or unclaimed dividend has been transferred under Section 124 (5) of the Companies Act, 2013, shall also be transferred by the listed entity in accordance with Section 124 (6) of the Companies Act, 2013 and rules made thereunder.
D. Procedure in case of claim by allottee
(1) As and when the allottee approaches the listed entity, the listed entity shall, after proper verification of the identity of the allottee either credit the shares lying in the Unclaimed Suspense Account or demat suspense account, as applicable, to the demat account of the allottee to the extent of the allottee's entitlement, or deliver the physical certificates after re-materialising the same, depending on what has been opted for by the allottee:
Provided that the rematerializing of the physical certificates shall be done only in case where the shares were originally issued in physical form.
E. Dealing with Corporate Benefits (in terms of securities accruing) and Voting Rights on such Unclaimed Shares
(1) Any corporate benefits in terms of securities accruing on such shares viz. bonus shares, split, etc., shall also be credited to such demat suspense account or unclaimed suspense account, as applicable for a period of seven years and thereafter shall be transferred by the listed entity in accordance with provisions of Section 124(5) read with Section 124 (6) of the Companies Act, 2013 and rules made thereunder.
(2) The voting rights on such unclaimed shares shall remain frozen till the rightful owner claims the shares.
- Schedule VII- Transfer Of Securities
SCHEDULE VII: TRANSFER OF SECURITIES
[See Regulation 40(7) and 61(4)
A. REQUIREMENT OF PAN
(1) For registration of transfer of securities, the transferee(s), as well as transferor(s), shall furnish a copy of their PAN card to the listed entity for registration of transfer of securities.
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(2)For securities market transactions and/or for off-market or private transactions involving transfer of shares in physical form, the transferee(s) as well as transferor(s) shall furnish copy of PAN card to the listed entity for registration of such transfer of securities.](3) In cases where PAN Card is not available i.e. in the case of residents of Sikkim, the requirement of PAN Card may be substituted with Identity proof.
(4) In case of mismatch in PAN card details as well as difference in maiden name and current name, in case of married women, of the holder(s) of securities, the listed entity may collect the PAN card as submitted by the transferee(s) or transferor(s) as the case maybe:
Provided that this shall be subject to the listed entity verifying the veracity of the claim of such transferee(s) or transferor(s) by collecting sufficient documentary evidence in support of the identity of the transferee(s) or transferor(s).
B. DIFFERENCES IN SIGNATURE
(1) In case of minor differences in the signature of the transferor(s), the listed entity shall follow the following procedure for registering transfer of securities:
(a) the listed entity shall promptly send to the first transferor(s), via speed post an intimation of the aforesaid defect in the documents and inform the transferor(s) that objection, supported by valid proof, is not lodged by the transferor(s) with the listed entity within fifteen days of receipt of the listed entity's letter, then the securities shall be transferred;
(b) if the intimation to the transferor(s) is delivered and the objection from the transferor(s) with supporting documents is not received within fifteen days, the listed entity shall transfer the securities provided the listed entity does not suspect fraud or forgery in the matter:
Provided that the listed entity shall maintain proof of delivery for in their record(s).
(2) In case of major differences in, or non-availability of, the signature of the transferor(s), the listed entity shall follow the following procedure for registering transfer of securities:
(a) The listed entity shall promptly send to the transferee(s), via Speed Post, an Objection Memo along with the documents in original marking the reason as ''material signature difference/ non-availability of signature'' and an advice to ensure submission of requested documents of the transferor(s);
(b) The listed entity shall also send a copy of the Objection memo as per clause (a) of sub-para (2) to the transferor(s), via Speed Post, simultaneously;
(c) The above Objection Memo in clause (a) and (b) of sub-para (2) shall also state the requirement of additional documents of transferor(s) as follows for effecting the transfer:
(i) an Affidavit to update transferor(s) signature in its records;
(ii) an original unsigned cancelled cheque and banker's attestation of the transferor(s) signature and address);
(iii) contact details of the transferor(s) and ;
(d) If the intimation to both the transferor(s) and the transferee(s) are delivered, requested documents of the transferor(s) are submitted to the listed entity and the address attested by the bank tallies with the address available in the database of listed entity, the listed entity, shall transfer the securities provided the listed entity does not suspect fraud or forgery in the matter:
Provided that listed entity shall maintain proof of delivery in their record(s).
C. ADDITIONAL DOCUMENTATION REQUIREMENTS IN CASE OF TRANSMISSION OF SECURITIES
(1) In case of transmission of securities held in dematerialized mode, where the securities are held in a single name without a nominee, for the purpose of following simplified documentation, as prescribed by the depositories vide bye-laws or operating instructions, as applicable, the threshold limit is rupees five lakhs only per beneficiary owner account.
(2) In case of transmission of securities held in physical mode:
(a) where the securities are held in single name with a nominee:
(i) duly signed transmission request form by the nominee;
(ii) original or copy of death certificate duly attested by a notary public or by a gazetted officer;
(iii) self-attested copy of PAN card of the nominee.
152[
(b)where the securities are held in single name without a nominee, a affidavit made on appropriate non judicial stamp paper , to the effect of identification and claim of legal ownership to the securities shall be required and additionally(i) for value of securities, threshold limit of upto rupees two lakh only, per listed entity, as on date of application, one or more of the following documents may be submitted :1. No objection certificate from all legal heir(s) who do not object to such transmission or copy of family settlement deed duly notarized or attested by a gazetted officer and executed by all the legal heirs of the deceased holder;2. indemnity made on appropriate non-judicial stamp paper, indemnifying the listed entity ;(ii) for value of securities, threshold limit, more than rupees two lakh, per listed entity, as on date of application, succession certificate or probate of will or letter of administration or court decree shall be submitted;(iii) the listed entity, however, at its discretion, may enhance value of securities, threshold limit, of rupees two lakh.(b) where the securities are held in single name without a nominee, an affidavit from all legal heir(s) made on appropriate non-judicial stamp paper, to the effect of identification and claim of legal ownership to the securities shall be required;
Provided that in case the legal heir(s)/claimant(s) is named in the succession certificate or probate of will or will or letter of administration, an affidavit from such legal heir(s) / claimant(s) alone would be sufficient.
Provided further that:
(i) for value of securities, threshold limit of up to rupees two lakh only, per listed entity, as on date of application, a succession certificate or probate of will or will or letter of administration or court decree, as may be applicable in terms of Indian Succession Act, 1925 may be submitted :
Provided that in the absence of such documents, the following documents may be submitted:
1. no objection certificate from all legal heir(s) who do not object to such transmission or copy of family settlement deed duly notarized and executed by all the legal heirs of the deceased holder;
2. an indemnity bond made on appropriate non-judicial stamp paper, indemnifying the Share Transfer Agent / listed entity;
(ii) for value of securities, more than rupees two lakh, per listed entity, as on date of application, a succession certificate or probate of will or will or letter of administration or court decree, as may be applicable in terms of Indian Succession Act, 1925 shall be submitted;
(iii) the listed entity, however, at its discretion, may enhance value of securities, threshold limit, of rupees two lakh.]
Amendment
- Schedule VIII- Manner Of Reviewing Form B Accompanying Annual Audited Results
153
[SCHEDULE VIII - MANNER OF REVIEWING FORM B ACCOMPANYING ANNUAL AUDITED RESULTS[See Regulations 33(6) and 33(7) , 52(3)(b) and 52(3)(c) and 95]A. REVIEW BY STOCK EXCHANGE(S)The stock exchange(s) shall adopt the following procedure for reviewing the Form B and accompanying annual audit reports submitted in terms of clause (d) of sub-regulation (3) of regulation 33 and clause (a) of sub-regulation (3) of 52:(1) Stock exchange(s) shall carry out preliminary scrutiny of reports accompanied by Form B including seeking necessary explanation from the listed entity concerned and consider the same based on materiality of the modified opinion(s).(2) The parameters for ascertaining the materiality of modified opinion(s) shall be the impact of these modified opinions on the profit and loss and financial position of the listed entity.(3) For the purpose of uniformity, stock exchange(s) shall consult one another for deciding the criteria for preliminary scrutiny.(4) Further, stock exchange(s) shall also consult one another for distributing the work in case shares of the listed entity concerned are listed on more than one stock exchange(s).(5) Upon examining the audit reports based on the above parameters, stock exchange(s) shall refer those cases, which, in their opinion, need further examination, to the Board.(6) Stock exchange(s) shall display the list of listed entities which have filed their audit reports along with Form B.B. REVIEW BY THE QUALIFIED AUDIT REPORT REVIEW COMMITTEE(1) The qualified audit report review committee shall be constituted by the board comprising of representatives from Institute of Chartered Accountants of India, stock exchange(s), Ministry of Corporate Affairs etc.(2) The qualified audit report review committee shall review the cases received from the stock exchange(s) and guide the Board in processing the annual audit reports with modified opinion(s).(3) After analyzing the modified opinion(s) in audit reports, qualified audit report review committee may make the following recommendations:(a) If qualified audit report review committee is of the view that the impact of modified opinion is not significant, it may recommend rectification of such modified opinion in the subsequent financial year;(b) If qualified audit report review committee is of the view that the impact of modified opinion is significant and the explanation given by the listed entity concerned in Form B is unsatisfactory, the case may be referred to the Financial Reporting Review Board of Institute of Chartered Accountants of India, for their opinion on whether the modified opinion is justified.(c) Based on the opinion of the financial reporting review board, qualified audit report review committee may recommend the following:(i) If Financial Reporting Review Board opines that modified opinion is justified, qualified audit report review committee may recommend submission of revised pro-forma financial results, incorporating the effect of the modified opinion, to the stock exchange(s) in the manner as specified in para (E) below.(ii) If financial reporting review board is of the view that modified opinion is not justified, Institute of Chartered Accountants of India may take up the matter appropriately with the statutory auditor of the listed entity.(d) If a modified opinion is not quantifiable, qualified audit report review committee may recommend rectification of such modified opinion in the subsequent financial year.C. Based on the recommendations of qualified audit report review committee and/or the opinion of Financial Reporting Review Board, the Board may direct the listed entity concerned to rectify its modified opinion and/or submit the revised pro-forma financial results in the manner specified in sub-para (3) of para (B).D. The Board may, at any stage, in the interest of investors, take any other necessary action as it deems fit.E.SUBMISSION OF REVISED PRO-FORMA FINANCIAL RESULTS(1) The listed entity shall undertake the following steps for submission of revised pro-forma financial results:(a) The listed entity shall submit revised pro-forma financial results, incorporating the effect of the modified opinion, to the stock exchange(s) within two months from the date of receipt of such direction from Board.(b) The accounting impact of such modified opinion shall be carried out as a prior period item in the financial statements of the subsequent financial year.F.The review of all Form Bs and the accompanying annual audit reports shall be carried out twice a year based on the reports received up to half year ending on June and December of every year and for this purpose, the following timelines are prescribed:ActivityTo be completed byFiling of annual audit reports and Form A/Form B by the listed entityAs per the regulationsPreliminary scrutiny of the reports received during the half year (January - June and July- December each year) by stock exchange(s) and referring cases to the BoardOne month from the end of half year ending on June and December each year.Review of the cases by qualified audit report review committeeOne month from the date of receipt of report from the stock exchange(s).Referring cases to Financial Reporting Review Board of Institute of Chartered Accountants of IndiaFifteen days from the date of decision of the qualified audit report review committeeReceipt of reply from Financial Reporting Review BoardOne month from the date of referral by qualified audit report review committeeCommunication of decision on the case to the listed entity concerned and the stock exchange(s).Fifteen days from the date of decision of qualified audit report review committee / Financial Reporting Review BoardSubmission of revised pro-forma financial results by the listed entity concernedWithin two months from the date of letter of communication to the concerned entity.Amendment
- Schedule IX- Amendments To Other Regulations
SCHEDULE IX- AMENDMENTS TO OTHER REGULATIONS
[See regulation 100]
1. Amendment to Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009.
(i) For regulation 7 the following shall be substituted, namely:- "Security Deposit.
7. (1) The issuer shall deposit, before the opening of subscription list, and keep deposited with the stock exchange(s), an amount calculated at the rate of one per cent. of the amount of securities offered for subscription to the public.
(2)The amount specified in sub-regulation (1) shall be deposited in the manner specified by Board and/or stock exchange(s).
(3)The amount specified in sub-regulation (1) shall be refundable or forfeitable in the manner specified by the Board."
(ii) In regulation 98, after clause (f), the following clauses shall be inserted, namely,-
"(g) the issuing company shall ensure that the underlying equity shares against which IDRs are issued have been or will be listed in its home country before listing of IDRs in stock exchange(s).
(h) the issuing company shall ensure that the underlying shares of IDRs shall rank pari-passu with the existing shares of the same class."
(iii) In regulation 101, for sub-regulation (1) the following shall be substituted, namely:-
"(1) The issuing company shall appoint one or more merchant bankers, at least one of whom shall be a lead merchant banker and shall also appoint other intermediaries, in consultation with the lead merchant banker and shall enter into an agreement with the merchant banker on the lines of format of agreement as specified in Schedule II."
(iv) After regulation 101 and before regulation 102, the following regulation shall be inserted, namely:-
"Agreements with other intermediaries and others.
101A. (1) The issuing company shall appoint a registrar and transfer agent which has connectivity with all the depositories.
(2)The issuing company shall enter into an agreement with overseas custodian bank and domestic depository.
(3) The lead merchant banker, after independently assessing the capability of other intermediaries and others to carry out their obligations, shall advise the issuing company on their appointment."
(v) For regulation 102 the following shall be substituted, namely:- “Display of bid data and issue of allotment letter.
102. (1) The stock exchange(s) offering online bidding system for the book building process shall display on their website, the data pertaining to book built IDR issue, in the format specified in Part B(2) of Schedule XI, from the date of opening of the bids till at least three days after closure of bids.
(2) The issuing company shall ensure that letter of allotment for the IDRs are issued simultaneously to all allottees and that in the event of it being impossible to issue letters of regret at the same time, a notice to that effect be issued in the media so that it appears on the morning after the letters of allotment have been dispatched.”
(vi) for regulation 106J the following shall be substituted, namely,- Period of subscription and issue of allotment letter.
106J. (1) A rights issue shall be open for subscription in India for a period as applicable under the laws of its home country but in no case less than ten days.
(2) The issuing company shall ensure that it sends the allotment letter of rights to IDR Holders at the time they are sent to shareholders of the issuing company as per the requirement of its home country or other jurisdictions where its securities are listed.
(vii) in regulation 106M, the words, number and symbol "regulation 7," shall be omitted.
(viii) Chapter XI shall be renumbered as Chapter XII.
(ix) Regulations 107, 108, 109, 110 and 111 shall be renumbered as 111, 112, 113, 114 and 115 respectively and any reference thereto in any regulation framed or any circular or guideline issued by the Board shall be read accordingly.
(x) After Chapter X and before Chapter XII, the following Chapter shall be inserted, namely:-
"CHAPTER XI
LISTING OF SECURITIES ON STOCK EXCHANGES
In-principle approval of recognized stock exchange(s).
107. (1) The issuer or the issuing company, as the case may be, shall obtain in-principle approval from recognised stock exchange as follows:
(a) in case of an initial public offer or an issue of Indian Depository Receipts (hereinafter referred to as ‘IDRs’) , from all the recognised stock exchange(s) on which the issuer or the issuing company, proposes to get its specified securities or IDRs, as the case may be, listed; and
(b) in case of other issues, before issuance of further securities, as follows:
(i) where the securities are listed only on recognised stock exchange(s) having nationwide trading terminals, from all such stock exchange(s);
(ii) where the securities are not listed on any recognised stock exchange having nationwide trading terminals, from all the stock exchange(s) on which the securities of the issuer are proposed to be listed;
(iii) where the specified are listed on recognised stock exchange(s) having nationwide trading terminals as well as on the recognised stock exchange(s) not having nationwide trading terminals, from all recognised stock exchange(s) having nationwide trading terminals.
Application for Listing.
108. (1) The issuer or the issuing company, as the case may be, shall complete the pre-listing formalities within the time lines specified by the Board from time to time.
(2) The issuer or the issuing company, as the case may be, shall, make an application for listing, within twenty days from the date of allotment, to one or more recognized stock exchange(s) along with the documents specified by stock exchange(s) from time to time.
(3) In case of delay in making application for listing beyond twenty days from the date of allotment, the issuer or the issuing company, as the case may be, shall pay penal interest to allottees for each day of delay at the rate of atleast ten per cent. per annum from the expiry of thirty days from date of allotment till the listing of such securities to the allottees.
(4) In the event of non-receipt of listing permission from the stock exchange(s) by the issuer or the issuing company, as the case may be, or withdrawal of Observation Letter issued by the Board, wherever applicable, the securities shall not be eligible for listing and the issuer or the issuing company, as the case may be, shall be liable to refund the subscription monies, if any, to the respective allottees immediately alongwith interest at the rate of ten per cent. per annum from the date of allotment.
Listing Agreement.
109. (1) Every issuer or the issuing company desirous of listing its securities on a recognised stock exchange shall execute a listing agreement with such stock exchange.
(2) Every issuer or the issuing company which has previously entered into agreement(s) with a recognised stock exchange to list its securities shall execute a fresh listing agreement with such stock exchange within six months of the date of notification of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.
Obligation of stock exchange(s).
110. The stock exchange(s) shall grant in-principle approval/list the securities or reject the application for in-principle approval /listing by the issuer or issuing company, as the case maybe, within thirty days from the later of the following dates:
(a) the date of receipt of application for in-principle approval/listing from issuer or the issuing company, as the case may be,;
(b) the date of receipt of satisfactory reply from the issuer or the issuing company, as the case may be, in cases where the stock exchange(s) has sought any clarification from them."
(xi) In Schedule VIII, in part E in clause 5, in item XVI, after sub-item B and before sub-item C, the following sub-item shall be inserted, namely:-
"(BA) Dealing with Fractional Entitlement: Manner of dealing with fractional entitlement viz. payment of the equivalent of the value, if any, of the fractional rights in cash etc."
(xii) In Schedule XIX, in part A, in item 13, after sub-item(e), the following sub-item shall be inserted, namely:-
"(f) Different classes of shares based on different criteria, if any."
(xiii) In Schedule XIX, in part A, in item 14, before sub-item (a), the following general instructions shall be inserted, namely:-
General Instructions:
(1) The format of disclosure of financial results may be as per the disclosure requirements of the issuing company in the home country where the Issuing Company is listed.
(2) The issuing company shall intimate to the investors in the offer document the type of disclosures that it will follow i.e. whether as per Indian GAAP, IFRS or US GAAP and any change in such format shall be informed to the IDR Holders by way of notices to the stock exchange.
(xiv) In Schedule XIX, in Part B, in item 2, after sub-item (d), the following sub-item shall be inserted, namely:-
"(e) Different classes of shares based on different criteria, if any."
(xv) In Schedule XX in the reference title the number “110” shall be substituted, with the number “114”.
2. Amendment to Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008.
(i) After regulation 12 and before regulation 13, the following regulation shall be inserted, namely:-
"Allotment of securities and payment of interest.
12A. (1) The Issuer shall ensure that that in case of listing of debt securities issued to public, allotment of securities offered to public shall be made within thirty days of the closure of the public issue.
(2) Where the debt securities are not allotted and/or application moneys are not refunded within the stipulated period in sub-regulation (1), the issuer shall undertake to pay interest at the rate of fifteen per cent. per annum.
(3) Credit to demat accounts of the allottees shall be made within two working days from the date of allotment.”
(ii) After regulation 19 and before regulation 20, the following regulations shall be inserted, namely:-
"Listing Agreement.
19A. (1) Every issuer desirous of listing its debt securities on a recognised stock exchange shall execute an agreement with such stock exchange.
(2) Every issuer which has previously entered into agreements with a recognised stock exchange to list its debt securities shall execute a fresh listing agreement with such stock exchange within six months of the date of notification of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.
Security Deposit.
19B. (1) The issuer shall deposit, before the opening of subscription list, and keep deposited with the stock exchange(s) an amount calculated at the rate of one per cent. of the amount of securities offered for subscription to the public.
(2)The amount stipulated in sub-regulation (1) shall be deposited in the manner specified by Board and/or stock exchange(s).
(3)The amount stipulated in sub-regulation (1) shall be refundable or forfeitable in the manner specified by the Board."
(iii) For regulation 23, the following shall be substituted, namely:- “Continuous Listing Conditions.
23. All the issuers making public issues of debt securities or seeking listing of debt securities issued on private placement basis shall comply with the conditions of listing specified in the respective listing agreement for debt securities.”
3. Amendment to Securities and Exchange Board of India(Issue and Listing of Non-Convertible Redeemable Preference Shares) Regulations, 2013.
(i) After regulation 16 and before regulation 17, the following regulations shall be inserted, namely:-
"Listing Agreement.
16A. (1) Every issuer desirous of listing its non-convertible redeemable preference shares, or perpetual non-cumulative preference shares or innovative perpetual debt instruments on a recognised stock exchange, shall execute an agreement with such stock exchange.
(2) Every issuer which has previously entered into agreements with a recognised stock exchange to list non-convertible redeemable preference shares, or perpetual non-cumulative preference shares or innovative perpetual debt instruments shall execute a fresh listing agreement with such stock exchange within six months of the date of notification of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.
Security Deposit.
16B. (1) The issuer shall deposit, before the opening of subscription list, and keep deposited with the stock exchange(s) an amount calculated at the rate of one per cent. of the amount of securities offered for subscription to the public.
(2)The amount stipulated in sub-regulation (1) shall be deposited in the manner specified by Board and/or stock exchange(s).
(3)The amount stipulated in sub-regulation (1) shall be refundable or forfeitable in the manner specified by the Board.”
(ii) In regulation 20, sub-regulations (2) and (3) shall be omitted.
(iii) In Schedule I, in para. III, in sub-para (ii), under the heading “Delay in Dispatch of Allotment Letters or Refund Orders” after the word and sign "closure." and before the words "The issuer further agrees", the following shall be inserted, namely:-
"Issuer agrees that credit to demat accounts of the allottees shall be made within two working days from the date of allotment."
4. Amendment to Securities and Exchange Board of India (Public Offer and Listing of Securitised Debt Instruments) Regulations, 2008.
(i) In regulation 31, after sub-regulation (8), the following sub-regulation shall be inserted, namely:-
"(9) Credit to demat accounts of the allottees shall be made by the issuer within two working days from the date of allotment.”
(ii) After regulation 35 and before regulation 36, the following regulation shall be inserted, namely:-
"Listing Agreement.
35A. (1) Every special purpose distinct entity desirous of listing securitised debt instruments on a recognised stock exchange, shall execute an agreement with such stock exchange.
(2) Every special purpose distinct entity which has previously entered into agreements with a recognised stock exchange to list securitised debt instruments shall execute a fresh listing agreement with such stock exchange within six months of the date of notification of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.
Security Deposit.
35B. (1) The issuer shall deposit, before the opening of subscription list, and keep deposited with the stock exchange(s) an amount calculated at the rate of one per cent. of the amount of securities offered for subscription to the public.
(2)The amount stipulated in sub-regulation (1) shall be deposited in the manner specified by Board and/or stock exchange(s)(s).
(3)The amount stipulated in sub-regulation (1) shall be refundable or forfeitable in the manner specified by the Board."
(iii) In regulation 36, sub-regulation (3) shall be substituted with the following, namely:-
"(3) In case of a private placement of securitised debt instruments, the special purpose distinct entity shall file listing particulars with the recognised stock exchange, along with the application made under sub-regulation (1) of regulation
35, containing such information as may be necessary for any investor in the secondary market to make an informed investment decision in respect of its securitised debt instruments and the special purpose distinct entity shall promptly disseminate such information, as prescribed, in such manner as the recognised stock exchange(s) may determine from time to time ".(iv) For regulation 37, the following shall be substituted, namely:- “Continuous listing conditions.
37. The special purpose distinct entity or trustee thereof shall submit such information, including financial information relating to the schemes, to the stock exchanges and investors and comply with such other continuing obligations as may be stipulated in the listing agreement.”
5. Amendment to Securities and Exchange Board of India (Mutual Funds) Regulations, 1996.
After regulation 31, the following regulation shall be inserted, namely:- “In-principle approval from recognised stock exchange(s).
31A. The listed entity, which intends to list units of its scheme on the recognised stock exchange(s), shall obtain ‘in-principle’ approval from recognised stock exchange(s) in the manner as specified by the recognised stock exchange(s) from time to time.
Listing Agreement.
31B. (1) Every mutual fund desirous of listing units of its schemes on a recognised stock exchange shall execute an agreement with such stock exchange.
(2) Every mutual fund which has previously entered into agreements with a recognised stock exchange to list units of its schemes shall execute a fresh listing agreement with such stock exchange within six months of the date of notification of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015."
- Schedule X- List Of Sebi Circulars Which Stand Rescinded
SCHEDULE X- LIST OF SEBI CIRCULARS WHICH STAND RESCINDED
[See Regulation 103]
- Schedule XI - Fee in respect of draft scheme of Arrangement
154[Schedule XI – Fee in respect of draft scheme of arrangement
[see regulations 37 and 94]
1. The listed entity shall, along with the draft scheme of arrangement, remit fee at the rate of 0.1% of the paid-up share capital of the listed/transferee/resulting company, whichever is higher, post sanction of the scheme, subject to a cap of `5,00,000/-.
2. The fee specified in clause 1 shall be paid by way of direct credit to the bank account of the Board through NEFT/RTGS/IMPS or any other mode allowed by RBI or by means of a demand draft in favour of “Securities and Exchange Board of India” payable at Mumbai.]
Amendment
- Schedule I-Terms Of Securities
- SEBI FAQ's on LODR,2015
- A. Definitions
Q 1. Regulation 2(1)(b) of LR defines an ‘associate company’ to mean any entity which is an associate under the Companies Act, 2013 or under the applicable accounting standards. Whether both conditions have to be met or either of the two?
Ans.The definition of associate company should be viewed under the Companies Act, 2013 as well as Accounting Standards. If the condition is met under either of the two, then such entity should be classified as an associate company
Q 2. Regulation 2(1)(zb) of LR defines the term ‘Related party’ to mean related party under the Companies Act, 2013 or under the applicable Accounting Standards. Whether both conditions have to be met or either of the two?
Ans.The definition of related party should be viewed under the Companies Act, 2013 as well as Accounting Standards. If the condition is met under either of the two, then such party should be classified as a related party.
- B. Corporate Governance
Q 1. Regulation 17(8) of LR requires a compliance certificate to the Board of directors by Chief Executive Officer (CEO) and Chief Financial Officer (CFO). Whether the Managing Director or Whole Time Director may certify the compliance certificate, when the company has not designated a CEO?
Ans. Such certificates may be signed by the officials who hold powers, duties and responsibilities of a CEO/ CFO irrespective of their designations.
Q 2. Regulation 23 (4) provides that all material related party transactions shall require approval of the shareholders through resolution and the related parties shall abstain from voting on such resolutions whether the entity is a related party to the particular transaction or not. In this regard, whether only those related parties who are related to the concerned transaction/ contract should abstain from voting or whether related parties should altogether abstain from voting?
Ans. The requirement under Regulation 23(4), is applicable for listed entities subject to the provisions of Regulation 15. Hence, for applicable entities, the regulations clearly provide that all material related party transactions shall require approval of the shareholders through resolution and the related parties shall abstain from voting on such resolutions whether the entity is a related party for the particular transaction or not.
Q3. Regulation 23(8) requires 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. Whether the listed entity requires to take a fresh shareholders approval in case it has already taken an approval prior to implementation of these regulations?
Answer: The listed entity need not take fresh approval of shareholders in case the entity has already fulfilled the requirement of the regulations.Q 4. Regulation 24 (1) prescribes having at least one independent director of the listed entity as a director on the board of directors of 'unlisted material subsidiary, incorporated in India'. Sub-regulations (2), (3) and (4) to the same regulation refer to 'unlisted subsidiary'. Whether such sub-regulations (2), (3) and (4) are applicable to all unlisted subsidiaries or only material unlisted subsidiaries incorporated in India?
Ans. Listed entities may be guided by the provisions of Regulation 24. Wherever 'unlisted material subsidiary' and 'unlisted subsidiary' have been distinctly mentioned in a particular sub-regulation, such sub-regulation shall be applicable to material unlisted subsidiaries or all unlisted subsidiaries as the case may be.
Q5. Regulation 24 (4) requires that the management of the unlisted subsidiary shall periodically bring to the notice of the board of directors of the listed entity, a statement of all significant transactions and arrangements entered into by the unlisted subsidiary. Whether the requirement is applicable only to the material unlisted subsidiary?
Answer: The requirement is applicable to all unlisted subsidiaries.Q6. Regulation 26(1) stipulates that a director shall not be a member in more than ten committees or act as chairperson of more than five committees across all listed entities. Clause (a) to the aforesaid sub-regulation requires membership on committees that a director serves in all public limited companies, whether listed or not, to be included for determining the count of committee membership/ chairmanship for sub-regulation (1) and excludes membership on committees of private limited companies, foreign companies and companies under Section 8 of the Companies Act, 2013. Whether a director can be committee member for ten listed entities only or the same includes unlisted public companies as well?
Answer: A director of a listed entity can be member in maximum ten committees and chairperson of more than five committees of listed entities and unlisted public limited companies put together.
- C. Disclosure of Events or Information
Q 1. Regulation 30(8) of LR requires posting of disclosures on the listed entity’s website for a minimum period of five years. Whether the said provision is prospective from December 1, 2015 and pertains to disclosures relating to events happening thereafter?
Ans. The disclosures made under Regulation 30(8) shall be made w.e.f. December 01, 2015, i.e., the listed entity shall disclose on its website all such events or information which has been disclosed to stock exchange(s) under this regulation on or after the said date, and such disclosures shall be hosted on the website of the listed entity for a minimum period of five years from the date of disclosure to the stock exchange.
Q 2. Regulation 30(9) of LR requires disclosure of all events and information with respect to subsidiaries which are material. If both parent and subsidiary are listed entities, would it be sufficient compliance if the listed subsidiary has made a disclosure or whether same disclosure be made by the parent listed entity also?
Ans. Both the parent and material subsidiary in their own right as Listed Entities have to make disclosure separately as applicable under Listing Regulations.
Q 3. Regulation 16 (1)(c) defines material subsidiary as - “material subsidiary” shall mean a subsidiary, whose income or net worth exceeds twenty percent of the consolidated income or net worth respectively, of the listed entity and its subsidiaries in the immediately preceding accounting year.” The Explanation to Regulation 16 (1)(c) states that the listed entity shall formulate a policy for determining material subsidiary. Can the listed entity adopt a different criteria for determining material subsidiary for the purpose of Regulation 30 (9)?
Ans. The definition of 'material subsidiary' under regulation 16(1)(c) defines a subsidiary that is material to the listed entity. Further, the explanation to the aforesaid provision allows the listed entity to formulate a policy for the same, i.e., a listed entity can develop criteria that is stricter than what has been provided in the Regulations. Regulation 30(9) requires the listed entity to disclose all events or information with respect to subsidiaries which are material for the listed entity. The said sub-regulation places stress on materiality of the events or information. Therefore, disclosure would be required in cases where the event or information originating from a subsidiary is material to the listed entity, irrespective of whether such a subsidiary is material or not as per the definition provided at regulation 16(1)(c).
Q 4. Schedule III Part A, Para A, Clause 1(ii)(a) requires disclosures on acquisition or agreements to acquire shares or voting rights in a company, whether directly or indirectly, such that the listed entity holds shares or voting rights aggregating to five per cent or more of the shares or voting rights in the said company. Whether the disclosure is with respect to acquisition of shares or voting rights when the target company is a listed entity only or whether it is applicable to unlisted entities also?
Ans. The Schedule refers to the listed entity’s acquisition of shares or voting rights in the company. Such target company can be listed or unlisted.
Q5. Schedule III Para A of Part A, item 4 (d) on deemed material events mentions that a listed entity shall disclose within 30 minutes of the closure of the meeting the decision with respect to fund raising proposed to be undertaken. What all methods of fund raising are covered under the same?
Answer: The listed entity may be guided by Regulation 29(1) (d) which stipulates the types of fund raising an entity is required to intimate to Stock Exchange. - D. Other Clarifications
Q 1. Under Regulation 33(3), for submission of financial results for the last quarter, whether Unaudited Results can be submitted to the Exchanges?
Ans. Regulation (33)(3)(d) clearly states that the listed entity shall file audited annual results in 60 days from the end of the last quarter. Therefore, the financial statements for the last quarter shall necessarily be audited. The said provision was also there in the erstwhile Listing Agreement.
Q2. Regulation 33 (3)(d) requires a company to submit audited standalone financial results for the financial year, within sixty days from the end of the financial year along with the audit report and either Form A (for audit report with unmodified opinion) or Form B (for audit report with modified opinion). However for listed entities having subsidiaries whether two sets of Form A or Form B have to be prepared for standalone and consolidated results?
Answer: A company having subsidiaries will prepare two sets of Form A and/or Form B, one for standalone results and another for consolidated results based on the respective audit report.
Q3. Regulation 34 (2) (f) requires Annual Report to contain Business Responsibility Report (BRR). Since when this requirement will be applicable?
Answer: Presently Regulation 34 requires top hundred listed entities based on market capitalization(calculated as on March 31 of every financial year) to compulsorily and other than top hundred listed entities to voluntarily include BRR in their Annual Report. Subsequent to amendment in SEBI (Listing Obligations and Disclosure Requirements) Regulation 2015 notified on December 22, 2015, the requirement of mandatory reporting of BRR in Annual Report has been raised from hundred to five hundred listed entities which will be effective from April 1, 2016 and hence it will form a part of the Annual Report for the financial year 2016-17.Q4. Regulation 35 requires the listed entity to submit to the stock exchange(s) an Annual Information Memorandum in the manner specified by the Board from time to time. Since the Regulations do not currently specify the applicable date and the manner, is the said provision currently applicable?
Answer: As mentioned, in the regulation, the said requirement will become applicable as and when Annual Information Memorandum is specified by SEBI.
Q4. Regulation 40(3) requires that the listed entity shall register transfers of its securities in the name of the transferee(s) and issue certificates or receipts or advices, as applicable, of transfers; or issue any valid objection or intimation to the transferee or transferor, as the case may be, within a period of fifteen days from the date of such receipt of request for transfer. It provides that the listed entity shall ensure that transmission requests are processed for securities held in dematerialized mode and physical mode within seven days and twenty one days respectively, after receipt of the specified documents and that proper verifiable dated records of all correspondence with the investor shall be maintained by the listed entity. In this regard, how would a company ensure compliance in an era where companies have no role to play in processing of transmission of securities held in dematerialized mode?
Answer: The provision in Regulation 40(3) may be read in context with Regulation 7(1) which states that the listed entity shall appoint a share transfer agent or manage the share transfer facility in-house. In cases where the listed entity is managing the share transfer in-house, such compliance may be ensured. In this regard, the share transfer agent is an agent of the listed entity and it is imperative that the listed entity as a principal shall supervise the activities of its agent. Further, Regulation 8 provides that the listed entity, wherever applicable, shall co-operate with and submit correct and adequate information to the intermediaries registered with the Board including registrar to an issue and share transfer agents.
Q5. Regulation 40 (8) requires the listed entity that has not effected transfer of securitieswithin fifteen days or where the listed entity has failed to communicate to the transferee(s) any valid objection to the transfer, within the stipulated time period of fifteen days to compensate the aggrieved party for the opportunity losses caused during the period of the delay. Sub regulation (9) of the aforesaid regulation states that the listed entity shall ensure that the share transfer agent and/or the in-house share transfer facility, as the case may be, produces a certificate from a practicing company secretary within one month of the end of each half of the financial year,certifying that all certificates have been issued within thirty days of the date of lodgment for transfer, sub-division, consolidation, renewal, exchange or endorsement of calls/allotment monies. The matter needs to be clarified.
Answer: It is clarified that the listed entity may seek such reports from share transfer agents as they may require, so as to ensure compliance with the time period of 15 days for transfer of securities as stipulated in sub-regulation (8).
Q6. As per Regulation 46(2)(n), the listed entity is required to disseminate on its website details of agreements entered into with the media companies and/or their associates, etc. In this regard, should the listed entity disclose all agreements entered into with media companies/ their associates including ordinary agreements or disclose only such agreements that are not in the normal course of business as required under item 5 of paragraph A of part A of Schedule III of LR?
Answer: It is clarified that only such agreements that are not in the normal course of business shall be disclosed. Listed entities may refer to SEBI Press Release No. 200/2010 dated August 27, 2010 and Press Council of India Press Release No. PR/3/10-11-PCI dated August 02, 2010 wherein concerns related to 'private treaties' and their disclosures have been discussed in detail.
Q7. Regulation 46 (3) requires listed entity to update any change in the content of its website within two working days from the date of such change in content. Whether change in the content of website means any change on the website?
Answer: Regulation 46(2) prescribes the list of information to be disseminated by a listed entity on its website. Regulation 46 (3) refers to the update of any change in the content which is provided as per the requirements of Regulation 46 (2).
- F. Miscellaneous
Q1. Regulation 9 requires a listed entity to frame a policy for preservation of documents approved by its board of directors, classifying them into the documents that can be preserved permanently or can be preserved for a period of not less than eight years after completion of the relevant transactions. What types of documents are covered under this regulation?
Answer: The documents preserved in terms of Regulation 9 includes documents required to be preserved by a listed entity in terms of securities laws defined under Regulation 2(1)(zf) and other laws and statutes applicable to such listed entity. - E. Common Obligations of Listed Entities
Q23. The regulations do not define 'working days'. Whether the same can be clarified?
Answer: 'Working days' means working days of the stock exchange where the securities of the entity are listed.
- A. Definitions
- Formats
Annexure Particulars Download Annexure 1 Format for Submission of Unaudited/Audited Financial results by Companies other than Bank
Download Annexure 2 Format for submitting the quarterly financial results by banks
Download Annexure 3 Format for submitting the quarterly financial results by companies eligible for alternative format
Download Annexure 4 Format for Reporting of Segment wise Revenue, Results and Capital Employed along with the quarterly results(applicable for banks as well as companies other than banks)
Download Annexure 5 Format for the Limited Review Report for companies (other than banks)
Download Annexure 6 Format for the Limited Review Report (for Banks)
Download Annexure 7 When an Unmodified Opinion is expressed on the Quarterly financial results(for companies other than banks)
Download Annexure 8 When an Unmodified Opinion is expressed on the Quarterly financial results(for banks) Download Annexure 9 Statement of Assets and Liabilities for Companies (Other than Banks)
Download Annexure 10 Form A (for audit report with unmodified opinion)
or
Form B (for audit report with modified opinion) along-with Financial Results
Download Annexure11 Format for Newspaper Publishing Purpose (Standalone/Consolidated)
Download - Circulars
SEBI/ LAD-NRO/GN/2016-17/008 Jul 14, 2016 Securities And Exchange Board Of India (Listing Obligations And Disclosure Requirements) (Second Amendment) Regulations, 2016 CIR/CFD/CMD/15/2015 05.07.2016 Revised Formats for Financial Results and Implementation of Ind-AS by Listed Entities NSE/CML/2016/09 01.06.2016 Disclosure of the Impact of Audit Qualifications by the Listed Entities under Regulation 33/52 of SEBI (LODR), (Amendment) Regulations, 2016 CIR/CFD/CMD/56/2016 27.05.2016 Disclosure of the Impact of Audit Qualifications by the Listed Entities SEBI/ LAD-NRO/GN/2016-17/001 25.05.2016 SECURITIES AND EXCHANGE BOARD OF INDIA (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS) (AMENDMENT) REGULATIONS, 2016 NSE/CML/2016/3 21.01.2016 Filing of Information on Electronic Platform NSE/CML/2015/23 28.12.2015 Filing of Information on Electronic Platform DCS/COMP/32/2015-16 12.02.2016 Circular to Listed Companies suspended for a period of more than 7 years, for non -compliance with the critical clauses of the erstwhile Listing Agreement. DCS/COMP/33/2015-16 11.03.2016 Mandatory Filing Of Compliances / Information In Electronic Mode
DCS/COMP/34/2015-16 16.03.2016 Mandatory Filing Of Corporate Governance Report And Shareholding Pattern In Xbrl Mode
NSE/CML/2016/05 02.05.2016 Revised Formats under SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 NSE/CML/2016/06 03.05.2016 Procedure to deal with cases prior to April 01, 2014 involving offer / allotment of securities to more than 49 and up to 200 investors in a financial year
- Chapter I- Preliminary
- SEBI (Listing Obligations and Disclosure Requirements) Amendment Regulations, 2018.
THE GAZETTE OF INDIA
EXTRAORDINARY
PART – III – SECTION 4
PUBLISHED BY AUTHORITY
NEW DELHI, MAY 9, 2018
SECURITIES AND EXCHANGE BOARD OF INDIA
NOTIFICATION
Mumbai, the 9th May, 2018SECURITIES AND EXCHANGE BOARD OF INDIA (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS) (AMENDMENT) REGULATIONS, 2018
No. SEBI/LAD-NRO/GN/2018/10. ─ In exercise of the powers conferred by section 11, sub section (2) of section 11A and section 30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992) read with section 31 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956), the Securities and Exchange Board of India hereby makes the following regulations to further amend the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, namely -
1. These regulations may be called the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018.
2. Save as otherwise specifically provided for in these regulations, they shall come into force with effect from April 1, 2019.3. In the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, -
(a) in regulation (2), in sub-regulation (1), in clause (zb), -
i. the following proviso shall be inserted after the definition and before the existing proviso, namely, -
“Provided that any person or entity belonging to the promoter or promoter group of the listed entity and holding 20% or more of shareholding in the listed entity shall be deemed to be a related party.”
ii. in the existing proviso, which shall be renumbered as the second proviso, the word “further” shall be inserted after the word “Provided” and before the word “that”.
(b) in regulation 15, in sub-regulation (2) as well as in the proviso to clause (b) of sub-regulation (2), the figure “17A” shall be inserted after the figure “17” and the figure “24A” be inserted after the figure “24”.
(c) in regulation (16), in sub-regulation (1), -
i. in clause (b), -
1. in sub-clause (ii), the words “or member of the promoter group of the listed entity” shall be inserted after the words “associate company”.
2. after the existing sub-clause (vii), the following new sub-clause shall be inserted, namely,-
“(viii) who is not a non-independent director of another company on the board of which any non-independent director of the listed entity is an independent director:”
The aforesaid amendments mentioned in clause (i) shall come into force with effect from October 1, 2018.
ii. in clause (c), the word “twenty” shall be substituted with the word “ten”.
iii. in clause (d), the words “executive directors, including all functional heads” shall be substituted with the following –
“chief executive officer/managing director/whole time director/manager (including chief executive officer/manager, in case they are not part of the board) and shall specifically include company secretary and chief financial officer:”
(d) in regulation 17, -
i. in sub-regulation (1), -
1. in clause (a), the following proviso and explanation shall be inserted-
“Provided that the Board of directors of the top 500 listed entities shall have at least one independent woman director by April 1, 2019 and the Board of directors of the top 1000 listed entities shall have at least one independent woman director by April 1, 2020;
Explanation: The top 500 and 1000 entities shall be determined on the basis of market capitalisation, as at the end of the immediate previous financial year.”
2. after the existing clause (b), the following new clause shall be inserted, namely,-
“(c) The board of directors of the top 1000 listed entities (with effect from April 1, 2019) and the top 2000 listed entities (with effect from April 1, 2020) shall comprise of not less than six directors.
Explanation: The top 1000 and 2000 entities shall be determined on the basis of market capitalisation as at the end of the immediate previous financial year.”
ii. after the existing sub-regulation (1), the following new sub-regulation shall be inserted, namely,-
“(1A) No listed entity shall appoint a person or continue the directorship of any person as a non-executive director who has attained the age of seventy five years unless a special resolution is passed to that effect, in which case the explanatory statement annexed to the notice for such motion shall indicate the justification for appointing such a person.”
iii. after the newly inserted sub-regulation (1A) as above, the following new sub-regulation shall be inserted, namely, -
“(1B). With effect from April 1, 2020, the top 500 listed entities shall ensure that the Chairperson of the board of such listed entity shall -
(a) be a non-executive director;
(b) not be related to the Managing Director or the Chief Executive Officer as per the definition of the term “relative” defined under the Companies Act, 2013:
Provided that this sub-regulation shall not be applicable to the listed entities which do not have any identifiable promoters as per the shareholding pattern filed with stock exchanges.
Explanation - The top 500 entities shall be determined on the basis of market capitalisation, as at the end of the immediate previous financial year.”
iv. after the existing sub-regulation (2), the following new sub-regulation shall be inserted, namely, -
“(2A) The quorum for every meeting of the board of directors of the top 1000 listed entities with effect from April 1, 2019 and of the top 2000 listed entities with effect from April 1, 2020 shall be one-third of its total strength or three directors, whichever is higher, including at least one independent director ;
Explanation I – For removal of doubts, it is clarified that the participation of the directors by video conferencing or by other audio-visual means shall also be counted for the purposes of such quorum.
Explanation II - The top 1000 and 2000 entities shall be determined on the basis of market capitalisation, as at the end of the immediate previous financial year.”
v. in sub-regulation (6), -
1. after clause (c), the following new sub-clause shall be inserted, namely,-
“(ca) The approval of shareholders by special resolution shall be obtained every year, in which the annual remuneration payable to a single non-executive director exceeds fifty per cent of the total annual remuneration payable to all non-executive directors, giving details of the remuneration thereof.”
2. after the existing clause (d), the following new clause shall be inserted, namely,-
“(e) The fees or compensation payable to executive directors who are promoters or members of the promoter group, shall be subject to the approval of the shareholders by special resolution in general meeting, if-
(i) the annual remuneration payable to such executive director exceeds rupees 5 crore or 2.5 per cent of the net profits of the listed entity, whichever is higher; or
(ii) where there is more than one such director, the aggregate annual remuneration to such directors exceeds 5 per cent of the net profits of the listed entity:
Provided that the approval of the shareholders under this provision shall be valid only till the expiry of the term of such director.
Explanation: For the purposes of this clause, net profits shall be calculated as per section 198 of the Companies Act, 2013.”
vi. the sub-regulation (10) shall be substituted with the following, namely, -
“(10) The evaluation of independent directors shall be done by the entire board of directors which shall include -
(a) performance of the directors; and
(b) fulfillment of the independence criteria as specified in these regulations and their independence from the management:
Provided that in the above evaluation, the directors who are subject to evaluation shall not participate.”
vii. after the existing sub-regulation 10, the following new sub-regulation shall be inserted, namely,-
“11. The statement to be annexed to the notice as referred to in sub-section (1) of section 102 of the Companies Act, 2013 for each item of special business to be transacted at a general meeting shall also set forth clearly the recommendation of the board to the shareholders on each of the specific items.”
(e) after the existing regulation 17, the following new regulation shall be inserted, namely, -
“17A. Maximum number of directorships.
The directors of listed entities shall comply with the following conditions with respect to the maximum number of directorships, including any alternate directorships that can be held by them at any point of time -
(1) A person shall not be a director in more than eight listed entities with effect from April 1, 2019 and in not more than seven listed entities with effect from April 1, 2020:
Provided that a person shall not serve as an independent director in more than seven listed entities.
(2) Notwithstanding the above, any person who is serving as a whole time director / managing director in any listed entity shall serve as an independent director in not more than three listed entities.
For the purpose of this sub-regulation, the count for the number of listed entities on which a person is a director / independent director shall be only those whose equity shares are listed on a stock exchange.”
(f) in regulation 19, -
a. after the existing sub-regulation (2), the following new sub-regulation shall be inserted, namely,-
“(2A) The quorum for a meeting of the nomination and remuneration committee shall be either two members or one third of the members of the committee, whichever is greater, including at least one independent director in attendance.”
b. after the existing sub-regulation (3), the following new sub-regulation shall be inserted, namely, -
“(3A) The nomination and remuneration committee shall meet at least once in a year.”
(g) in regulation 20, -
a. in sub-regulation (1), for the words “the mechanism of redressal of grievances” the words “various aspects of interest” shall be substituted.
b. after the existing sub-regulation (2), the following new sub-regulation shall be inserted, namely, -
“(2A) At least three directors, with at least one being an independent director, shall be members of the Committee.”
c. sub-regulation (3) shall be substituted with the following, -
“(3) The Chairperson of the Stakeholders Relationship Committee shall be present at the annual general meetings to answer queries of the security holders.”
d. after sub-regulation 3, the following new sub-regulation shall be inserted, namely -“(3A) The stakeholders relationship committee shall meet at least once in a year.”
(h) in regulation 21, -
a. after the existing sub-regulation (3), the following new sub-regulation shall be inserted, namely,-
“(3A) The risk management committee shall meet at least once in a year.”
b. in sub-regulation (4), after the words “as it may deem fit” and before the symbol “.”, the words “such function shall specifically cover cyber security” shall be inserted.
c. in sub-regulation (5), the figure “100” shall be substituted with the figure “500”.
(i) in regulation 23, -
a. in sub-regulation (1), the words “including clear threshold limits duly approved by the board of directors and such policy shall be reviewed by the board of directors at least once every three years and updated accordingly” shall be inserted after the words “related party transactions” and before the symbol “:”.
b. after sub-regulation (1), the following new sub-regulation shall be inserted, namely,-
“(1A) Notwithstanding the above, a transaction involving payments made to a related party with respect to brand usage or royalty shall be considered material if the transaction(s) to be entered into individually or taken together with previous transactions during a financial year, exceed two percent of the annual consolidated
turnover of the listed entity as per the last audited financial statements of the listed entity.”
c. in sub-regulation (4), the words “the related parties shall abstain from voting on” shall be substituted with the words “no related party shall vote to approve”.
d. in sub-regulation (7), the words “abstain from voting” shall be substituted with the words “not vote to approve the relevant transaction”.
e. after the existing sub-regulation (8), the following new sub-regulation shall be inserted, namely, -
“(9) The listed entity shall submit within 30 days from the date of publication of its standalone and consolidated financial results for the half year, disclosures of related party transactions on a consolidated basis, in the format specified in the relevant accounting standards for annual results to the stock exchanges and publish the same on its website.”
The amendment shall come into force with effect from the half year ending March 31, 2019.
(j) in regulation 24, -
a. the existing sub-regulation (1) shall be substituted with the following, namely, -
“(1) At least one independent director on the board of directors of the listed entity shall be a director on the board of directors of an unlisted material subsidiary, whether incorporated in India or not.
Explanation- For the purposes of this provision, notwithstanding anything to the contrary contained in regulation 16, the term “material subsidiary” shall mean a subsidiary, whose income or net worth exceeds twenty percent of the consolidated income or net worth respectively, of the listed entity and its subsidiaries in the immediately preceding accounting year.”
b. in the Explanation to sub-regulation (4), the word “material” appearing after the word “unlisted” shall be omitted.
(k) after the existing regulation 24, the following new regulation shall be inserted, namely,-
“24A. Secretarial Audit.
Every listed entity and its material unlisted subsidiaries incorporated in India shall undertake secretarial audit and shall annex with its annual report, a secretarial audit report, given by a company secretary in practice, in such form as may be specified with effect from the year ended March 31, 2019.”
(l) in regulation 25, -
i. the existing sub-regulation (1) shall be substituted with the following new sub-regulation, namely, -
“(1) No person shall be appointed or continue as an alternate director for an independent director of a listed entity with effect from October 1, 2018.”
ii. after the existing sub-regulation 7, the following new sub-regulations shall be inserted, namely, -
“(8) Every independent director shall, at the first meeting of the board in which he participates as a director and thereafter at the first meeting of the board in every financial year or whenever there is any change in the circumstances which may affect his status as an independent director, submit a declaration that he meets the criteria of independence as provided in clause (b) of sub-regulation (1) of regulation 16 and that he is not aware of any circumstance or situation, which exist or may be reasonably anticipated, that could impair or impact his ability to discharge his duties with an objective independent judgment and without any external influence.
(9) The board of directors of the listed entity shall take on record the declaration and confirmation submitted by the independent director under sub-regulation (8) after undertaking due assessment of the veracity of the same.
(10) With effect from October 1, 2018, the top 500 listed entities by market capitalization calculated as on March 31 of the preceding financial year, shall undertake Directors and Officers insurance (‘D and O insurance’) for all their independent directors of such quantum and for such risks as may be determined by its board of directors.”
(m) in regulation 29, in sub-regulation (1), in clause (f), the proviso thereto shall be omitted with effect from October 1, 2018.
(n) in regulation 32, after the existing sub-regulation (7), the following new sub-regulation shall be inserted, namely, -
“(7A) Where an entity has raised funds through preferential allotment or qualified institutions placement, the listed entity shall disclose every year, the utilization of such funds during that year in its Annual Report until such funds are fully utilized.”
(o) in regulation 33, in sub-regulation (3), -
i. in clause (b), -
a. the word ‘may’ shall be replaced with the word ‘shall’ ;
13
b. the words and symbol “subject to following:” shall be substituted with the symbol “.” ; and
c. sub-clauses (i) and (ii) shall be omitted.
ii. in clause (e), the words “or limited reviewed” shall be inserted after the words “audited” and before the words “financial results”.
iii. after the existing clause (f), the following new clauses shall be inserted, namely, -
“(g) The listed entity shall also submit as part of its standalone and consolidated financial results for the half year, by way of a note, statement of cash flows for the half-year.
(h) The listed entity shall ensure that, for the purposes of quarterly consolidated financial results, at least eighty percent of each of the consolidated revenue, assets and profits, respectively, shall have been subject to audit or in case of unaudited results, subjected to limited review.
(i) The listed entity shall disclose, in the results for the last quarter in the financial year, by way of a note, the aggregate effect of material adjustments made in the results of that quarter which pertain to earlier periods.”
(p) in regulation 33, the following new sub-regulation shall be inserted, namely, -
“(8) The statutory auditor of a listed entity shall undertake a limited review of the audit of all the entities/ companies whose accounts are to be consolidated with the listed entity as per AS 21 in accordance with guidelines issued by the Board on this matter.”
(q) in regulation 34, -
14
i. the existing sub-regulation (1) shall be substituted with the following new sub-regulation, namely, -
“(1) The listed entity shall submit to the stock exchange and publish on its website-
(a) a copy of the annual report sent to the shareholders along with the notice of the annual general meeting not later than the day of commencement of dispatch to its shareholders;
(b) in the event of any changes to the annual report, the revised copy along with the details of and explanation for the changes shall be sent not later than 48 hours after the annual general meeting.”
The amendment at clause (q) shall be applicable in respect of the Annual report filed for the year ended March 31, 2019 and thereafter.
(r) in regulation 36, -
i. in sub-regulation (1), in clause (a), the words “ for the purpose” shall be omitted and the words “either with the listed entity or with any depository” shall be inserted.
The amendment at clause (r)(i) shall be applicable in respect of the Annual report filed for the year ended March 31, 2019 and thereafter.
ii. after the existing sub-regulation (3), the following new sub-regulations shall be inserted, namely, -
“(4) The disclosures made by the listed entity with immediate effect from date of notification of these amendments-
15
(a) to the stock exchanges shall be in XBRL format in accordance with the guidelines specified by the stock exchanges from time to time; and
(b) to the stock exchanges and on its website, shall be in a format that allows users to find relevant information easily through a searching tool:
Provided that the requirement to make disclosures in searchable formats shall not apply in case there is a statutory requirement to make such disclosures in formats which may not be searchable, such as copies of scanned documents.
(5) The notice being sent to shareholders for an annual general meeting, where the statutory auditor(s) is/are proposed to be appointed/re-appointed shall include the following disclosures as a part of the explanatory statement to the notice:
(a) Proposed fees payable to the statutory auditor(s) along with terms of appointment and in case of a new auditor, any material change in the fee payable to such auditor from that paid to the outgoing auditor along with the rationale for such change;
(b) Basis of recommendation for appointment including the details in relation to and credentials of the statutory auditor(s) proposed to be appointed.”
(s) in regulation 44, -
(i) the title ‘Voting by shareholders’ shall be replaced with the title ‘Meetings of shareholders and voting’ ; and
(ii) after the existing sub-regulation (4), the following new sub-regulations (5) and (6) shall be inserted, namely, -
“(5) The top 100 listed entities by market capitalization, determined as on March 31st of every financial year, shall hold their annual general meetings within a period of five months from the date of closing of the financial year.
(6) The top 100 listed entities shall provide one-way live webcast of the proceedings of the annual general meetings.
Explanation: The top 100 entities shall be determined on the basis of market capitalisation, as at the end of the immediate previous financial year.”
(t) in regulation 46, in sub-regulation (2), -
i. for the words “on its website”, the words “under a separate section on its website” shall be substituted;
ii. after the existing clause (q), the following new clauses shall be inserted, namely, -
“(r) With effect from October 1, 2018, all credit ratings obtained by the entity for all its outstanding instruments, updated immediately as and when there is any revision in any of the ratings.
(s) separate audited financial statements of each subsidiary of the listed entity in respect of a relevant financial year, uploaded at least 21 days prior to the date of the annual general meeting which has been called to inter alia consider accounts of that financial year.”
(u) in Schedule II, -
a. in Part C, in clause A, after the existing sub-clause (20), the following new sub-clause shall be inserted, namely, -
“(21) reviewing the utilization of loans and/ or advances from/investment by the holding company in the subsidiary exceeding rupees 100 crore or 10% of the asset size of the subsidiary, whichever is lower including existing loans / advances / investments existing as on the date of coming into force of this provision.”
b. in Part D, -
i. in clause A, after the existing sub-clause (5), the following new sub-clause shall be inserted, namely, -
“(6) recommend to the board, all remuneration, in whatever form, payable to senior management.”
ii. the contents under clause B shall be substituted with the following new provisions, namely, -
“The role of the committee shall inter-alia include the following:
(1) Resolving the grievances of the security holders of the listed entity including complaints related to transfer/transmission of shares, non-receipt of annual report, non-receipt of declared dividends, issue of new/duplicate certificates, general meetings etc.
(2) Review of measures taken for effective exercise of voting rights by shareholders.
(3) Review of adherence to the service standards adopted by the listed entity in respect of various services being rendered by the Registrar & Share Transfer Agent.
(4) Review of the various measures and initiatives taken by the listed entity for reducing the quantum of unclaimed dividends and ensuring timely receipt of dividend warrants/annual reports/statutory notices by the shareholders of the company.”
c. in Part E, clause D shall be omitted.
The amendment in clause c. above shall come into effect from April 1, 2020.
(v) in Schedule III, in Part A, under the Clause A dealing with ‘Events which shall be disclosed without any application of the guidelines for materiality as specified in sub-regulation (4) of Regulation (30)’, after the existing sub-clause 7, the following new sub-clauses shall be inserted, namely, -
“(7A) In case of resignation of the auditor of the listed entity, detailed reasons for resignation of auditor, as given by the said auditor, shall be disclosed by the listed entities to the stock exchanges as soon as possible but not later than twenty four hours of receipt of such reasons from the auditor.
(7B) Resignation of auditor including reasons for resignation: In case of resignation of an independent director of the listed entity, within seven days from the date of resignation, the following disclosures shall be made to the stock exchanges by the listed entities:
i. Detailed reasons for the resignation of independent directors as given by the said director shall be disclosed by the listed entities to the stock exchanges.
ii. The independent director shall, along with the detailed reasons, also provide a confirmation that there is no other material reasons other than those provided.
iii. The confirmation as provided by the independent director above shall also be disclosed by the listed entities to the stock exchanges along with the detailed reasons as specified in sub-clause (i) above.”
(w) in Schedule IV, in Part A, in clause BB, the existing sub-clauses (i) and (ii) thereunder shall be substituted with the following, namely,-
“i. The management shall mandatorily make an estimate which the auditor shall review and report accordingly.
ii. Notwithstanding the above, the management may be permitted to not provide estimate on matters like going concerns or sub-judice matters; in which case, the management shall provide the reasons and the auditor shall review the same and report accordingly.”
(x) in Schedule V, -
a. in Part A dealing with ‘Related Party Disclosure’, after the existing clause 2, the following new clause shall be inserted, namely,-
“(2A) Disclosures of transactions of the listed entity with any person or entity belonging to the promoter/promoter group which hold(s) 10% or more shareholding in the listed entity, in the format prescribed in the relevant accounting standards for annual results.”
b. in Part B dealing with ‘Management Discussion and Analysis’, in clause 1, after the existing sub-clause (h), the following new sub-clauses shall be inserted, namely,-
“(i) details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanations therefor, including:
(i) Debtors Turnover
(ii) Inventory Turnover
(iii) Interest Coverage Ratio
(iv) Current Ratio
(v) Debt Equity Ratio
(vi) Operating Profit Margin (%)
(vii) Net Profit Margin (%)
or sector-specific equivalent ratios, as applicable.
(j) details of any change in Return on Net Worth as compared to the immediately previous financial year along with a detailed explanation thereof.”
c. in Part C dealing with ‘Corporate Governance Report’, -
i. in clause (2), -
1. in sub-clause (c), after the word “chairperson”, the symbol and words “, and with effect from the Annual Report for the year ended 31st March 2019, including separately the names of the listed entities where the person is a director and the category of directorship” shall be inserted.
2. after the existing sub-clause (g), the following new sub-clauses shall be inserted, namely, -
“(h) A chart or a matrix setting out the skills/expertise/competence of the board of directors specifying the following:
(i) With effect from the financial year ending March 31, 2019, the list of core skills/expertise/competencies identified by the board of directors as required in the context of its business(es) and sector(s) for it to function effectively and those actually available with the board; and
(ii) With effect from the financial year ended March 31, 2020, the names of directors who have such skills / expertise / competence
(i) confirmation that in the opinion of the board, the independent directors fulfill the conditions specified in these regulations and are independent of the management.
(j) detailed reasons for the resignation of an independent director who resigns before the expiry of his tenure along with a confirmation by such director that there are no other material reasons other than those provided.”
ii. in clause (9), after the existing sub-clause (p), the following new sub-clause shall be inserted, namely, -
“q) list of all credit ratings obtained by the entity along with any revisions thereto during the relevant financial year, for all debt instruments of such entity or any fixed deposit programme or any scheme or proposal of the listed entity involving mobilization of funds, whether in India or abroad.”
iii. in clause (10), after the existing sub-clause (g), the following new sub-clauses shall be inserted, namely, -
“(h) Details of utilization of funds raised through preferential allotment or qualified institutions placement as specified under Regulation 32 (7A).
(i) a certificate from a company secretary in practice that none of the directors on the board of the company have been debarred or disqualified from being appointed or continuing as directors of companies by the Board/Ministry of Corporate Affairs or any such statutory authority.
(j) where the board had not accepted any recommendation of any committee of the board which is mandatorily required, in the relevant financial year, the same to be disclosed along with reasons thereof:
Provided that the clause shall only apply where recommendation of / submission by the committee is required for the approval of the Board of Directors and shall not apply where prior approval of the relevant committee is required for undertaking any transaction under these Regulations.
(k) total fees for all services paid by the listed entity and its subsidiaries, on a consolidated basis, to the statutory auditor and all entities in the network firm/network entity of which the statutory auditor is a part.”
Save as specified otherwise, the amendments to Schedule V shall be applicable in respect of Annual reports filed for the year ended March 31, 2019 and thereafter.
Footnote:
1. The Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 were published in the Gazette of India on 2nd September 2015 vide No. SEBI/LAD-NRO/GN/2015-16/013.
2. The Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, were subsequently amended on:
a) December 22, 2015 by the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2015 vide notification no. SEBI/LAD-NRO/GN/2015-16/27.
b) May 25, 2016 by Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2016 vide notification no. SEBI/LAD-NRO/GN/ 2016-17/001.
c) July 08, 2016 by Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Second Amendment) Regulations, 2016 vide notification no. SEBI/ LAD-NRO/GN/2016-17/008.
d) January 4, 2017 by Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Third Amendment) Regulations, 2016 vide notification no. SEBI/ LAD-NRO/GN/2016-17/025.
e) February 15, 2017 by Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2017 vide notification no. SEBI/LAD/NRO/GN/2016-17/029.
f) March 6, 2017 by the Securities and Exchange Board of India (Payment of Fees and Mode of Payment) (Amendment) Regulations, 2017 vide Notification No. LAD-NRO/GN/2016- 17/037 read with March 29, 2017 by Securities and Exchange Board of India (Payment of Fees and Mode of Payment) (Amendment) Regulations, 2017 vide notification no. SEBI/LAD/NRO/GN/2016-17/38.
******** - Companies (Issue of Global Depositories Receipts) Rules, 2014
- SEBI (ISSUE AND LISTING OF DEBT SECURITIES BY MUNICIPALITIES) REGULATIONS, 2015
- CHAPTER I PRELIMINARY
Short title and commencement.
1. (1) These regulations may be called the Securities and Exchange Board of India (Issue and Listing of Debt Securities by Municipalities) Regulations, 2015.
(2) These regulations shall come into force on the date of their publication in the Official Gazette.
Definitions.
2. (1) In these regulations, unless the context otherwise requires, the terms defined shall bear the meanings assigned to them below, and their cognate expressions shall be construed accordingly,–
(a) “Act” means the Securities and Exchange Board of India Act, 1992 (15 of 1992);
(b) “advertisement” includes all forms of communication including notices, brochures, pamphlets, show cards, catalogues, hoardings, placards, posters, insertions in newspaper, cover pages of offer documents, pictures, films, etc.,
in any print media or electronic media or social media, radio, television programme;
(c) "Board" means the Securities and Exchange Board of India established under section 3 of the Act;
(d) “corporate municipal entity” means a company as defined under Companies Act, 2013, which is a subsidiary of a municipality and which is set up for the purpose of raising funds for a specific municipality or group of municipalities;
(e) “debt securities” means a non-convertible debt securities which create or acknowledge indebtedness, and include debenture, bonds and such other securities of a municipality, or a corporate municipal entity, whether constituting a charge on the assets of such body or not;
(f) “designated stock exchange” means a recognised stock exchange in which securities of an issuer are listed or proposed to be listed and which is chosen by the issuer as a designated stock exchange for the purpose of a particular issue of debt securities under these regulations;
(g) "general obligation bonds" means debt securities where principal and interest are serviced through tax proceeds of the municipality.
(h) "issuer” means any municipality or a corporate municipal entity, which makes or proposes to make an issue of debt securities in accordance with these regulations or which has its securities listed on a recognised stock exchange or which seeks to list its debt securities on a recognised stock exchange;
(i) "municipality" means an institution of self-government constituted under Article 243Q of the Constitution of India;
(j) "national municipal accounts manual" means the municipal accounting manual formulated by the Ministry of Urban Development;
(k) "offer document” means prospectus or shelf prospectus and includes any such document or advertisement whereby the subscription to debt securities are invited by the issuer from public;
(l) "private placement" means any offer of debt securities or invitation to subscribe to debt securities to a select group of persons by a municipality through issue of a private placement offer letter to not more than two hundred persons, which shall not intend to result in, directly or indirectly, the debt securities becoming available for subscription or purchase by persons other than those receiving the offer or invitation:
Provided that for a corporate municipal entity, it shall mean an offer or invitation made in terms of section 42 of the Companies Act, 2013 and the rules made thereunder, through issue of a private placement offer letter;
(m) “public issue” means an offer or invitation by an issuer to public to subscribe to the debt securities, which is not in the nature of a private placement;
(n) "revenue bonds" means debt securities which are serviced by revenues from one or more projects;
(o) “schedule" means a schedule annexed to these regulations;
(p) "shelf prospectus" means a prospectus in respect of which the securities or class of securities included therein are issued for subscription in one or more issues over a certain period without the issue of a further prospectus:
Provided that for a corporate municipal entity, it shall have the same meaning as assigned to it in section 31 of Companies Act, 2013;
(q) “specified” means specified by a general or special order or circular issued under the Act or these regulations.
(2) All other words and expressions used but not defined in these regulations, shall have the same meanings respectively assigned to them in the Act or the Companies Act, 2013 or Securities Contracts (Regulation) Act, 1956 or the Depositories Act, 1996 or the Rules and the Regulations made thereunder or any statutory modification or re-enactment thereto.
Applicability.
3. These regulations shall apply to -
(a) public issue of debt securities; and
(b) listing of debt securities issued through public issue or on private placement basis on a recognised stock exchange. - CHAPTER II ELIGIBILITY
Eligible municipalities.
4. No issuer shall be eligible to issue debt securities to public under these regulations, unless the following criteria are complied with:
(a) municipality, whether proposing to issue debt securities itself or through corporate municipal entity, should be eligible to raise funds under its constitution;
(b) accounts of municipality shall be prepared in accordance with National Municipal Accounts Manual or in accordance with similar Municipal Accounts Manual adopted by the respective State Government for at least three immediately preceding financial years;
1[(c) municipality shall have surplus income as per its Income and Expenditure Statement, in any of the immediately preceding three financial years or any other financial criteria as may be specified by the Board from time to time.
1 Substituted by Securities and Exchange Board of India (Issue and Listing of Debt Securities by Municipalities) (Amendment) Regulations, 2017 w.e.f 15.02.2017. prior to its substitution clause (c) read as under:
Page - 4 - of 29
Provided that a corporate municipal entity shall not have negative net worth in any of immediately preceding three financial years;
2[(d) municipality shall not have defaulted in repayment of debt securities or loans obtained from banks or financial institutions, during the last three hundred and sixty five days: Provided that where the issuer is a corporate municipal entity, the requirements at clauses (b) and (d) shall be complied by the municipality which is being financed;]
(e) no order or direction of restraint, prohibition or debarment by Board against the corporate municipal entity or its directors is in force;
(f) the corporate municipal entity, its promoter, group company or director(s), should not have been named in the list of the wilful defaulters published by the Reserve Bank of India or should not have defaulted of payment of interest or repayment of principal amount in respect of debt instruments issued by it to the public, if any. - CHAPTER III REQUIREMENTS FOR PUBLIC ISSUE
General conditions.
5. (1) An issuer making public issue of debt securities shall only issue revenue bonds.
(2) No issuer shall make a public issue of revenue bonds unless following conditions are complied with:
(a) it has made an application to one or more recognised stock exchanges for listing of such securities therein:
Provided that where the application is made to more than one recognised stock exchanges, the issuer shall choose one of them as the designated stock exchange:
Provided further that where any of such stock exchanges have nationwide trading terminals, the issuer shall choose one of them as the designated stock exchange;
Explanation.-For any subsequent public issue, the issuer may choose a different stock exchange as a designated stock exchange subject to the requirements of this regulation;
(b) it has obtained in-principle approval for listing of its revenue bonds on the recognised stock exchanges where the application for listing has been made;
"(c) municipality shall not have negative net worth in any of the three immediately preceding financial years; "
2 Substituted by Securities and Exchange Board of India (Issue and Listing of Debt Securities by Municipalities) (Amendment) Regulations, 2017 w.e.f 15.02.2017. prior to its substitution clause (d) read as under:
"(d) municipality shall not have defaulted in repayment of debt securities or loans obtained from Banks or Financial Institutions, during the last three hundred and sixty five days:
Provided that where the issuer is a corporate municipal entity, the requirements at (b), (c) and (d) shall be complied by the Municipality which is being financed.
Explanation.-For this purpose, the term default means where interest and/ or principal amount has remained overdue for a period of more than ninety days;"
(c) credit rating has been obtained from at least one credit rating agency registered with the Board and is disclosed in the offer document:
Provided that the revenue bonds intended to be issued shall have a minimum investment grade rating:
Provided further that where credit ratings are obtained from more than one credit rating agencies, all the ratings, including the unaccepted ratings, shall be disclosed in the offer document;
(d) it has entered into an arrangement with a depository registered with the Board for dematerialisation of the revenue bonds that are proposed to be issued to the public, in accordance with the Depositories Act, 1996 and regulations made there under.
(3) The revenue bonds shall have a minimum tenure of three years or such period as specified by the Board from time to time.
(4) The revenue bonds shall have a maximum tenure of thirty years or such period as specified by the Board from time to time.
(5) The issuer shall appoint one or more merchant bankers registered with the Board at least one of whom shall be a lead merchant banker.
(6) The issuer shall create a separate escrow account for servicing of revenue bonds with earmarked revenue.
(7) The issuer shall appoint a monitoring agency such as public financial institution or a scheduled commercial bank to monitor the earmarked revenue in the escrow account under sub-regulation (6):
Provided that where the issuer is corporate municipal entity, it shall appoint a debenture trustee registered with the Board in accordance with the provisions of the Securities and Exchange Board of India (Debenture Trustees) Regulations, 1993 and Companies Act, 2013.
Disclosures in the offer document.
6. (1) The offer document shall contain true, fair and material disclosures, which are necessary for the subscribers of the revenue bonds to take an informed investment decision.
(2) Without prejudice to the generality of sub-regulation (1), the issuer, which is a municipality, and the lead merchant banker shall ensure that the offer document contains the following:
(a) disclosures specified in Schedule Iof these regulations;
(b) disclosures with respect to compliance with regulation 12;
(c) additional disclosures as may be specified by the Board:
Provided that in case of issuer being a corporate municipal entity, the issuer and the lead merchant banker shall ensure that the offer document contains the following:
(i) disclosures as specified in Companies Act, 2013 and Companies (Prospectus and Allotment of Securities) Rules, 2014;
(ii) disclosures specified in Schedule Iof these regulations;
(iii) disclosures with respect to compliance with regulation 12;
(iv) additional disclosures as may be specified by the Board.
Filing of draft offer document
7. (1) No issuer shall make a public issue of revenue bonds unless a draft offer document has been filed with the designated stock exchange through the lead merchant banker:
Provided that where an issuer has filed a shelf prospectus, not more than four public issuances shall be made through a single shelf prospectus during a financial year.
(2) The draft offer document filed with the designated stock exchange shall be made public by posting the same on the website of the designated stock exchange for seeking public comments for a period of seven working days from the date of filing the draft offer document with such exchange.
(3) The draft offer document may also be displayed on the website of the issuer, merchant bankers and the stock exchanges where the revenue bonds are proposed to be listed.
(4) The lead merchant banker shall ensure that the draft offer document specifies the names and contact details of the compliance officer of the lead merchant banker, the officer concerned and the project officer, wherever applicable, of the issuer including their postal and email address, telephone and fax numbers.
(5) The lead merchant banker shall ensure that all comments received on the draft offer document are suitably addressed:
Provided that where the issuer is a corporate municipal entity, the lead merchant banker shall ensure that all comments received on the draft offer document are suitably addressed prior to the filing of the final offer document with the Registrar of Companies.
(6) The issuer shall, before filing of draft offer documents with Board, obtain a “Viability Certificate“ or Detailed Project Appraisal Report (DPR) from a scheduled commercial bank or public financial institution stating that the project is financially viable, based on the estimates/assumptions available at that time.
(7) A copy of draft and final offer document shall also be forwarded to the Board for its records, simultaneously with filing of these documents with designated stock exchange.
(8) The issuer filing a shelf prospectus shall file a copy of an information memorandum with the recognised stock exchanges and the Board and in case of a corporate municipal entity, file the same with the Registrar of Companies.
(9) Where the issuer is a corporate municipal entity, the information memorandum shall contain the disclosures specified in Companies Act, 2013 and rules made thereunder and shall include disclosures regarding summary term sheet, material updations including revision in ratings, if any, along with the rating rationale and financial ratios specified in Schedule I.
(10) The lead merchant banker shall, prior to opening of the public issue, furnish to the Board a due diligence certificate as per Schedule II of these regulations:
Provided that where the issuer is a corporate municipal entity, the lead merchant banker shall, prior to filing of the final offer document with the Registrar of Companies, furnish to the Board a due diligence certificate as per Schedule II of these regulations.
(11) The debenture trustee, wherever appointed under proviso to sub-regulation (7) of Regulation 5 shall, prior to the opening of the public issue, furnish to the Board a due diligence certificate as per Schedule III of these regulations.
Mode of disclosure of offer document.
8. (1) The draft and final offer document shall be displayed on the websites of stock exchanges and shall be available for download in PDF / HTML formats.
(2) The draft offer document shall be filed with the designated stock exchange, for dissemination on its website prior to the opening of the issue:
Provided that where the issuer is a Corporate Municipal Entity, the final offer document shall be filed with the designated stock exchange, simultaneously with filing thereof with the Registrar of Companies, for dissemination on its website prior to the opening of the issue.
(3) Where any person makes a request for a physical copy of the offer document, the same shall be provided to him by the issuer or lead merchant banker.
Advertisements for public issues.
9. (1)The issuer may make an advertisement in a national daily with wide circulation, on or before the issue opening date and such advertisement shall, amongst other things, contain the disclosures as per Schedule IV.
(2) No issuer shall issue an advertisement which is misleading in material particular or which contain any information in a distorted manner or which is manipulative or deceptive.
(3) The advertisement shall be truthful, fair and clear and shall not contain a statement, promise or forecast which is untrue or misleading.
(4) Any advertisement issued by the issuer shall not contain any matters which are extraneous to the contents of the offer document.
(5) The advertisement shall urge the investors to invest only on the basis of information contained in the offer document.
(6) Any promotional or educative advertisement issued by the issuer during the subscription period shall not make any reference to the issue of revenue bonds or be used for solicitation.
Abridged prospectus and application forms.
10. (1) The issuer and lead merchant banker shall ensure that:
(a) every application form issued by the issuer is accompanied by a copy of the abridged prospectus;
(b) the abridged prospectus shall not contain matters which are extraneous to the contents of the prospectus;
(c) adequate space shall be provided in the application form to enable the investors to fill in various details like name, address, etc.
(2) The issuer may provide the facility for subscription of application in electronic mode.
Minimum subscription.
11. (1) Theissuer may decide the amount of minimum subscription which it seeks to raise by issue of debt securities and disclose the same in the offer document:
Provided such minimum subscription limit shall not be less than seventy five per cent of the issue size.
(2) In the event of non-receipt of minimum subscription as specified above, all application moneys received in the public issue shall be refunded forthwith to the applicants, within twelve days from the date of the closure of the issue.
(3) In the event, there is a delay by the issuer in making the aforesaid refund, then the issuer shall refund the subscription amount along with interest at the rate of ten per cent. per annum for the delayed period.
Utilization of issue proceeds.
12. (1) The funds raised from public issue of debt securities shall be used only for projects that are specified under objects in the offer document.
(2) The proceeds of the issue shall be clearly earmarked for a defined project or a set of projects for which requisite approvals have been obtained from concerned authorities.
(3) The issuers shall maintain a bank account in which the amount raised from the issue shall be transferred immediately after the closure of the issue and such amount shall only be utilised for specified project(s):
Provided that where the issuer is a Corporate Municipal Entity, the issue proceeds, net of issue expenses, shall be used only for onward lending to municipalities, as disclosed in the offer document:
Provided further that where the issuer is a corporate municipal entity, it shall maintain sufficient interest margin while onward lending to the municipalities, to meet its operating expenses and obligations.
(4) The issuer shall establish a separate project implementation cell and designate a project officer who shall not be below the rank of deputy commissioner, who shall monitor the progress of the project(s) and shall ensure that the funds raised are utilised only for the project(s) for which the debt securities were issued:
Provided that where the issuer is a corporate municipal entity, such requirement shall be complied by the Municipality which is being financed.
(5) Issuer’s contribution for each project shall not be less than twenty per cent. of the project costs, which shall be contributed from their internal resources or grants:
Provided that where the issuer is a corporate municipal entity, contribution of the concerned municipality, which is being financed by the corporate municipal entity, shall not be less than twenty per cent. of the project costs, which shall be contributed from its internal resources or grants.
(6) The issuer shall disclose the schedule of implementation of the project in the offer document in a tabular form and the funds raised by the issuer shall be utilized in accordance with the said schedule.
Underwriting.
13. A public issue of revenue bonds may be underwritten by an underwriter registered with the Board and in such a case adequate disclosures regarding underwriting arrangements shall be disclosed in the offer document. - CHAPTER IV LISTING OF DEBT SECURITIES
Mandatory listing.
14. An issuer desirous of making an offer of debt securities to the public shall make an application for listing to one or more recognised stock exchanges:
Provided that in case of issuer being corporate municipal entity, such an application shall be made in terms of sub-section (1) of section 40 of the Companies Act, 2013.
Conditions for listing of debt securities issued on private placement basis.
15. (1) An issuer may list its debt securities issued on private placement basis on a recognised stock exchange subject to the following conditions:
(a) an issuer may issue general obligation bonds or revenue bonds;
(b) accounts of municipality being the issuer, shall be prepared in accordance with National Municipal Accounts Manual or in accordance with similar Municipal Accounts Manual adopted by the respective State Government for at least three immediately preceding financial years;
(c) no order or direction of restraint, prohibition or debarment by Board against the corporate municipal entity or its directors is in force;
(d) the issuer, being a corporate municipal entity, has issued such debt securities in compliance with the provisions of Companies Act, 2013 and particularly section 42 of the Companies Act, 2013 and rules prescribed there under and other applicable laws;
(e) the issuer shall not solicit or collect funds by issue of debt securities, except by way of private placement;
(f) the minimum subscription amount per investor shall not be less than rupees twenty five lakh or such amount as may be specified by Board from time to time;
(g) credit rating has been obtained in respect of such debt securities from at least one credit rating agency registered with the Board;
(h) the debt securities proposed to be listed are in dematerialized form;
(i) the disclosures as provided in Schedule Iof these regulations have been made.
- CHAPTER V REQUIREMENTS FOR BOTH PUBLIC ISSUES AND PRIVATE PLACEMENT
Asset cover.
16. An issuer, proposing to issue debt securities shall maintain 100% asset cover sufficient to discharge the principal amount at all times for the debt securities issued.
Buy-back.
17. The issuers may provide an option to buy-back the debt-securities at a value which shall not be less than the face value of the debt securities, from the investors:
Provided in such cases, appropriate disclosure shall be made in the offer document
Prohibitions of mis-statements in the offer document.
18. (1) The offer document shall not omit disclosure of a material fact which may make the statements made therein misleading, in light of the circumstances under which they are made.
(2) The offer document or abridged prospectus or any advertisement issued by an issuer in connection with a public issue of debt securities shall not contain any false or misleading statement.
Creation of security for secured debentures.
19. (1) The debentures shall be secured by the creation of a charge, on the properties or assets or the receivables of the issuer, having a value which is sufficient for the due repayment of the amount of debentures and interest thereon:
Provided that in case unsecured debentures are intended to be listed on stock exchange(s), then such debt securities shall either be backed by guarantee from State Government or Central Government or shall have a structured payment mechanism whereby the issuer shall deposit debt servicing amounts in the designated bank account at least 10 working days before due date of payment.
(2) The total value of secured debentures issued shall not exceed the market value of immovable property/other assets or receivables of the issuer, for which a charge shall be created.
(3) The issuer shall give an undertaking in the offer document that the assets on which charge is created are free from any encumbrances and if the assets are already charged to secure a debt, the permissions or consent to create second or paripasu charge on the assets of the issuer have been obtained from the earlier creditor.
(4) The issue proceeds shall not be utilised until the documents for creation of security are executed.
Trust deed.
20. (1) A trust deed for securing the issue of debentures shall be executed by the issuer in favour of the independent trustee or debenture trustee, as applicable, within three months of the closure of the issue.
(2) The trust deed shall contain such clauses as may be prescribed in Schedule IV of the Securities and Exchange Board of India (Debenture Trustees) Regulations, 1993:
Provided that in case of private placement by a corporate municipal entity, the trust deed shall, in-addition, contain such clauses as prescribed under section 71 of the Companies Act, 2013 and Companies (Share Capital and Debentures) Rules 2014.
(3) The trust deed shall not contain a clause which has the effect of:
(a) limiting or extinguishing the obligations and liabilities of the debenture trustees or the issuer in relation to any rights or interests of the investors;
(b) limiting or restricting or waiving the provisions of the Act, these regulations and circulars or guidelines issued by the Board;
(c) indemnifying the debenture trustees or the issuer for loss or damage caused by their act of negligence or commission or omission.
Redemption and roll-over.
21. (1) The issuer shall redeem the debt securities in terms of the offer document.
(2) Where the issuer being a corporate municipal entity, desires to roll-over the debt securities issued, it shall do so only upon passing of a special resolution to that effect and give twenty one days notice of the proposed roll over to the holders of debt securities:
Provided where the issuer is a municipality, the notice shall be given to the holders of debt securities and stock exchanges where the debt securities are listed, upon the said decision:
Provided further that in case the issuer is a municipality, if the holders of debt securities do not provide consent for the proposed roll over within the notice period, the issuer shall redeem the debt securities of such holders.
(3) The notice referred to in sub- regulation (2) shall contain disclosures with regard to credit rating and rationale for roll-over.
(4) The issuer being a corporate municipal entity shall, prior to sending the notice to holders of debt securities, file a copy of the notice and proposed resolution with the stock exchanges where such securities are listed, for dissemination of the same to public on their websites.
(5) The debt securities issued can be rolled over subject to the following conditions:
(a) The roll-over is approved by a special resolution passed by the holders of debt securities through postal ballot having the consent of not less than 75% of the holders by value of such debt securities:
Provided that this condition shall not be applicable to the issuer, which is a municipality:
Provided further that in case of issuer being a municipality, a period of seven days shall be granted to the holders of debt securities to provide their consent;
(b) atleast one rating is obtained from a credit rating agency within a period of six months prior to the due date of redemption and is disclosed in the notice referred to in sub-regulation (2);
(c) fresh trust deed shall be executed at the time of such roll over or the existing trust deed may be continued if the trust deed provides for such continuation ;
(d) adequate security shall be created or maintained in respect of such debt securities to be rolled–over.
(6) The issuer shall redeem the debt securities of all the holders, who have not given their positive consent to the roll-over.
Debenture redemption reserve.
22. (1) For the redemption of the debentures issued by a corporate municipal entity, the issuer shall create debenture redemption reserve in accordance with the provisions of the Companies Act, 2013 and the rules made thereunder.
(2) Where the issuer is a corporate municipal entity and the issuer has defaulted in payment of interest on debt securities or redemption thereof or in creation of security as per the terms of the issue of debt securities, any distribution of dividend shall require approval of the debenture trustees. - CHAPTER VI CONDITIONS FOR CONTINUOUS LISTING AND TRADING OF DEBT SECURITIES
Continuous listing conditions.
23. (1) All the issuers making public issues of debt securities or seeking listing of debt securities issued on private placement basis, shall comply with conditions of listing including continuous disclosure and other requirements specified by the Board in general and those specified in Schedule V to these regulations.
(2) Where the issuer is corporate municipal entity, one-third of its Board shall comprise of independent directors, as defined in section 149 of the Companies Act, 2013.
(3) Every rating obtained by an issuer shall be periodically reviewed by the registered credit rating agency and any revision in the rating shall be promptly disclosed by the issuer to the stock exchange(s) where the debt securities are listed.
(4) In the event of credit rating being downgraded by two or more notches below the rating assigned at the time of issue, the issuer shall present to all bondholders, the reasons for fall in rating and the steps, if any, it intends to take to recover the rating.
(5) Any change in rating shall be promptly disseminated in such manner as the stock exchange where such securities are listed may determine from time to time.
(6) The issuer, the respective debenture trustees, wherever appointed, and stock exchanges shall disseminate all information and reports regarding debt securities including compliance reports filed by the issuers and the debenture trustees, if appointed, to the investors and the general public by placing them on their websites.
(7) The information referred to in sub-regulation (5) shall also be placed on the websites, if any, of the debenture trustee, the issuer and the stock exchanges.
Accounting and audit.
24. (1) An Issuer, being a municipality, shall prepare its accounts in accordance with the National Municipal Accounts Manual or in accordance with similar Municipal Accounts Manual adopted by the respective State Government:
Provided that in case of the Issuer being a corporate municipal entity, the accounts shall be prepared in accordance with section 129 and 134 of the Companies Act, 2013 and the rules made thereunder.
(2) In case of the issuer being a municipality, the accounts of the issuer shall be audited by the persons appointed by the municipal corporations, as permissible under its constitution/state legislation governing the municipality:
Provided that in case of an issuer being a corporate municipal entity, the accounts of the issuer shall be audited by an auditor, in terms of section 139 of the Companies Act, 2013 and the rules made thereunder:
(3) The bank account for issue proceeds and separate escrow account with earmarked revenues, shall be audited by persons so appointed by the municipality or the corporate municipal entity, within six months of the close of every financial year.
Trading and reporting of debt securities.
25. (1) The debt securities issued to the public or on a private placement basis, which are listed in recognised stock exchanges, shall be traded and such trades shall be cleared and settled in recognised clearing corporation subject to conditions specified by the Board.
(2) The trading lot for privately placed debt securities shall be rupees one lakh or such amount as may be specified by the Board.
(3) In case of trades of debt securities which have been made over the counter, such trades shall be reported on a recognised stock exchange having a nationwide trading terminal or such other platform as may be specified by the Board from time to time.
(4) The information in respect of issues such as issuer details, instrument details, ratings, rating migration, coupon, buyback, redemption details, shall be required to be reported to a common database with depositories or any other platform as may be specified by the Board. - CHAPTER VII OBLIGATIONS OF INTERMEDIARIES AND ISSUERS
Obligations of monitoring agency and trustee.
26. (1) The monitoring agency appointed under sub-regulation (7) of regulation 5 shall be vested with the requisite powers for protecting the interest of holders of debt securities.
(2) The monitoring agency shall inspect on half yearly basis, the utilization of issue proceeds in accordance with objects of the issue as specified in offer document and report, material deviation, if any, to the concerned stock exchange for public dissemination.
(3) The monitoring agency shall monitor earmarked revenue in the separate escrow account.
(4) The debenture trustee, wherever appointed, shall be vested with the requisite powers for protecting the interest of holders of debt securities:
Provided that , where the issuer is a corporate municipal entity, such powers shall include a right to appoint a nominee director on the Board of the issuer, in consultation with institutional holders of such securities.
(5) the debenture trustee, wherever appointed, shall disclose the information to the investors and the general public by issuing a press release in any of the following events:
(a) default by issuer to pay interest on debt securities or redemption amount;
(b) failure to create a charge on the assets;
(c) revision of rating assigned to the debt securities.
(6) The debenture trustee, wherever appointed, shall carry out its duties and perform its functions under these regulations, the Securities and Exchange Board of India (Debenture Trustees) Regulations, 1993, the trust deed and offer document, with due care, diligence and loyalty.
(7) The debenture trustee, wherever appointed, shall ensure disclosure of all material events on an ongoing basis
(8) The debenture trustees, wherever appointed, shall supervise the implementation of the conditions regarding creation of security for the debt securities and debenture redemption reserve.
Obligations of the issuer and merchant banker.
27. (1) The issuer shall disclose all the material facts in the offer documents issued or distributed to the public and shall ensure that all the disclosures made in the offer document are true, fair and adequate and there is no mis-leading or untrue statements or mis-statement in the offer document.
(2) The merchant banker(s) shall verify and confirm that the disclosures made in the offer documents are true, fair and adequate and ensure that the issuer is in compliance with these regulations.
(3) The merchant banker(s) shall ensure that all transaction specific disclosures required in Schedule I of these regulations are complied with:
Provided where the issuer is a corporate municipal entity, merchant banker(s) shall also ensure that the disclosures under Companies Act, 2013 and rules made thereunder are complied with.
(4) The issuer shall treat the applicants in a public issue of debt securities in a fair and equitable manner as per the procedures as may be specified by the Board.
(5) The issuer and merchant bankers shall be responsible for the due diligence in respect of assignments undertaken by them in respect of issue, offer and distribution of securities to the public.
(6) No person shall employ any device, scheme or artifice to defraud in connection with issue or subscription or distribution of debt securities which are listed or proposed to be listed on a recognised stock exchange.
(7) The issuer and the merchant bankers shall ensure that the security created to secure the debt securities is adequate to ensure hundred per cent. asset cover for the debt securities. - CHAPTER VIII MISCELLANEOUS
Sanction for violations.
28. Any contravention of these regulations shall be dealt with by the Board in accordance with the Act.
Power to remove difficulties.
29. In order to remove any difficulties in the interpretation or application of the provisions of these regulations, the Board shall have the power to issue directions through guidance notes or circulars:
Provided that where any direction is issued by the Board in a specific case relating to interpretation or application of any provision of these regulations, it shall be done only after affording a reasonable opportunity of being heard to the concerned persons and after recording reasons for the direction. - SCHEDULE I [See Regulation 6(2)]
No. SEBI/ LAD-NRO/GN/2015-16/006.- In exercise of the powers conferred by Section 30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), to put in place a framework for public issue of debt securities by municipalities, listing and trading of such securities and matters incidental thereto, the Board hereby makes the following regulations, namely, —
- CHAPTER I PRELIMINARY
- SEBI (PROHIBITION OF INSIDER TRADING) REGULATIONS, 2015
- CHAPTER – I PRELIMINARY
Short title and commencement.
1. (1) These regulations may be called the SEBI (Prohibition of Insider Trading) Regulations, 2015.
(2) These regulations shall come into force on the one hundred and twentieth day from the date of its publication in the Official Gazette.Definitions.
2. (1) In these regulations, unless the context otherwise requires, the following words, expressions and derivations therefrom shall have the meanings assigned to them as under:–
(a) “Act” means the Securities and Exchange Board of India Act, 1992 (15 of 1992);
(b) “Board” means the Securities and Exchange Board of India;
(c) “compliance officer” means any senior officer, designated so and reporting to the board of directors or head of the organization in case board is not there, who is financially literate and is capable of appreciating requirements for legal and regulatory compliance under these regulations and who shall be responsible for compliance of policies, procedures, maintenance of records, monitoring adherence to the rules for the preservation of unpublished price sensitive information, monitoring of trades and the implementation of the codes specified in these regulations under the overall supervision
of the board of directors of the listed company or the head of an organization, as the case may be;
(d) "connected person" means,-
(i) any person who is or has during the six months prior to the concerned act been associated with a company, directly or indirectly, in any capacity including by reason of frequent communication with its officers or by being in any contractual,
fiduciary or employment relationship or by being a director, officer or an employee of the company or holds any position including a professional or business relationship between himself and the company whether temporary or permanent, that allows such person, directly or indirectly, access to unpublished price sensitive information or is reasonably expected to allow such access.
(ii) Without prejudice to the generality of the foregoing, the persons falling within the following categories shall be deemed to be connected persons unless the contrary is established, -
(a). an immediate relative of connected persons specified in clause (i); or
(b). a holding company or associate company or subsidiary company; or
(c). an intermediary as specified in section 12 of the Act or an employee or director thereof; or
(d). an investment company, trustee company, asset management company or an employee or director thereof; or
(e). an official of a stock exchange or of clearing house or corporation; or
(f). a member of board of trustees of a mutual fund or a member of the board of directors of the asset management company of a mutual fund or is an employee thereof; or
(g). a member of the board of directors or an employee, of a public financial institution as defined in section 2 (72) of the Companies Act, 2013; or
(h). an official or an employee of a self-regulatory organization recognised or authorized by the Board; or
(i). a banker of the company; or
(j). a concern, firm, trust, Hindu undivided family, company or association of persons wherein a director of a company or his immediate relative or banker of the company, has more than ten per cent. of the holding or interest;
NOTE: It is intended that a connected person is one who has a connection with the company that is expected to put him in possession of unpublished price sensitive information. Immediate relatives and other categories of persons specified above are also presumed to be connected persons but such a presumption is a deeming legal fiction and is rebuttable. This definition is also intended to bring into its ambit persons who may not seemingly occupy any position in a company but are in regular touch with the company and its officers and are involved in the know of the company’s operations. It is intended to bring within its ambit those who would have access to or could access unpublished price sensitive information about any
company or class of companies by virtue of any connection that would put them in possession of unpublished price sensitive information.
(e) "generally available information" means information that is accessible to the public on a non-discriminatory basis;
NOTE: It is intended to define what constitutes generally available information so that it is easier to crystallize and appreciate what unpublished price sensitive information is. Information published on the website of a stock exchange, would ordinarily be considered generally available.
(f) “immediate relative” means a spouse of a person, and includes parent, sibling, and child of such person or of the spouse, any of whom is either dependent financially on such person, or consults such person in taking decisions relating to trading in securities;
NOTE: It is intended that the immediate relatives of a “connected person” too become connected persons for purposes of these regulations. Indeed, this is a rebuttable presumption.
(g) "insider" means any person who is:
i) a connected person; or
ii) in possession of or having access to unpublished price sensitive information;
NOTE: Since “generally available information” is defined, it is intended that anyone in possession of or having access to unpublished price sensitive information should be considered an “insider” regardless of how one came in possession of or had access to such information. Various circumstances are provided for such a person to demonstrate that he has not indulged in insider trading. Therefore, this definition is intended to bring within its reach any person who is in receipt of or has access to unpublished price sensitive information. The onus of showing that a certain person was in possession of or had access to unpublished price sensitive information at the time of trading would, therefore, be on the person leveling the charge after which the person who has traded when in possession of or having access to unpublished price sensitive information may demonstrate that he was not in such possession or that he has not traded or or he could not access or that his trading when in possession of such information was squarely covered by the exonerating circumstances.
(h) "promoter" shall have the meaning assigned to it under the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 or any modification thereof;
(i) "securities" shall have the meaning assigned to it under the Securities Contracts (Regulation) Act, 1956 (42 of 1956) or any modification thereof except units of a mutual fund;
(j) "specified" means specified by the Board in writing;
(k) “takeover regulations” means the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 and any amendments thereto;
(l) "trading" means and includes subscribing, buying, selling, dealing, or agreeing to subscribe, buy, sell, deal in any securities, and "trade" shall be construed accordingly ;
NOTE: Under the parliamentary mandate, since the Section 12A (e) and Section 15G of the Act employs the term 'dealing in securities', it is intended to widely define the term “trading” to include dealing. Such a construction is intended to curb the activities based on unpublished price sensitive information which are strictly not buying, selling or subscribing, such as pledging etc when in possession of unpublished price sensitive information.
(m) “trading day” means a day on which the recognized stock exchanges are open for trading;
(n) "unpublished price sensitive information" means any information, relating to a company or its securities, directly or indirectly, that is not generally available which upon becoming generally available, is likely to materially affect the price of the securities and shall, ordinarily including but not restricted to, information relating to the following: –
(i) financial results;
(ii) dividends;
(iii) change in capital structure;
(iv) mergers, de-mergers, acquisitions, delistings, disposals and expansion of business and such other transactions;
(v) changes in key managerial personnel; and
(vi) material events in accordance with the listing agreement.
NOTE: It is intended that information relating to a company or securities, that is not generally available would be unpublished price sensitive information if it is likely to materially affect the price upon coming into the public domain. The types of matters that would ordinarily give rise to unpublished price sensitive information have been listed above to give illustrative guidance of unpublished price sensitive information.
(2) Words and expressions used and not defined in these regulations but defined in the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Securities Contracts (Regulation) Act, 1956 (42 of 1956), the Depositories Act, 1996 (22 of 1996) or the Companies Act, 2013 (18 of 2013) and rules and regulations made thereunder shall have the meanings respectively assigned to them in those legislation. - CHAPTER – II RESTRICTIONS ON COMMUNICATION AND TRADING BY INSIDERS
Communication or procurement of unpublished price sensitive information.
3. (1) No insider shall communicate, provide, or allow access to any unpublished price sensitive information, relating to a company or securities listed or proposed to be listed, to any person including other insiders except where such communication is in furtherance of legitimate purposes, performance of duties or discharge of legal obligations.
NOTE: This provision is intended to cast an obligation on all insiders who are essentially persons in possession of unpublished price sensitive information to handle such information with care and to deal with the information with them when transacting their business strictly on a need-to-know basis. It is also intended to lead to organisations developing practices based on need-to-know principles for treatment of information in their possession.
(2) No person shall procure from or cause the communication by any insider of unpublished price sensitive information, relating to a company or securities listed or proposed to be listed, except in furtherance of legitimate purposes, performance of duties or discharge of legal obligations.
NOTE: This provision is intended to impose a prohibition on unlawfully procuring possession of unpublished price sensitive information. Inducement and procurement of unpublished price sensitive information not in furtherance of one’s legitimate duties and discharge of obligations would be illegal under this provision.
(3) Notwithstanding anything contained in this regulation, an unpublished price sensitive information may be communicated, provided, allowed access to or procured, in connection with a transaction that would:–
(i) entail an obligation to make an open offer under the takeover regulations where the board of directors of the company is of informed opinion that the proposed transaction is in the best interests of the company;
NOTE: It is intended to acknowledge the necessity of communicating, providing, allowing access to or procuring UPSI for substantial transactions such as takeovers, mergers and acquisitions involving trading in securities and change of control to assess a potential investment. In an open offer under the takeover regulations, not only would the same price be made available to all shareholders of the company but also all information necessary to enable an informed divestment or retention decision by the public shareholders is required to be made available to all shareholders in the letter of offer under those regulations.
(ii) not attract the obligation to make an open offer under the takeover regulations but where the board of directors of the company is of informed opinion that the proposed transaction is in the best interests of the company and the information that constitute unpublished price sensitive information is disseminated to be made generally available at least two trading days prior to the proposed transaction being effected in such form as the board of directors may determine.
NOTE: It is intended to permit communicating, providing, allowing access to or procuring UPSI also in transactions that do not entail an open offer obligation under the takeover regulations if it is in the best interests of the company. The board of directors, however, would cause public disclosures of such unpublished price sensitive information well before the proposed transaction to rule out any information asymmetry in the market.
(4) For purposes of sub-regulation (3), the board of directors shall require the parties to execute agreements to contract confidentiality and non-disclosure obligations on the part of such parties and such parties shall keep information so received confidential, except for the purpose of sub-regulation (3), and shall not otherwise trade in securities of the company when in possession of unpublished price sensitive information.
Trading when in possession of unpublished price sensitive information.
4. (1) No insider shall trade in securities that are listed or proposed to be listed on a stock exchange when in possession of unpublished price sensitive information:
Provided that the insider may prove his innocence by demonstrating the circumstances including the following : –
(i) the transaction is an off-market inter-se transfer between promoters who were in possession of the same unpublished price sensitive information without being in breach of regulation 3 and both parties had made a conscious and informed trade decision;
(ii) in the case of non-individual insiders: –
(a) the individuals who were in possession of such unpublished price sensitive information were different from the individuals taking trading decisions and such decision-making individuals were not in possession of such unpublished price sensitive information when they took the decision to trade; and
(b) appropriate and adequate arrangements were in place to ensure that these regulations are not violated and no unpublished price sensitive information was communicated by the individuals possessing the information to the individuals
taking trading decisions and there is no evidence of such arrangements having been breached;
(iii) the trades were pursuant to a trading plan set up in accordance with regulation 5.
NOTE: When a person who has traded in securities has been in possession of unpublished price sensitive information, his trades would be presumed to have been motivated by the knowledge and awareness of such information in his possession. The reasons for which he trades or the purposes to which he applies the proceeds of the transactions are not intended to be relevant for determining whether a person has violated the regulation. He traded when in possession of unpublished price sensitive information is what would need to be demonstrated at the outset to bring a charge. Once this is established, it would be open to the insider to prove his innocence by demonstrating the circumstances mentioned in the proviso, failing which he would have violated the prohibition.
(2) In the case of connected persons the onus of establishing, that they were not in possession of unpublished price sensitive information, shall be on such connected persons and in other cases, the onus would be on the Board.
(3) The Board may specify such standards and requirements, from time to time, as it may deem necessary for the purpose of these regulations.
Trading Plans.
5. (1) An insider shall be entitled to formulate a trading plan and present it to the compliance officer for approval and public disclosure pursuant to which trades may be carried out on his behalf in accordance with such plan.
NOTE: This provision intends to give an option to persons who may be perpetually in possession of unpublished price sensitive information and enabling them to trade in securities in a compliant manner. This provision would enable the formulation of a trading plan by an insider to enable him to plan for trades to be executed in future. By doing so, the possession of unpublished price sensitive information when a trade under a trading plan is actually executed would not prohibit the execution of such trades that he had pre-decided even before the unpublished price sensitive information came into being.
(2) Such trading plan shall:–
(i) not entail commencement of trading on behalf of the insider earlier than six months from the public disclosure of the plan;
NOTE: It is intended that to get the benefit of a trading plan, a cool-off period of six months is necessary.
Such a period is considered reasonably long for unpublished price sensitive information that is in possession of the insider when formulating the trading plan, to become generally available. It is also considered to be a reasonable period for a time lag in which new unpublished price sensitive information may come into being without adversely affecting the trading plan formulated earlier. In any case, it should be remembered that this is only a statutory cool-off period and would not grant immunity from action if the insider were to be in possession of the same unpublished price sensitive information both at the time of formulation of the plan and implementation of the same.
(ii) not entail trading for the period between the twentieth trading day prior to the last day of any financial period for which results are required to be announced by the issuer of the securities and the second trading day after the disclosure of such financial results;
NOTE: Since the trading plan is envisaged to be an exception to the general rule prohibiting trading by insiders when in possession of unpublished price sensitive information, it is important that the trading plan does not entail trading for a reasonable period around the declaration of financial results as that would generate unpublished price sensitive information.
(iii) entail trading for a period of not less than twelve months;
NOTE: It is intended that it would be undesirable to have frequent announcements of trading plans for short periods of time rendering meaningless the defence of a reasonable time gap between the decision to trade and the actual trade. Hence it is felt that a reasonable time would be twelve months.
(iv) not entail overlap of any period for which another trading plan is already in existence;
NOTE: It is intended that it would be undesirable to have multiple trading plans operating during the same time period. Since it would be possible for an insider to time the publication of the unpublished price sensitive information to make it generally available instead of timing the trades, it is important not to have the ability to initiate more than one plan covering the same time period.
(v) set out either the value of trades to be effected or the number of securities to be traded along with the nature of the trade and the intervals at, or dates on which such trades shall be effected; and NOTE: It is intended that while regulations should not be too prescriptive and rigid about what a trading plan should entail, they should stipulate certain basic parameters that a trading plan should conform to and within which, the plan may be formulated with full flexibility. The nature of the trades entailed in the trading plan i.e. acquisition or disposal should be set out. The trading plan may set out the value of securities or the number of securities to be invested or divested. Specific dates or specific time intervals may be set out in the plan.
(vi) not entail trading in securities for market abuse.
NOTE: Trading on the basis of such a trading plan would not grant absolute immunity from bringing proceedings for market abuse. For instance, in the event of manipulative timing of the release of unpublished price sensitive information to ensure that trading under a trading plan becomes lucrative in circumvention of regulation 4 being detected, it would be open to initiate proceedings for alleged breach of SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to the Securities Market) Regulations, 2003.
(3) The compliance officer shall review the trading plan to assess whether the plan would have any potential for violation of these regulations and shall be entitled to seek such express undertakings as may be necessary to enable such assessment and to approve and monitor the implementation of the plan.
NOTE: It is intended that the compliance officer would have to review and approve the plan. For doing so, he may need the insider to declare that he is not in possession of unpublished price sensitive information or that he would ensure that any unpublished price sensitive information in his possession becomes generally available before he commences executing his trades. Once satisfied, he may approve the trading plan, which would then have to be implemented in accordance with these regulations.
(4) The trading plan once approved shall be irrevocable and the insider shall mandatorily have to implement the plan, without being entitled to either deviate from it or to execute any trade in the securities outside the scope of the trading plan.
Provided that the implementation of the trading plan shall not be commenced if any unpublished price sensitive information in possession of the insider at the time of formulation of the plan has not become generally available at the time of the commencement of implementation and in such event the compliance officer shall confirm that the commencement ought to be deferred until such unpublished price sensitive information becomes generally available information so as to avoid a violation of sub-regulation (1) of regulation 4.
NOTE: It is intended that since the trading plan is an exception to the general rule that an insider should not trade when in possession of unpublished price sensitive information, changing the plan or trading outside the same would negate the intent behind the exception. Other investors in the market, too, would factor the impact of the trading plan on their own trading decisions and in price discovery. Therefore, it is not fair or desirable to permit the insider to deviate from the trading plan based on which others in the market have assessed their views on the securities.
The proviso is intended to address the prospect that despite the six-month gap between the formulation of the trading plan and its commencement, the unpublished price sensitive information in possession of the insider is still not generally available. In such a situation, commencement of the plan would conflict with the over-riding principle that trades should not be executed when in possession of such information. If the very same unpublished price sensitive information is still in the insider’s possession, the commencement of execution of the trading plan ought to be deferred.
(5) Upon approval of the trading plan, the compliance officer shall notify the plan to the
stock exchanges on which the securities are listed.
NOTE: It is intended that given the material exception to the prohibitory rule in regulation 4, a trading plan is required to be publicly disseminated. Investors in the market at large would also factor the potential pointers in the trading plan in their own assessment of the securities and price discovery for them on the premise of how the insiders perceive the prospects or approach the securities in their trading plan. - CHAPTER – III DISCLOSURES OF TRADING BY INSIDERS
General provisions.
6. (1) Every public disclosure under this Chapter shall be made in such form as may be specified.
(2) The disclosures to be made by any person under this Chapter shall include those relating to trading by such person’s immediate relatives, and by any other person for whom such person takes trading decisions.
NOTE: It is intended that disclosure of trades would need to be of not only those executed by the person concerned but also by the immediate relatives and of other persons for whom the person concerned takes trading decisions. These regulations are primarily aimed at preventing abuse by trading when in possession of unpublished price sensitive information and therefore, what matters is whether the person who takes trading decisions is in possession of such information rather than whether the person who has title to the trades is in such possession.
(3) The disclosures of trading in securities shall also include trading in derivatives of securities and the traded value of the derivatives shall be taken into account for purposes of this Chapter: Provided that trading in derivatives of securities is permitted by any law for the time being in force.
(4) The disclosures made under this Chapter shall be maintained by the company, for a minimum period of five years, in such form as may be specified.
Disclosures by certain persons.
7. (1) Initial Disclosures.
(a). Every promoter, key managerial personnel and director of every company whose securities are listed on any recognised stock exchange shall disclose his holding of securities of the company as on the date of these regulations taking effect, to the company within thirty days of these regulations taking effect;
(b). Every person on appointment as a key managerial personnel or a director of thecompany or upon becoming a promoter shall disclose his holding of securities of the company as on the date of appointment or becoming a promoter, to the company within seven days of such appointment or becoming a promoter.
(2) Continual Disclosures.
(a). Every promoter, employee and director of every company shall disclose to the company the number of such securities acquired or disposed of within two trading days of such transaction if the value of the securities traded, whether in one
transaction or a series of transactions over any calendar quarter, aggregates to a traded value in excess of ten lakh rupees or such other value as may be specified;
(b). Every company shall notify the particulars of such trading to the stock exchange on which the securities are listed within two trading days of receipt of the disclosure or from becoming aware of such information.
Explanation. — It is clarified for the avoidance of doubts that the disclosure of the incremental transactions after any disclosure under this sub-regulation, shall be made when the transactions effected after the prior disclosure cross the threshold specified in clause (a) of sub-regulation (2).
Disclosures by other connected persons.
(3) Any company whose securities are listed on a stock exchange may, at its discretion require any other connected person or class of connected persons to make disclosures of holdings and trading in securities of the company in such form and at such frequency as may be determined by the company in order to monitor compliance with these regulations.
NOTE: This is an enabling provision for listed companies to seek information from those to whom it has to provide unpublished price sensitive information. This provision confers discretion on any company to seek such information.
For example, a listed company may ask that a management consultant who would advise it on corporate strategy and would need to review unpublished price sensitive information, should make disclosures of his trades to the company. - CHAPTER – IV CODES OF FAIR DISCLOSURE AND CONDUCT
Code of Fair Disclosure.
8. (1) The board of directors of every company, whose securities are listed on a stock exchange, shall formulate and publish on its official website, a code of practices and procedures for fair disclosure of unpublished price sensitive information that it would follow in order to adhere to each of the principles set out in Schedule A to these regulations, without diluting the
provisions of these regulations in any manner.
NOTE: This provision intends to require every company whose securities are listed on stock exchanges to formulate a stated framework and policy for fair disclosure of events and occurrences that could impact price discovery in the market for its securities. Principles such as, equality of access to information, publication of policies such as those on dividend, inorganic growth pursuits, calls and meetings with analysts, publication of transcripts of such calls and meetings, and the like are set out in the schedule.
(2) Every such code of practices and procedures for fair disclosure of unpublished price sensitive information and every amendment thereto shall be promptly intimated to the stock exchanges where the securities are listed.
NOTE: This provision is aimed at requiring transparent disclosure of the policy formulated in sub-regulation (1).
Code of Conduct.
9. (1) The board of directors of every listed company and market intermediary shall formulate a code of conduct to regulate, monitor and report trading by its employees and other connected persons towards achieving compliance with these regulations, adopting the minimum standards set out in Schedule B to these regulations, without diluting the provisions of these regulations in any manner.
NOTE: It is intended that every company whose securities are listed on stock exchanges and every market intermediary registered with SEBI is mandatorily required to formulate a code of conduct governing trading by its employees. The standards set out in the schedule are required to be addressed by such code of conduct.
(2) Every other person who is required to handle unpublished price sensitive information in the course of business operations shall formulate a code of conduct to regulate, monitor and report trading by employees and other connected persons towards achieving compliance with these regulations, adopting the minimum standards set out in Schedule B to these regulations, without diluting the provisions of these regulations in any manner.
NOTE: This provision is intended to mandate persons other than listed companies and market intermediaries that are required to handle unpublished price sensitive information to formulate a code of conduct governing trading in securities by their employees. These entities include professional firms such as auditors, accountancy firms, law firms, analysts, consultants etc., assisting or advising listed companies, market intermediaries and other capital market participants. Even entities that normally operate outside the capital market may handle unpublished price sensitive information. This provision would mandate all of them to formulate a code of conduct.
(3) Every listed company, market intermediary and other persons formulating a code of conduct shall identify and designate a compliance officer to administer the code of conduct and other requirements under these regulations.
NOTE: This provision is intended to designate a senior officer as the compliance officer with the responsibility to
administer the code of conduct and monitor compliance with these regulations. - CHAPTER – V MISCELLANEOUS
Sanction for violations.
10. Any contravention of these regulations shall be dealt with by the Board in accordance with the Act.
Power to remove difficulties.
11. In order to remove any difficulties in the interpretation or application of the provisions of these regulations, the Board shall have the power to issue directions through guidance notes or circulars:
Provided that where any direction is issued by the Board in a specific case relating to interpretation or application of any provision of these regulations, it shall be done only after affording a reasonable opportunity of being heard to the concerned persons and after recording reasons for the direction.
Repeal and Savings.
12. (1) The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992 are hereby repealed.
(2) Notwithstanding such repeal,—
(a) the previous operation of the repealed regulations or anything duly done or suffered thereunder, any right, privilege, obligation or liability acquired, accrued or incurred under the repealed regulations, any penalty, forfeiture or punishment incurred in respect of any offence committed against the repealed regulations, or any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment as aforesaid, shall remain unaffected as if the repealed regulations had never been repealed; and
(b) anything done or any action taken or purported to have been done or taken including any adjudication, enquiry or investigation commenced or show-cause notice issued under the repealed regulations prior to such repeal, shall be deemed to have been done or taken under the corresponding provisions of these regulations;
(3) After the repeal of Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992, any reference thereto in any other regulations made, guidelines or circulars issued thereunder by the Board shall be deemed to be a reference to the corresponding provisions of these regulations. - SCHEDULE A [See sub-regulation (1) of regulation 8]
Principles of Fair Disclosure for purposes of Code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information
1. Prompt public disclosure of unpublished price sensitive information that would impact price discovery no sooner than credible and concrete information comes into being in order to make such information generally available.
2. Uniform and universal dissemination of unpublished price sensitive unpublished price sensitive information to avoid selective disclosure.
3. Designation of a senior officer as a chief investor relations officer to deal with dissemination of information and disclosure of unpublished price sensitive information.
4. Prompt dissemination of unpublished price sensitive information that gets disclosed selectively, inadvertently or otherwise to make such information generally available.
5. Appropriate and fair response to queries on news reports and requests for verification of market rumours by regulatory authorities.
6. Ensuring that information shared with analysts and research personnel is not unpublished price sensitive information.
7. Developing best practices to make transcripts or records of proceedings of meetings with analysts and other investor relations conferences on the official website to ensure official confirmation and documentation of disclosures made.
8. Handling of all unpublished price sensitive information on a need-to-know basis. - SCHEDULE B [See sub-regulation (1) and sub-regulation (2) of regulation 9]
Minimum Standards for Code of Conduct to Regulate, Monitor and Report Trading by Insiders
1. The compliance officer shall report to the board of directors and in particular, shall provide reports to the Chairman of the Audit Committee, if any, or to the Chairman of the board of directors at such frequency as may be stipulated by the board of directors.
2. All information shall be handled within the organisation on a need-to-know basis and no unpublished price sensitive information shall be communicated to any person except in furtherance of the insider’s legitimate purposes, performance of duties or discharge of his legal obligations. The code of conduct shall contain norms for appropriate Chinese Walls procedures, and processes for permitting any designated person to “cross the wall”.
3. Employees and connected persons designated on the basis of their functional role (“designated persons”) in the organisation shall be governed by an internal code of conduct governing dealing in securities. The board of directors shall in consultation with the compliance officer specify the designated persons to be covered by such code on the basis of their role and function in the organisation. Due regard shall be had to the access that such role and function would provide to unpublished price sensitive information in addition to seniority and professional designation.
4. Designated persons may execute trades subject to compliance with these regulations. Towards this end, a notional trading window shall be used as an instrument of monitoring trading by the designated persons. The trading window shall be closed when the compliance officer determines that a designated person or class of designated persons can reasonably be expected to have possession of unpublished price sensitive information. Such closure shall be imposed in relation to such securities to which such unpublished price sensitive information relates.
Designated persons and their immediate relatives shall not trade in securities when the trading window is closed.
5. The timing for re-opening of the trading window shall be determined by the compliance officer taking into account various factors including the unpublished price sensitive information in question becoming generally available and being capable of assimilation by the market, which in any event shall not be earlier than forty-eight hours after the information becomes generally available. The trading window shall also be applicable to any person having contractual or fiduciary relation with the company, such as auditors, accountancy firms, law firms, analysts, consultants etc., assisting or advising the company.
6. When the trading window is open, trading by designated persons shall be subject to preclearance by the compliance officer, if the value of the proposed trades is above such thresholds as the board of directors may stipulate. No designated person shall apply for pre-clearance of any proposed trade if such designated person is in possession of unpublished price sensitive information even if the trading window is not closed.
7. The compliance officer shall confidentially maintain a list of such securities as a “restricted list” which shall be used as the basis for approving or rejecting applications for preclearance of trades.
8. Prior to approving any trades, the compliance officer shall be entitled to seek declarations to the effect that the applicant for pre-clearance is not in possession of any unpublished price sensitive information. He shall also have regard to whether any such declaration is reasonably capable of being rendered inaccurate.
9. The code of conduct shall specify any reasonable timeframe, which in any event shall not be more than seven trading days, within which trades that have been pre-cleared have to be executed by the designated person, failing which fresh pre-clearance would be needed for the trades to be executed.
10. The code of conduct shall specify the period, which in any event shall not be less than six months, within which a designated person who is permitted to trade shall not execute a contra trade. The compliance officer may be empowered to grant relaxation from strict application of such restriction for reasons to be recorded in writing provided that such relaxation does not violate these regulations. Should a contra trade be executed, inadvertently or otherwise, in violation of such a restriction, the profits from such trade shall be liable to be disgorged for remittance to the Board for credit to the Investor Protection and Education Fund administered by the Board under the Act.
11. The code of conduct shall stipulate such formats as the board of directors deems necessary for making applications for pre-clearance, reporting of trades executed, reporting of decisions not to trade after securing pre-clearance, recording of reasons for such decisions and for reporting level of holdings in securities at such intervals as may be determined as being
necessary to monitor compliance with these regulations.
12. Without prejudice to the power of the Board under the Act, the code of conduct shall stipulate the sanctions and disciplinary actions, including wage freeze, suspension etc., that may be imposed, by the persons required to formulate a code of conduct under sub-regulation (1) and sub-regulation (2) of regulation 9, for the contravention of the code of conduct.
13. The code of conduct shall specify that in case it is observed by the persons required to formulate a code of conduct under sub-regulation (1) and sub-regulation (2) of regulation 9, that there has been a violation of these regulations, they shall inform the Board promptly.
- CHAPTER – I PRELIMINARY
- SEBI (FOREIGN PORTFOLIO INVESTORS) REGULATIONS, 2014
- CHAPTER I PRELIMINARY
Short title and commencement.
1. (1) These regulations may be called the Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2014.
(2) They shall come into force on the date of their publication in the Official Gazette.
Definitions.
2. (1) In these regulations, unless the context otherwise requires, the terms defined herein shall bear the meanings assigned to them below, and their cognate expressions and variations shall be construed accordingly,—
(a) “Act” means the Securities and Exchange Board of India Act, 1992;
(b) “Board” means the Securities and Exchange Board of India established under section 3 of the Act;
(c) "certificate" means a certificate of registration granted to a foreign portfolio investor by the designated depository participant on behalf of the Board under these regulations;
(d) “custodian of securities” means a person registered under the Securities and Exchange Board of India (Custodian of Securities) Regulations, 1996;
(e) "designated bank" means a scheduled bank in India, which has been authorized by the Reserve Bank of India to act as a banker to foreign portfolio investors;
(f) “designated depository participant” means a person who has been approved by the Board under Chapter III of these regulations;
(g) "foreign institutional investor" means an institution who is registered under the Securities and Exchange Board of India (Foreign Institutional Investors) Regulations, 1995;
(h) “foreign portfolio investor” means a person who satisfies the eligibility criteria prescribed under regulation 4 and has been registered under Chapter II of these regulations, which shall be deemed to be an intermediary in terms of the provisions of the Act:
Provided that any foreign institutional investor or qualified foreign investor who holds a valid certificate of registration shall be deemed to be a foreign portfolio investor till the expiry of the block of three years for which fees have been paid as per the Securities and Exchange Board of India (Foreign Institutional Investors) Regulations, 1995;
(i) "Form" means a form specified in the First Schedule to these regulations;
(j) "offshore derivative instrument" means any instrument, by whatever name called, which is issued overseas by a foreign portfolio investor against securities held by it that are listed or proposed to be listed on any recognised stock exchange in India, 1[or unlisted debt securities or securitised debt instruments,] as its underlying;
(k) “qualified depository participant” means a depository participant approved by the Board to act as qualified depository participant;
(l) “qualified foreign investor” means a person who has opened a dematerialized account with a qualified depository participant as a qualified foreign investor;
(m) "Schedule" means a schedule to these regulations;
(n) "sub-account" means a person who is registered under the Securities and Exchange Board of India (Foreign Institutional Investor) Regulations, 1995.
(2) Words and expressions used and not defined in these regulations, but defined in the Act or the Companies Act, 2013, the Securities Contracts (Regulation) Act, 1956, the Depositories Act, 1996 or the rules and regulations made thereunder shall have the same meaning respectively assigned to them in those Acts or rules or regulations or any statutory modification or re-enactment thereto. - CHAPTER II REGISTRATION OF FOREIGN PORTFOLIO INVESTORS
Application for grant of certificate as foreign portfolio investor.
3. (1) No person shall buy, sell or otherwise deal in securities as a foreign portfolio investor unless it has obtained a certificate granted by the designated depository participant on behalf of the Board:
Provided that a foreign institutional investor or sub-account may, subject to payment of conversion fees as specified in Part A of the Second Schedule, continue to buy, sell
1Inserted by the Securities and Exchange Board of India (Foreign Portfolio Investors) (Second Amendment) Regulations, 2017, w.e.f. 27-2-2017.
or otherwise deal in securities subject to the provisions of these regulations, till the expiry of its registration as a foreign institutional investor or sub-account, or until he obtains a certificate of registration as foreign portfolio investor, whichever is earlier:
Provided further that a qualified foreign investor may continue to buy, sell or otherwise deal in securities subject to the provisions of these regulations, for a period of one year from the date of commencement of these regulations, or until he obtains a certificate of registration as foreign portfolio investor, whichever is earlier.
(2) An application for the grant of certificate as foreign portfolio investor shall be made to the designated depository participant in Form A of the First Schedule and shall be accompanied by the fee specified in Part A of the Second Schedule.
Eligibility criteria of foreign portfolio investor.
4.The designated depository participant shall not consider an application for grant of certificate of registration as a foreign portfolio investor unless the applicant satisfies the following conditions namely, -
(a) the applicant is a person not resident in India;
(b) the applicant is resident of a country whose securities market regulator is a signatory to International Organization of Securities Commission’s Multilateral Memorandum of Understanding (Appendix A Signatories) or a signatory to bilateral Memorandum of Understanding with the Board:
[Provided that an applicant falling under Category I foreign portfolio investor, as defined in clause (a) of Regulation 5, shall be considered as eligible for registration, if the applicant is a resident in a country as may be approved by the Government of India.]2
(c) the applicant being a bank, is a resident of a country whose central bank is a member of Bank for International Settlements;
(d) the applicant is not resident in a country identified in the public statement of Financial Action Task Force as:
2 Inserted by the Securities and Exchange Board of India (Foreign Portfolio Investors) (Amendment) Regulations, 2018, w.e.f. 05-04-2018.
(i) a jurisdiction having a strategic Anti-Money Laundering or Combating the Financing of Terrorism deficiencies to which counter measures apply; or
(ii) a jurisdiction that has not made sufficient progress in addressing the deficiencies or has not committed to an action plan developed with the Financial Action Task Force to address the deficiencies;
(e) the applicant is not a non-resident Indian;
(f) the applicant is legally permitted to invest in securities outside the country of its incorporation or establishment or place of business;
(g) the applicant is authorized by its Memorandum of Association and Articles of Association or equivalent document(s) or the agreement to invest on its own behalf or on behalf of its clients;
(h) the applicant has sufficient experience, good track record, is professionally competent, financially sound and has a generally good reputation of fairness and integrity;
(i) the grant of certificate to the applicant is in the interest of the development of the securities market;
(j) the applicant is a fit and proper person based on the criteria specified in Schedule II of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008; and
(k) any other criteria specified by the Board from time to time.
3[Provided that, in respect of a Category I or Category II foreign portfolio investor, as defined in clause (a) or clause (b) of Regulation 5, clauses (f), (g) (h)and (i) of this regulation shall not be applicable.]
Explanation.-For the purposes of this regulation:
(i) The term “person” shall have the same meaning as assigned to it under section 2 (31) of the Income-tax Act, 1961;
3 Inserted by the Securities and Exchange Board of India (Foreign Portfolio Investors) (Amendment) Regulations, 2018, w.e.f. 05-04-2018.
(ii) The term “non-resident” shall have the same meaning as assigned to it under the Income-tax Act, 1961;
(iii) The term “resident in India” shall have the same meaning as assigned to it under the Income-tax Act, 1961;
(iv) “Bilateral Memorandum of Understanding with the Board” shall mean a bilateral Memorandum of Understanding between the Board and the overseas regulator that, inter alia, provides for information sharing arrangements under clause (ib) of sub section (2) of Section 11 of the Act.
Categories of foreign portfolio investor.
5. Anapplicant shall seek registration as a foreign portfolio investor in one of the categories mentioned hereunder or any other category as may be specified by the Board from time to time:
(a) "Category I foreign portfolio investor" which shall include Government and Government related investors such as central banks, Governmental agencies, sovereign wealth funds and international or multilateral organizations or agencies;
(b) "Category IIforeign portfolio investor" which shall include:
(i) appropriately regulated broad based funds such as mutual funds, investment trusts, insurance/reinsurance companies;
(ii) appropriately regulated persons such as banks, asset management companies, investment managers/ advisors, portfolio managers 4[, broker dealers and swap dealers];
(iii) broad based funds that are not appropriately regulated but whose investment manager is appropriately regulated:
Provided that the investment manager of such broad based fund is itself registered as Category II foreign portfolio investor:
Provided further that the investment manager undertakes that it shall be responsible and liable for all acts of commission and omission of
4 Inserted by the Securities and Exchange Board of India (Foreign Portfolio Investors) (Amendment) Regulations, 2018, w.e.f. 05-04-2018.
all its underlying broad based funds and other deeds and things done by such broad based funds under these regulations.
(iv) university funds and pension funds; and
(v) university related endowments already registered with the Board as foreign institutional investors or sub-accounts.
Explanation 1.-For the purposes of this clause, an applicant seeking registration as a foreign portfolio investor shall be considered to be "appropriately regulated" if it is regulated or supervised by the securities market regulator or the banking regulator of the concerned foreign jurisdiction, in the same capacity in which it proposes to make investments in India.
Explanation 2.-
A) For the purposes of this clause, "broad based fund" shall mean a fund, established or incorporated outside India, which has at least twenty investors, with no investor holding more than forty-nine per cent of the shares or units of the fund:
Provided that if the broad based fund has an institutional investor who holds more than forty nine per cent of the shares or units in the fund, then such institutional investor must itself be a broad based fund:
5[Provided further that if a foreign portfolio investor has a Bank, Sovereign Wealth Fund, Insurance/ Reinsurance company or a Pension Fund as its institutional investor, then such an applicant shall be deemed to be broad based subject to the condition that such institutional investor(s) shall, jointly or separately, hold more than fifty percent of the shares or units of the fund in the applicant fund at all times:
Provided also that in cases where broad based status is achieved on the basis of investor(s) of an underlying fund, then such underlying fund shall also be
5 Inserted by the Securities and Exchange Board of India (Foreign Portfolio Investors) (Amendment) Regulations, 2018, w.e.f. 05-04-2018.
required to fulfil the extant eligibility requirements as specified for foreign portfolio investors from time to time by the Board.]
B) For the purpose of clause A of this Explanation, for ascertaining the number of investors in a fund, direct investors as well as underlying investors shall be considered.
C) For the purpose of clause B of this Explanation, only investors of entities which have been set up for the sole purpose of pooling funds and making investments, shall be considered for the purpose of determining underlying investors.
6[ D) Exit of some investors from a broad based fund will not result in immediate loss of Category II status of such fund. Such fund may regain broad based status within a period of 90 days, failing which, the fund shall be appropriately recategorised.]
(c) "Category III foreign portfolio investor" which shall include all others not eligible under Category I and II foreign portfolio investors such as endowments, charitable societies, charitable trusts, foundations, corporate bodies, trusts, individuals and family offices.
Furnishing of information, clarificationand personal representation.
6.(1) The Board or the designated depository participant may require the applicant to furnish such further information or clarification as may be considered necessary to grant certificate of registration as a foreign portfolio investor.
(2)The applicant or his authorized representative shall, if so required by the Board or designated depository participant, appear before them for personal representation in connection with the grant of a certificate.
Procedure and grant of certificate.
7.(1) The designated depository participant may grant certificate of registration as prescribed in Form B of First Schedule to an applicant if it is satisfied that the applicant is eligible and fulfils the requirements as specified in these regulations.
6 Inserted by the Securities and Exchange Board of India (Foreign Portfolio Investors) (Amendment) Regulations, 2018, w.e.f. 05-04-2018.
(2) The designated depository participant shall endeavor to dispose of the application for grant of certificate of registration as soon as possible but not later than thirty days after receipt of application by the designated depository participant or, after the information called for under regulation 6 has been furnished, whichever is later.
(3) Upon grant of certificate of registration to the foreign portfolio investor, the designated depository participant shall forthwith collect the fees, as specified in Part A of the Second Schedule, from foreign portfolio investor on behalf of the Board and shall remit fees to the Board.
(4) If an applicant seeking registration as a foreign portfolio investor has any grievance with respect to its application or if the designated depository participant has any question in respect of interpretation of any provision of this regulation, it may approach the Board for appropriate instructions.
Application to conform to the requirements.
8. An application for grant of certificate of registration to act as a foreign portfolio investor, which is not complete in all respects or is false or misleading in any material particular shall be deemed to be deficient and liable to be rejected by the designated depository participant:
Providedthat, before rejecting any such application, the applicant shall be given a reasonable opportunity to remove the deficiency, within the time as specified by the designated depository participant.
Procedure where certificate is not granted.
9.(1)Where an application for grant of a certificate does not satisfy the requirements specified in these regulations, the designated depository participant may reject the application after giving the applicant a reasonable opportunity of being heard.
(2) The decision to reject the application shall be communicated by the designated depository participant to the applicant in writing stating therein the grounds on which the application has been rejected.
(3) The applicant, who is aggrieved by the decision of the designated depository participant under sub-regulation (1) may, within a period of thirty days from the date of receipt of communication under sub-regulation (2), apply to the Board for
reconsideration of the decision of the designated depository participant.
(4) The Board shall, as soon as possible, in the light of the submissions made in the application for reconsideration made under sub-regulation (3) and after giving a reasonable opportunity of being heard, convey its decision in writing to the applicant.
Suspension, cancellation or surrender of certificate.
10. (1) Subject to compliance with the provisions of the Act, these regulations and the circulars issued thereunder, the registration granted by the designated depository participant on behalf of the Board under these regulations shall be permanent unless suspended or cancelled by the Board or surrendered by the foreign portfolio investor.
(2) Suspension and cancellation of registration granted by the Board under these regulations, shall be dealt with in the manner as provided in Chapter V of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008.
(3) Any foreign portfolio investor desirous of giving up its activity and surrendering the certificate of registration may make a request for such surrender to the designated depository participant who shall accept the surrender of registration after obtaining approval from the Board to do so.
(4)While accepting the surrender of registration under sub-regulation (3), the designated depository participant may impose such conditions as may be specified by the Board and such person shall comply with such conditions. - CHAPTER III APPROVAL OF DESIGNATED DEPOSITORY PARTICIPANT
Application for approval to act as designated depository participant.
11. (1) No person shall act as designated depository participant unless it has obtained the approval of the Board:
Provided that a custodian of securities which is registered with the Board as on the date of commencement of these regulations, shall be deemed to have been granted approval as designated depository participant subject to the payment of fees as specified in Part B of Second Schedule:
Provided further that a qualified depository participant which has been granted approval by the Board prior to the commencement of these regulations, having opened qualified foreign investor account as on date of notification of these regulations, shall be deemed to have been granted approval as designated depository participant subject to the payment of fees as specified in Part B of Second Schedule.
(2) An application for approval to act as designated depository participant shall be made to the Board through the depository in which the applicant is a participant and shall be accompanied by the application fee specified in Part A of the Second Schedule which shall be paid in the manner specified therein.
(3) The depository shall forward to the Board the application, as early as possible, but not later than thirty days from the date of receipt by the depository, along with its recommendations and certifying that the participant complies with the eligibility criteria as provided for in these regulations.
Eligibility criteria of designated depository participant.
12. (1)The Board shall not consider an application for the grant of approval as designated depository participant unless the applicant satisfies the following conditions, namely:
(a) the applicant is a participant registered with the Board;
(b) the applicant is a custodian of securities registered with the Board;
(c) the applicant is an Authorized Dealer Category-1 bank authorized by Reserve Bank of India;
(d) the applicant has multinational presence either through its branches or through agency relationships with intermediaries regulated in their respective home jurisdictions;
(e) the applicant has systems and procedures to comply with the requirements of Financial Action Task Force Standards, Prevention of Money Laundering Act, 2002, Rules prescribed thereunder and the circulars issued from time to time by the Board;
(f) the applicant is a fit and proper person based on the criteria specified in Schedule II of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008; and
(g) any other criteria specified by the Board from time to time.
(2) Notwithstanding anything contained in sub-regulation (1) of this regulation, the Board may consider an application from a global bank, regulated in its home jurisdiction, for grant of approval to act as designated depository participant, if it is satisfied that it has sufficient experience in providing custodial services and the grant of such approval is in the interest of the development of the securities market:
Provided that such global bank shall be registered with the Board as a participant, custodian of securities, and shall have tie up with Authorized Dealer Category-1 bank.
Furnishing of information, clarification and personal representation.
13. (1) The Board may require the applicant or the depository of which the applicant is a participant to furnish such further information or clarification as may be considered necessary for grant of approval to act as designated depository participant.
(2) The applicant or his authorized representative shall, if so required by the Board, appear before it for personal representation in connection with the grant of approval.
Procedure and grant of approval to designated depository participant.
14. (1) After considering an application made under regulation 11, the Board may grant approval to the applicant, if it is satisfied that the applicant is eligible and fulfills the requirements as specified in these regulations including payment of fees as specified in Part B of Second Schedule.
(2) The Board shall dispose of the application for grant of approval as soon as possible but not later than one month after receipt of application by the Board or, after the information called for under regulation 13 has been furnished, whichever is later.
Application to conform to the requirements.
15. An application for grant of approval to act as designated depository participant which is not complete in all respects or is false or misleading in any material particular, shall be deemed to be deficient and shall be liable to be rejected by the Board:
Providedthat, before rejecting any such application, the applicant shall be given a reasonable opportunity to remove the deficiency, within the time as specified by the Board.
Procedure where approval is not granted.
16. (1) Where an application for grant of an approval does not satisfy the requirements specified in these regulations, the Board may reject the application after giving the applicant a reasonable opportunity of being heard.
(2) The decision to reject the application shall be communicated by the Board to the applicant in writing stating therein the grounds on which the application has been rejected.
(3) The applicant, who is aggrieved by the decision of the Board under sub-regulation (1) may, within a period of thirty days from the date of receipt of communication under sub-regulation (2), apply to the Board for reconsideration of its decision.
(4) The Board shall, as soon as possible, in the light of the submissions made in the application for reconsideration made under sub-regulation (3) and after giving a reasonable opportunity of being heard, convey its decision in writing to the applicant.
Validity of approval.
17. Subject to compliance with the provisions of the Act, these regulations and the circulars issued thereunder, the approval granted by the Board under these regulations shall be permanent unless suspended or withdrawn by the Board or surrendered by the designated depository participant.
Suspension or withdrawal of approval.
18. Where any designated depository participant who has been granted approval under these regulations-
(a) fails to comply with any conditions subject to which an approval has been granted to him under these regulations;
(b) contravenes any of the provisions of the securities laws or directions, instructions or circulars issued thereunder;
the Board may, without prejudice to any action under the securities laws or directions, instructions or circulars issued thereunder, by order suspend or withdraw
such approval after providing the designated depository participant a reasonable opportunity of being heard.
Surrender of approval.
19. (1) Any designated depository participant, who has been granted approval under these regulations, desirous of giving up its activity and surrendering the approval granted, may make a request for such surrender to the Board.
(2) While accepting the surrender under sub-regulation (1), the Board may impose such conditions as it deems fit for protection of investors or the clients of designated depository participants or the securities market and such person shall comply with such conditions. - CHAPTER IV INVESTMENT CONDITIONS AND RESTRICTIONS
Commencement of investment.
20. No foreign portfolio investor shall make any investments in securities in India without complying with the provisions of this Chapter.
Investment restrictions.
21. (1) A foreign portfolio investor shall invest only in the following securities, namely-
(a) 7[Shares], debentures and warrants of companies, listed or to be listed on a recognized stock exchange in India8[, through primary and secondary markets];
(b) Units of schemes floated by domestic mutual funds, whether listed on a recognized stock exchange or not;
(c) Units of schemes floated by a collective investment scheme;
(d) Derivatives traded on a recognized stock exchange;
(e) Treasury bills and dated government securities;
(f) Commercial papers issued by an Indian company;
(g) Rupee denominated credit enhanced bonds;
7Substituted for “Securities in the primary and secondary markets including shares” by the Securities and Exchange Board of India (Foreign Portfolio Investors) (Amendment) Regulations, 2017, w.e.f. 12-1-2017.
8Inserted by the Securities and Exchange Board of India (Foreign Portfolio Investors) (Amendment) Regulations, 2017, w.e.f. 12-1-2017.
(h) Security receipts issued by asset reconstruction companies;
(i) Perpetual debt instruments and debt capital instruments, as specified by the Reserve Bank of India from time to time;
(j) Listed and unlisted non-convertible debentures/bonds issued by an Indian company in the infrastructure sector, where ‘infrastructure’ is defined in terms of the extant External Commercial Borrowings (ECB) guidelines;
(k) Non-convertible debentures or bonds issued by Non-Banking Financial Companies categorized as ‘Infrastructure Finance Companies’(IFCs) by the Reserve Bank of India;
(l) Rupee denominated bonds or units issued by infrastructure debt funds;
(m) Indian depository receipts; 9[***]
10[(n) Unlisted non-convertible debentures/bonds issued by an Indian company subject to the guidelines issued by the Ministry of Corporate Affairs, Government of India from time to time;
(o) Securitized debt instruments, including,-
(i) any certificate or instrument issued by a special purpose vehicle set up for securitization of asset/s with banks, financial institutions or non-banking financial institutions as originators; and
(ii) any certificate or instrument issued and listed in terms of the Securities and Exchange Board of India (Public Offer and Listing of Securitised Debt Instruments) Regulations, 2008; and]
11[(p)] Such other instruments specified by the Board from time to time.
(2) Where a foreign institutional investor or a sub account, prior to commencement of these regulations, holds equity shares in a company whose shares are not listed on any recognized stock exchange, and continues to hold such shares after initial public offering and listing thereof, such shares shall be subject to lock-in for the same period, if any, as is applicable to
9 The word “and” omitted by the Securities and Exchange Board of India (Foreign Portfolio Investors) (Second Amendment) Regulations, 2017, w.e.f. 27-2-2017.
10 Inserted by the Securities and Exchange Board of India (Foreign Portfolio Investors) (Second Amendment) Regulations, 2017, w.e.f. 27-2-2017.
11 Sub-clause (n) re-named as sub-clause (p) by the Securities and Exchange Board of India (Foreign Portfolio Investors) (Second Amendment) Regulations, 2017, w.e.f. 27-2-2017.
shares held by a foreign direct investor placed in similar position, under the policy of the Government of India relating to foreign direct investment for the time being in force.
(3) Nothing contained in sub-regulation (2) shall be deemed to prejudice the applicability of any other law, regulation or guideline.
(4) In respect of investments in the secondary market, the following additional conditions shall apply:
(a) A foreign portfolio investor shall transact in the securities in India only on the basis of taking and giving delivery of securities purchased or sold;
(b) Nothing contained in clause (a) shall apply to:
(i) any transactions in derivatives on a recognized stock exchange;
(ii) short selling transactions in accordance with the framework specified by the Board;
(iii) any transaction in securities pursuant to an agreement entered into with the merchant banker in the process of market making or subscribing to unsubscribed portion of the issue in accordance with Chapter XB of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009;
(iv) any other transaction specified by the Board.
(c) No transaction on the stock exchange shall be carried forward;
(d) The transaction of business in securities by a foreign portfolio investor shall be only through stock brokers registered by the Board;
(e) Nothing contained in clause (d) of this sub-regulation shall apply to:
(i) transactions in Government securities and such other securities falling under the purview of the Reserve Bank of India which shall be carried out in the manner specified by the Reserve Bank of India;
(ii) sale of securities in response to a letter of offer sent by an acquirer in accordance with the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011;
(iii)sale of securities in response to an offer made by any promoter or acquirer in accordance with the Securities and Exchange Board of India (Delisting of Equity shares) Regulations, 2009;
(iv) sale of securities, in accordance with the Securities and Exchange Board of India (Buy-back of securities) Regulations, 1998;
(v) divestment of securities in response to an offer by Indian Companies in accordance with Operative Guidelines for Disinvestment of Shares by Indian Companies in the overseas market through issue of American Depository Receipts or Global Depository Receipts as notified by the Government of India and directions issued by Reserve Bank of India from time to time;
(vi) any bid for, or acquisition of, securities in response to an offer for disinvestment of shares made by the Central Government or any State Government;
(vii) any transaction in securities pursuant to an agreement entered into with merchant banker in the process of market making or subscribing to unsubscribed portion of the issue in accordance with Chapter XB of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009;
12[(viii) transactions by Category I and II foreign portfolio investors, in corporate bonds, as may be specified by the Board;
(ix) transactions on the electronic book provider platform of recognized stock exchanges;]
13[(x)] any other transaction specified by the Board.
(f) A foreign portfolio investor shall hold, deliver or cause to be delivered securities only in dematerialized form:
Provided that any shares held in non-dematerialized form, before the commencement of these regulations, can be held in non-dematerialized form, if such shares cannot be dematerialized.
(5) In respect of investments in the debt securities, the foreign portfolio investors shall also comply with terms, conditions or directions, specified or issued by the Board or
12Inserted by the Securities and Exchange Board of India (Foreign Portfolio Investors) (Amendment) Regulations, 2017, w.e.f. 12-1-2017.
13 Sub-clause (viii) re-numbered as sub-clause (x) by the Securities and Exchange Board of India (Foreign Portfolio Investors) (Amendment) Regulations, 2017, w.e.f. 12-1-2017.
Reserve Bank of India, from time to time, in addition to other conditions specified in these regulations.
Explanation. - For the purposes of this sub-regulation, the expression “debt securities” shall include dated Government securities, commercial paper, treasury bills, listed or to be listed corporate debt, units of debt oriented mutual funds, unlisted non-convertible debentures / bonds in the infrastructure sector, security receipts issued by asset reconstruction companies or any other security, as specified by the Board from time to time.
(6) Unless otherwise approved by the Board, securities shall be registered in the name of the foreign portfolio investor as a beneficial owner for the purposes of the Depositories Act, 1996.
(7) The purchase of equity shares of each company by a single foreign portfolio investor or an investor group shall be below ten percent of the total issued capital of the company.
(8) The investment by the foreign portfolio investor shall also be subject to such other conditions and restrictions as may be specified by the Government of India from time to time.
(9) In cases where the Government of India enters into agreements or treaties with other sovereign Governments and where such agreements or treaties specifically recognize certain entities to be distinct and separate, the Board may, during the validity of such agreements or treaties, recognize them as such, subject to conditions as may be specified by it.
(10) A foreign portfolio investor may lend or borrow securities in accordance with the framework specified by the Board in this regard.
Explanation.- For the purposes of this regulation, the words ‘security receipts’, ‘asset reconstruction’, ‘securitisation company’ and ‘reconstruction company’ shall have the meanings respectively assigned to them under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.
Conditions for issuance of offshore derivative instruments.
22. (1) No foreign portfolio investor may issue, subscribe to or otherwise deal in offshore derivative instruments, directly or indirectly, unless the following conditions are satisfied:
(a) such offshore derivative instruments are issued only to persons who are regulated by an appropriate foreign regulatory authority;
(b) such offshore derivative instruments are issued after compliance with ‘know your client’ norms:
Provided that those unregulated broad based funds, which are classified as Category II foreign portfolio investor by virtue of their investment manager being appropriately regulated shall not issue, subscribe or otherwise deal in offshore derivatives instruments directly or indirectly:
Provided further that no Category III foreign portfolio investor shall issue, subscribe to or otherwise deal in offshore derivatives instruments directly or indirectly.
14[(c) such offshore derivative instruments shall not be issued to or transferred to persons who are resident Indians or non-resident Indians and to entities that are beneficially owned by resident Indians or non-resident Indians.]
15[(2) A foreign portfolio investor shall ensure that any transfer of offshore derivative instruments issued by or on behalf of it, is made subject to the following conditions:
(a) such offshore derivative instruments are transferred to persons subject to fulfillment of sub-regulation (1); and
(b) prior consent of the foreign portfolio investor is obtained for such transfer,except when the persons to whom the offshore derivative instruments are to be transferred to are pre-approved by the foreign portfolio investor.]
(3) Foreign portfolio investors shall fully disclose to the Board any information concerning the terms of and parties to off-shore derivative instruments such as participatory notes, equity linked notes or any other such instruments, by whatever names they are called, entered into by it relating to any securities listed or proposed to be listed in any stock exchange in India, as and when and in such form as the Board
14Inserted by the Securities and Exchange Board of India (ForeignPortfolio Investors) (Third Amendment) Regulations, 2017, w.e.f. 25.5.2017.
15 Substituted by the Securities and Exchange Board of India (Foreign Portfolio Investors) (Amendment) Regulations, 2016, w.e.f. 8-7-2016. Prior to substitution, sub-regulation (2) read as under:
“(2) A foreign portfolio investor shall ensure that further issue or transfer of any offshore derivative instruments issued by or on behalf of it is made only to persons who are regulated by an appropriate foreign regulatory authority.”
may specify.
(4) Any offshore derivative instruments issued under the Securities and Exchange Board of India (Foreign Institutional Investors) Regulations, 1995 before commencement of these regulations shall be deemed to have been issued under the corresponding provision of these regulations.
16[(5) A foreign portfolio investor shall collect regulatory fee, as specified in Part C of the Second Schedule, from every subscriber of offshore derivative instrument issued by it and deposit the same with the Board.]
No. LAD-NRO/GN/2013-14/36/12.- In exercise of the powers conferred by sub-section (1) of Section 30 read with sub-section (1) of Section 11, clause (ba) of sub-section (2) of Section 11 and sub-sections (1) and (1A) of Section 12 of the Securities and Exchange Board of India Act, 1992, and under Section 25 of the Depositories Act, 1996, the Securities and Exchange Board of India hereby, makes the following regulations, to put in place a framework for registration and procedures with regard to foreign investors who propose to make portfolio investment in India, namely,—
- SEBI (INFRASTRUCTURE INVESTMENT TRUSTS) REGULATIONS, 2014
- CHAPTER I PRELIMINARY
Short title and commencement
1. (1) These regulations may be called the Securities and Exchange Board of India (Infrastructure Investment Trusts) Regulations, 2014.
(2) They shall come into force on the date of their notification in the Official Gazette.
Definitions
2. (1) In these regulations, unless the context otherwise requires, the terms defined herein shall bear the meanings assigned to them below, and their cognate expressions shall be construed accordingly,–
(a) “Act” means the Securities and Exchange Board of India Act, 1992 (15 of 1992);
2 (b) “associate” of any person 1[“means “associate company” as defined under the Companies Act, 2013 or under the applicable accounting standards and shall also include”,] –
(i) any person controlled, directly or indirectly, by the said person;
(ii) any person who controls, directly or indirectly, the said person;
(iii) where the said person is a company or a body corporate, any person(s) who is designated as promoter(s) of the company or body corporate and any other company or body corporate with the same promoter(s);
(iv) where the said person is an individual, any relative of the individual;
(v) 2[***]
(vi) 3[***]
(vii) 4[***]
(viii) 5[***]
(c) "Board" means the Securities and Exchange Board of India established under section 3 of the Act;
(d) “body corporate” shall have the meaning assigned to it in or under sub-section (11) of section 2 of the Companies Act, 2013;
(e) “bonus issue” means additional units allotted to the unit holders, as on the record date fixed for the said purpose, without any cost to the unit holder;
(f) “certificate” means a certificate of registration granted under these regulations;
(g) "change in control", means,–
1 Substituted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016. Prior to which it read as ‘“associate” of any person includes’.
2 Sub clause (v) omitted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016. Prior to which it read as ‘where the said person is a company or a body corporate or an LLP, its group companies;’
3 Sub clause (vi) omitted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016. Prior to which it read as ‘companies or LLPs under the same management;’
4 Sub clause (vii) omitted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016. Prior to which it read as ‘where the said person is an InvIT, related parties to the InvIT;’
5 Sub clause (viii) omitted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016. Prior to which it read as ‘any company or LLP or body corporate in which the person or its director(s) or partner(s) holds, either individually or collectively, more than fifteen percent of its paid-up equity share capital or partnership interest, as the case may be;’
3 (i) In case of a company or body corporate, change in control where 'control' shall have the meaning as provided in sub-section (27) of Section 2 of the Companies Act, 2013;
(ii) in any other case, change in the controlling interest.
Explanation.─ For the purpose of sub-clause (ii), the expression “controlling interest” means an interest, whether direct or indirect, to the extent of more than fifty percent of voting rights or interest;
(h) “company” means a company as defined under sub-section (20) of section 2 of the Companies Act, 2013;
(i) "completed and revenue generating project" means an infrastructure project, which prior to the date of its acquisition by, or transfer to, the InvIT, satisfies the following conditions,–
(i) the infrastructure project has achieved the commercial operations date as defined under the relevant project agreement including concession agreement, power purchase agreement or any other agreement of a similar nature entered into in relation to the operation of the project or in any agreement entered into with the lenders;
(ii) the infrastructure project has received all the requisite approvals and certifications for commencing operations; and
(iii) the infrastructure project has been generating revenue from operations for a period of not less than one year;
(j) “concession agreement” means an agreement entered into by a person with a concessioning authority for the purpose of implementation of the project as provided in the agreement;
(k) “concessioning authority” means the public sector concessioning authority in PPP projects;
(l) “credit rating agency” means a credit rating agency registered with the Board under the Securities and Exchange Board of India (Credit Rating Agencies) Regulations, 1999;
(m) “custodian” means a person registered with the Board under the Securities and Exchange Board of India (Custodian of Securities) Regulations, 1996;
6 [“(ma) “debt securities” shall be defined under Regulation 2(1)(e) of the Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008;”]
(n) “designated stock exchange” means a recognised stock exchange in which units of an InvIT are listed or proposed to be listed and which is chosen by the InvIT as a designated stock exchange for the purpose of a particular issue of the units of the InvIT under these regulations:
Provided that where one or more of such stock exchanges have nationwide trading terminals, the InvIT shall choose one of them as the designated stock exchange:
Provided further that the InvIT may choose a different recognised stock exchange as a designated stock exchange for any subsequent issue of units of the InvIT under these regulations;
(o) "eligible infrastructure project" means an infrastructure project which, prior to the date of its acquisition by, or transfer to, the InvIT, satisfies the following conditions,–
(i) For PPP projects,–
(1) the Infrastructure Project is 7[a] completed and revenue generating [project]8, or
9 [“(1a) the Infrastructure Project, which has achieved commercial operations date and does not have the track record of revenue from operations for a period of not less than one year, or”]
(2) the Infrastructure Project is a pre-COD project;
(ii) In non-PPP projects, the infrastructure project has received all the requisite approvals and certifications for commencing construction of the project;
6 Inserted by the Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016.
7 Inserted by the Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016.
8 Inserted by the Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016.
9Inserted by the Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016.
(p) "follow–on offer” means offer of units of an InvIT to the public for subscription and includes an offer for sale of InvIT units by an existing unit holder to the public;
(q) 10[***]
(r) “form” means any of the forms set out in the Schedule I;
11[(ra) general purposes" include such identified purposes for which no specific amount is allocated or any amount so specified towards general purpose or any such purpose by whatever name called, in the draft offer document filed with the Board:
Provided that any issue related expenses shall not be considered as a part of general purpose merely because no specific amount has been allocated for such expenses in the draft offer document filed with the Board;”]
(s) “governing board” in case of an LLP shall mean a group of members assigned by the LLP to act in a manner similar to the board of directors in case of a company;
12 [(sa) “holdco” or “holding company” means a company or LLP,-
(i) in which InvIT holds or proposes to hold controlling interest and not less than fifty one per cent of the equity share capital or interest and which in turn has made investments in other SPV(s), which ultimately hold the infrastructure assets;
(ii) which is not engaged in any other activity other than holding of the underlying SPV(s), holding of infrastructure projects and any other activities pertaining to and incidental to such holdings;”]
10 Sub clause (q) omitted by the Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016. Prior to omission it read as ‘“follow-on offer document” means any document by which follow-on offer is made to the public by an InvIT;’
11 Inserted by the Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016.
12 Inserted by the Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016.
(t) “infrastructure” includes all infrastructure sub-sectors as defined vide notification of the Ministry of Finance dated October 07, 2013 and shall include any amendments or additions made thereof;
(u) "infrastructure project" means any project in infrastructure sector;
13 [(ua) “initial offer” means the first offer of units of an InvIT including an offer for sale of the InvIT units by an existing unit holder whether through public issue or private placement;”]
(v) “initial 14 [public] offer” means the first offer of units of an InvIT to the public for subscription and includes an offer for sale of the InvIT units by an existing unit holder to the public;
(w) 15[***]
(x) “infrastructure developer” in case of PPP projects shall mean the lead member of the concessionaire SPV;
(y) “inspecting officer” means any one or more person appointed by the Board to exercise powers conferred under Chapter V;
(z) “investment management agreement” means an agreement between the trustee and the investment manager which lays down the roles and responsibilities of the investment manager towards the InvIT;
(za) “InvIT” or 'Infrastructure Investment Trust' shall mean the trust registered as such under these regulations;
(zb) "InvIT assets” means assets owned by the InvIT, whether directly or through a 16 [holdco and/ or] SPV, and includes all rights, interests and benefits arising from and incidental to ownership of such assets;
(zc) “Lead member” means the lead member of the Concessionaire SPV for PPP projects as defined in the project documents;
(zd) “listed InvIT” means an InvIT whose units are listed on a recognized stock exchange;
13 Inserted by the Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016.
14 Inserted by the Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016 w.e.f 30.11.2016, w.e.f 30.11.2016.
15 Sub clause (w) omitted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016. Prior to which it read as “initial offer document” means any document by which initial offer is made to the public by an InvIT;
16 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016.
(ze) "LLP" means a limited liability partnership as defined under the Limited Liability Partnership Act, 2008;
(zf) “investment manager” means a company or LLP or body corporate which manages assets and investments of the InvIT and undertakes activities of the InvIT as specified under regulation 10;
(zg) "NAV" or "net asset value” means the value of the InvIT 17[“ assets reduced by the external debt”] divided by the number of outstanding units as on a particular date;
(zh) “net worth” in relation to a company or a body corporate shall have the meaning assigned to it under sub-section (57) of section 2 of the Companies Act, 2013;.
(zi) “non-PPP project” means an infrastructure project that is not a PPP project;
(zj) "offer document" means any document described or issued as an offer document including any notice, circular, advertisement or other document inviting offers 18[through a public issue ]for the subscription or purchase of units of the 19[***]InvIT and includes initial 20[public]offer document, follow-on offer document 21[“, letter of offer in case of rights issue] and any other offer document as may be specified by the Board;
(zk) “parties to the InvIT” shall include the sponsor(s), investment manager, project manager 22[(s)] and the trustee;
(zl) “placement memorandum” means any document through which private placement of units of the InvIT is made;
(zm) “PPP project” means an infrastructure project undertaken on a Public- Private Partnership basis between a public concessioning authority and a private SPV concessionaire selected on the basis of open competitive bidding or on the basis of an MoU with the relevant authorities;
17 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016.
18 Substituted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016. Prior to its substitution it was read as ‘from the public’.
19 Omitted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016. Prior to its omission it read as ‘publically offered’.
20 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016.
21 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016.
22 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016.
(zn) “pre-COD project” means an infrastructure project which,–
(i) has not achieved commercial operation date as defined under the relevant project agreements including the concession agreement, power purchase agreement or any other agreement of a similar nature entered into in relation to the operation of a project or any agreement entered into with the lenders; and
(ii) has,–
(1) achieved completion of at least fifty per cent. of the construction of the infrastructure project as certified by an independent engineer of such project; or
(2) expended not less than fifty per cent. of the total capital cost set forth in the financial package of the relevant project agreement;
(zo) “preferential issue” means an issue of units by a listed InvIT to any select person or group of persons on a private placement basis and does not include an offer of units made through a public issue, rights issue, bonus issue, qualified institutions placement or any other issue as may be specified by the Board;
23 [(zoa) “private placement” means an issue of units by an InvIT to any select person or group of persons and does not include an offer of units made through a public issue;
(zob) “project implementation agreement" or "project management agreement” means an agreement between the project manager, the concessionaire SPV and the trustee which sets out obligations of the project manager with respect to execution of the project:
Provided that in case of PPP projects, such obligations shall be in addition to the responsibilities as under the concession agreement or any such agreement entered into with the concessioning authority;”]
(zp) “project manager” means the person designated as the project manager by the InvIT, responsible for achieving execution 24[/management] of the
23 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016.
24 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016.
project as specified under regulation 11 and in case of PPP projects, shall mean the entity responsible for such execution and achievement of project milestones in accordance with the concession agreement or any other relevant project document;
(zq) “public” for the purposes of offer and listing of units means any person other than related party of the InvIT or any other person as may be specified by the Board:
Provided that in case any related party to the InvIT is a qualified institutional buyer, such person shall be included under the term 'public';
(zr) “public issue” means issue of units by a 25[***] InvIT to the public and includes initial 26[public] offer and follow-on offer or any other issue made to the public as may be specified by the Board;
(zs) “qualified Institutional buyer” shall have the meaning assigned to it under clause (zd) of sub-regulation (1) of regulation 2 of the Securities and Exchange Board of India (Issue Of Capital And Disclosure Requirements) Regulations, 2009;
(zt) “qualified Institutions placement” means allotment of units by a listed InvIT to qualified institutional buyers on private placement basis in terms of these regulations;
(zu) “recognised stock exchange” means any stock exchange which is recognised under section 4 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956);
(zv) 27[“related parties”] shall 28[be defined under the Companies Act, 2013 or under the applicable accounting standards and shall also] include,–
(i) parties to the InvIT;
(ii) 29[***]
25 Omitted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016. Prior to the omission the clause read as “public issue” means issue of units by a publically offered InvIT to the public and includes initial offer and follow-on offer or any other issue made to the public as may be specified by the Board;
26 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016.
27 Substituted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016.
28 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016.
29 Omitted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016. Prior to the omission the clause read as any unit holder holding, directly or indirectly, more than twenty per cent. of the units of the InvIT
(iii) 30[***]promoters, directors and partners of the persons mentioned in clause (i)31[***];
(zw) “rights issue” means an offer of units by a listed InvIT to the unit holders of the InvIT as on the record date fixed for the said purpose;
(zx) “right-of-first-refusal” or "ROFR" means the right given to the InvIT by a person to enter into a transaction with it before the person is entitled to enter that transaction with any other party;
(zy) "SPV" or "special purpose vehicle" means any company or LLP,–
(i) in which 32[either] the InvIT 33[or the holdco] holds or proposes to hold controlling interest and not less than fifty [34one] per cent. of the equity share capital or interest:
Provided that in case of PPP projects where such acquiring or holding is disallowed by government or regulatory provisions under the concession agreement or such other agreement, this clause shall not apply and shall be subject to provisions under proviso to sub-regulation (3) of regulation 12;
(ii) which holds not less than ninety per cent. of its assets directly in infrastructure projects and does not invest in other SPVs; and
(iii) which is not 35[***] engaged in any other activity other than activities pertaining to and incidental to the underlying infrastructure projects;
(zz) “sponsor” means any company or LLP or body corporate which sets up the InvIT and is designated as such at the time of application made to the Board and in case of PPP projects, shall mean the infrastructure developer or a special purpose vehicle holding concession agreement;
30 Omitted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016. Prior to the omission the clause read as associates, promoters, directors and partners of the persons mentioned in clause (i) and (ii);
31 Omitted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016. Prior to the omission the clause read as associates, promoters, directors and partners of the persons mentioned in clause (i) and (ii);
32 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016.
33 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016.
34 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016.
35 Omitted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016. Prior to the omission it read as which is not be engaged in any other activity other than activities pertaining to and incidental to the underlying infrastructure projects;
(zza) ‘strategic investor’ means,–
a. an infrastructure finance company registered with Reserve Bank of India as a Non Banking Financial Company;
b. a Scheduled Commercial Bank;
c. an international multilateral financial institution;
d. a systemically important Non Banking Financial Companies registered with Reserve Bank of India;
e. a foreign portfolio investors,
36[who invest, either jointly or severally,] not less than five per cent. of the total offer size of the InvIT or such amount as may be specified by the Board from time to time 37[, subject to the compliance with the applicable provisions, if any, of the Foreign Exchange Management Act, 1999 and the rules or regulations or guidelines made thereunder];
(zzb) “trustee” means a person who holds the InvIT assets in trust for the benefit of the unit holders, in accordance with these regulations;
(zzc) "under-construction project" means an infrastructure project whether PPP or non-PPP, which has 38[either] not achieved commercial operation date as defined under the relevant project agreements including the concession agreement, power purchase agreement or any other agreement of a similar nature entered into in relation to the operation of a project or in any agreement entered into with the lenders 39[or has achieved commercial operation date and does not have the track record of revenue from operations for a period of not less than one year];
(zzd) “unit” means beneficial interest of the InvIT;
(zze) “unit holder” means any person who owns units of the InvIT;
(zzf) 40[“valuer” means any person who is a “registered valuer” under section 247 of the Companies Act, 2013 or as specified by the Board from time to time.]
36 Substituted for the words “who together invest” by the Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2017, w.e.f. 15.12.2017.
37 Inserted ibid.
38 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016.
39 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016.
40 Substituted by the Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2017, w.e.f. 15.12.2017. Prior to the substitution, the definition of the term “valuer” read as follows:
“valuer” means any person 40[(s)] who is a "registered valuer" under section 247 of the Companies Act, 2013 40[or as defined hereunder] and who has 40[/have] been appointed by the investment manager to undertake 40[both financial and technical] valuation of the InvIT assets:
Provided that:-
40[(a) a valuer in respect of financial valuation means,-
(i) a chartered accountant, company secretary or cost accountant who is in whole-time practice, or retired member of Indian Corporate Law Service or any person holding equivalent Indian or foreign qualification as the Ministry of Corporate Affairs may recognize by an order:
Provided that such foreign qualification is acquired by Indian citizen.
(ii) a Merchant Banker registered with the Securities and Exchange Board of India, and who has in his employment person(s) having qualifications prescribed under sub-sub-clause (i) above to carry out valuation by such qualified persons.
(b) a valuer in respect of technical asset valuation, means members of the following institutions for specific asset categories,-
(i) Institution of Valuers;
(ii) Institution of Surveyors (Valuation Branch);
(iii) Institution of Government Approved Valuers;
(iv) Practicing Valuers Association of India;
(v) Centre for Valuation Studies, Research and Training;
(vi) Royal Institution of Chartered Surveyors, UK;
(vii) American Society of Appraisers, United States;
(viii) Appraisal Institute, United States;
(ix) Institute of Engineers;
(x) Council of Architecture or the Indian Institute of Architects:
Provided that, the persons referred to in sub-sub-clause (i) and qualified person referred to in sub-sub-clause (ii) of sub-clause (a) above, shall have not less than five years continuous experience after acquiring membership of respective institutions:
Provided further that, persons referred to in sub-sub-clauses (i) to (x) of sub-clause (b) above, shall have a minimum working experience of five years in relevant areas of valuation practice and in relation to relevant asset value and categories; and be citizens of India.”
(zzg) 41["value of InvIT assets"] means 42[value of InvIT assets] as assessed by the valuer based on value of the infrastructure and other assets owned by the InvIT, whether directly or through 43[holdco and/or] SPV 44[***]
(2) The words and expressions used and not defined in these regulations, but defined in the Act, the Securities Contracts (Regulation) Act, 1956, (42 of 1956), the Companies Act, 2013 (18 of 2013), or anay rules or regulations made thereunder, shall have the same meanings respectively assigned to them in those Acts, rules or regulations or any statutory modification or re-enactment thereto, as the case may be.
41Substituted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016. Prior to the substitution it read as ‘value of InvIT means value of InvIT assets as assessed by the valuer based on value of the infrastructure and other assets owned by the InvIT, whether directly or through SPV excluding any debtor liabilities thereof.
42 Substituted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016. Prior to the substitution it read as ‘value of InvIT means value of InvIT assets as assessed by the valuer based on value of the infrastructure and other assets owned by the InvIT, whether directly or through SPV excluding any debtor liabilities thereof.
43 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016.
44 Omitted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016. Prior to the substitution it read as ‘excluding any debtor liabilities thereof’ - CHAPTER II REGISTRATION OF InvITs
Registration of infrastructure investment trusts
3. (1) No person shall act as an InvIT unless it has obtained a certificate of registration from the Board under these regulations.
(2) An application for grant of certificate of registration as InvIT shall be made by the sponsor 45[on behalf of the trust] in Form A as specified in the Schedule I and shall be accompanied by a non-refundable application fee as specified in Schedule II.
(3) The Board may, in order to protect the interests of investors, appoint any person to take charge of records, documents of the applicant and for this purpose, also determine the terms and conditions of such an appointment.
(4) The Board shall take into account requirements as specified in these regulations for the purpose of considering grant of registration.
Eligibility criteria.
4. (1) For the purpose of the grant of certificate to an applicant, the Board shall consider all matters relevant to the activities as an InvIT.
(2) Without prejudice to the generality of the foregoing provisions, the Board shall consider the following, mandatory requirements namely,–
(a) the applicant is 46[the sponsor on behalf of the] trust and the instrument of trust is in the form of a deed duly registered in India under the provisions of the Registration Act, 1908;
(b) the trust deed has its main objective as undertaking activity of InvIT in accordance with these regulations and includes responsibilities of the trustee in accordance with regulation 9;
45 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016.
46 Substituted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016. Prior to the substitution it read as the applicant is ‘a’ trust and the instrument of trust is in the form of a deed duly registered in India under the provisions of the Registration Act, 1908;
(c) persons have been designated as sponsor(s), investment manager and trustee under these regulations and all such persons are separate entities;
(d) with regard to sponsor(s) ,–
(i) 47[each sponsor shall be clearly identified in the application of registration to the Board and in the offer document/ placement memorandum, as applicable];
(ii) each sponsor has,–
(1) a net worth of not less than Rs. 100 crore if it is a body corporate or a company; or
(2) net tangible assets of value not less than Rs 100 crore in case it is a limited liability partnership:48[***]
(iii) Whether the sponsor or its associate has a sound track record in development of infrastructure or fund management in the infrastructure sector.
Explanation.- For the purpose of this clause, ‘sound track record’ means experience of at least 5 years and where the sponsor is a developer, at least two projects of the sponsor have been completed;
(e) with regard to the investment manager,-
(i) the investment manager has a net worth of not less than rupees ten crore if the investment manager is a body corporate or a company or net tangible assets of value not less than ten crore rupees in case the investment manager is a limited liability partnership;
(ii) the investment manager has not less than five years experience in fund management or advisory services or development in the infrastructure sector;
(iii) the investment manager has not less than two employees who have at least five years experience each, in fund management or advisory services or development in the infrastructure sector;
47 Substituted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016. Prior to the substitution it read as ‘there are not more than 3 sponsors’.
48 Omitted “Provided that in case of PPP projects, where the sponsor is the SPV, the net worth or net tangible assets shall be as defined in the eligibility criteria of the project documents;” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016.
(iv) the investment manager has not less than one employee who has at least five years experience in the relevant sub-sector(s) in which the InvIT has invested or proposes to invest;
(v) the investment manager has not less than half of its directors in case of a company or members of the governing board in case of an LLP as independent and not directors or members of the governing board of another InvIT;
(vi) the investment manager has an office in India from where the operations pertaining to the InvIT is proposed to be conducted;
(vii) the investment manager has entered into an investment management agreement with the trustee which provides for the responsibilities of the investment manager in accordance with regulation 10;
(f) 49[ the project manager has been identified and shall be appointed in terms of the project implementation/ management agreement:
Provided that the project implementation agreement/ management agreement shall be submitted along with the draft offer document/ or the placement memorandum;
(g) with regard to the trustee,–
(i) the trustee is registered with the Board under Securities and Exchange Board of India (Debenture Trustees) Regulations, 1993 and is not an associate of the sponsor(s) or manager; and
(ii) the trustee has such wherewithal with respect to infrastructure, personnel, etc. to the satisfaction of the Board and in accordance with circulars or guidelines as may be specified by the Board;
49 Substituted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016. Prior to the substitution it read as the project implementation agreement has been entered into between the project manager, the concessionaire SPV and the trustee acting on behalf of the InvIT which sets out obligations of the project manager with respect to execution of the project:
Provided that in case of PPP projects, such obligations shall be in accordance with the concession agreement or any such agreement entered into with the concessioning authority;
(h) no unit holder of the InvIT enjoys 50[superior] voting or any other rights over another unit holder 51[and there shall not be multiple classes of units of InvITs:
Notwithstanding the above, subordinate units may be issued only to the sponsors and its associates, where such subordinate units shall carry only inferior voting or any other rights compared to other units;]
(i) 52[***]
(j) the applicant has clearly described at the time of registration, details pertaining to proposed activities of the InvIT;
(k) the applicant, sponsor(s), investment manager, project manager(s) and trustee are fit and proper persons based on the criteria as specified in Schedule II of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008;
(l) whether any previous application for grant of certificate made by the 53[InvIT or the parties to the InvIT or their directors/members of governing board] has been rejected by the Board;
(m) whether any disciplinary action has been taken by the Board or any other regulatory authority against the 54[InvIT or the parties to the InvIT or their directors/members of governing board] under any Act or the regulations or circulars or guidelines made thereunder.
Furnishing of further information, clarification
5. (1) The Board may require the applicant to furnish any such information or clarification as may be required by it for the purpose of processing of the application.
(2) The Board, if it so desires, may require the applicant or its authorized representative(s) to appear before the Board for personal representation in connection with the grant of certificate.
50 Substituted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016. Prior to the substitution it read as no unit holder of the InvIT enjoys preferential voting or any other rights over another unit holder;
51 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016.
52 Omitted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016. Prior to the substitution it read as here shall not be multiple classes of units of InvITs;
53 Substituted for the words “applicant or any related party” by the SEBI (Infrastructure Investment Trusts) (Amendment) Regulations, 2017, w.e.f. 15.12.2017.
54 Substituted ibid for the words “applicant or any related party”.
Procedure for grant of certificate
6. (1) The Board on being satisfied that the applicant fulfils, the requirements specified in regulation 4 shall send intimation to the applicant and on receipt of the payment of registration fees as specified in Schedule II, grant certificate of registration in Form B under Schedule I:
Provided that the Board may grant in-principle approval to the applicants, where it deems fit and on satisfaction of all requirements as specified in regulation 4, grant final registration to the applicant.
(2) The registration may be granted with such conditions as may be deemed appropriate by the Board.
Conditions of certificate
7. The certificate granted under regulation 6 shall, inter-alia, be subject to the following conditions,-
(a) the InvIT shall abide by the provisions of the Act and these regulations;
(b) the InvIT shall forthwith inform the Board in writing, if any information or particulars previously submitted to the Board are found to be false or misleading in any material particular or if there is any material change in the information already submitted;
(c) The InvIT and parties to the InvIT shall satisfy with the conditions specified in regulation 4 at all times;
(d) The InvIT and parties to the InvIT shall comply, at all times, with the Code of conduct as specified in the Schedule VI, wherever applicable.
Procedure where registration is refused
8. (1) After considering an application made under regulation 3, if the Board is of the opinion that a certificate should not be granted to the applicant, it may reject the application after giving the applicant a reasonable opportunity of being heard.
(2) The decision of the Board to reject the application shall be communicated to the applicant within thirty days of such decision. - CHAPTER III RIGHTS AND RESPONSIBILITIES OF PARTIES TO THE InvIT, VALUER AND AUDITOR
Rights and responsibilities of trustee
9. (1) The trustee shall hold the InvIT assets in the name of the InvIT for the benefit of the unit holders in accordance with the trust deed and these regulations.
(2) The trustee shall enter into an investment management agreement with the investment manager on behalf of the InvIT.
(3) The trustee shall oversee activities of the investment manager in the interest of the unit holders, ensure that the investment manager complies with regulation 10 and shall obtain compliance certificate from the investment manager, in the form as may be specified, on a quarterly basis.
(4) The trustee shall oversee activities of the project manager 55[***]with respect to compliance with these regulations and the 56[project implementation agreement/] project management agreement and shall obtain compliance certificate from the Project manager, in the form as may be specified, on a quarterly basis.
(5) The trustee shall ensure that the investment manager complies with reporting and disclosures requirements in accordance with these regulations and in case of any delay or discrepancy, require the investment manager to rectify the same on an urgent basis.
(6) The trustee shall review the transactions carried out between the investment manager and its associates and where the investment manager has advised that there may be a conflict of interest, shall obtain
55 Omitted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016. Prior to the substitution it read as (4) The trustee shall oversee activities of the project manager ‘other than that relating with revenue streams from the projects’ with respect to compliance with these regulations and the project management agreement and shall obtain compliance certificate from the Project manager, in the form as may be specified, on a quarterly basis.
56 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016.
confirmation from a practising chartered accountant 57[or valuer, as applicable,] that such transaction is on arm's length basis.
(7) The trustee shall periodically review the status of unit holders' complaints and their redressal undertaken by the investment manager.
(8) The trustee shall make distributions and ensure that investment manager makes timely declaration of distributions to the unit holders in accordance with sub-regulations (6),(7) and (8) of regulation 18.
(9) The trustee may require the investment manager to set up such systems and procedures and submit such reports to the trustees, as may be necessary for effective monitoring of the functioning of the InvIT.
(10) The trustee shall ensure that subscription amount is kept in a separate bank account in name of the InvIT and is only utilized for adjustment against allotment of units or refund of money to the applicants till the time such units are listed.
(11) The trustee shall ensure that the remuneration of the valuer is not be linked to or based on the value of the assets being valued.
(12) The trustee shall ensure that the investment manager convenes meetings of the unit holders in accordance with these regulations and oversee the voting by unit holders.
(13) The trustee shall ensure that the investment manager convenes meetings of unit holders not less than once every year and the period between such meetings shall not exceed fifteen months.
(14) The trustee may take up with the Board or with the designated stock exchange, as may be applicable, any matter which has been approved in any meeting of unit holders, if the matter requires such action.
(15) In case of any change in investment manager due to removal or otherwise,–
a. prior to such change, the trustee shall obtain approval from unit holders in accordance with regulation 22 and from the Board;
b. the trustee shall appoint the new investment manager within three months from the date of termination of the earlier investment management agreement;
57 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016.
c. the previous investment manager shall continue to act as such at the discretion of trustee till such time as new investment manager is appointed;
d. the trustee shall ensure that the new investment manager shall stand substituted as a party in all the documents to which the earlier investment manager was a party;
e. the trustee shall ensure that the earlier investment manager continues to be liable for all its acts of omissions and commissions notwithstanding such termination.
(16) In case of any change in the project manager due to removal or otherwise,–
a. the trustee shall appoint the new project manager within three months from the date of termination of the earlier 58[project implementation agreement/] project management agreement;
b. the trustee may, either suo motu or based on the advice of the concessioning authority appoint an administrator in connection with a infrastructure project(s) for such term and on such conditions as it deems fit;
c. the previous project manager shall continue to act as such at the discretion of trustee till such time as new project manager is appointed;
d. all costs and expenses in this regard will be borne by the new project manager;
e. the trustee shall ensure that the new project manager shall stand substituted as a party in all the documents to which the earlier project manager was a party;
f. the trustee shall ensure that the earlier project manager continues to be liable for all its acts of omissions and commissions for the period during which it served as the project manager, notwithstanding such termination.
(17) The trustee shall obtain prior approval from the unit holders in accordance with regulation 22 and from the Board in case of change in control of the investment manager.
58 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016.
(18) In case of change in control of the project manager in a PPP project, the trustee shall ensure that written consent of the concessioning authority is obtained in terms of the concession agreement prior to such change, where applicable.
(19) The trustee59 [of the InvIT] shall not invest in units of the InvIT in which it is designated as the trustee.
(20) The trustee shall ensure that the activity of the InvIT is being operated in accordance with the provisions of the trust deed, these regulations and the offer document or placement memorandum and if any discrepancy is noticed, shall inform the same to the Board immediately in writing.
(21) The trustee shall provide to the Board and to the designated stock exchanges, where applicable, such information as may be sought by the Board or by the designated stock exchanges pertaining to the activity of the InvIT.
(22) The trustee shall immediately inform the Board in case any act which is detrimental to the interest of the unit holders is noted.
Rights and responsibilities of investment manager
10. (1) The investment manager shall make the investment decisions with respect to the underlying assets or projects of the InvIT including any further investment or divestment of the assets.
(2) The investment manager shall oversee activities of the project manager with respect to 60[compliance with these regulations] and the 61[project implementation agreement/] project management agreement and shall obtain compliance certificate from the project manager, in the form as may be specified, on a quarterly basis.
59Substituted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016. Prior to the substitution it read as the trustee or its associates shall not invest in units of the InvIT in which it is designated as the trustee.
60 Substituted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016. Prior to the substitution it read as the investment manager shall oversee activities of the project manager with respect to ‘revenue streams from the projects’ and the project management agreement and shall obtain compliance certificate from the project manager, in the form as may be specified, on a quarterly basis.
61 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016.
(3) The investment manager shall ensure that the infrastructure assets of the InvIT or 62[holdco or] SPV have proper legal titles, if applicable, and that all the material contracts entered into on behalf of InvIT or SPV are legal, valid, binding and enforceable by and on behalf of the InvIT or SPV.
(4) The investment manager shall ensure that the investments made by the InvIT are in accordance with the investment conditions specified in regulation 18 and in accordance with the investment strategy of the InvIT.
(5) The investment manager, in consultation with trustee, shall appoint the valuer(s), auditor, registrar and transfer agent, merchant banker, custodian and any other intermediary or service provider or agent as may be applicable with respect to activities pertaining to the InvIT in a timely manner and in accordance with these regulations.
(6) The investment manager shall appoint an auditor for a period of not more than five consecutive years:
Provided that the auditor, not being an individual, may be reappointed for a period of another five consecutive years, subject to approval of unit-holders in the annual meeting in accordance with regulation 22.
(7) The investment manager shall arrange for adequate insurance coverage for the assets of the InvIT:
Provided that this shall not apply in case the assets are required to be insured by any other person under any agreement including a concession agreement or under any Act or regulations or circulars or guidelines of any concessioning authority or government or local body:
Provided further that in case of assets held by 63[holdco or]SPV, the investment manager shall ensure that assets held by the 64[holdco or] SPV are adequately insured.
(8) The investment manager shall ensure that it has adequate infrastructure and sufficient key personnel with adequate experience and qualification to undertake management of the InvIT at all times.
62 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
63Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
64 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
(9) The investment manager 65[and the merchant banker(s)] shall be responsible for all activities pertaining to issue of units and listing of units of the InvIT including,–
a. filing of placement memorandum with the Board;
b. filing the 66[of the] offer document with the Board and the exchanges within the prescribed time period;
c. dealing with all matters up to allotment of units to the unit holders;
d. obtaining in-principle approval 67[and final listing and trading approvals] from the designated stock exchanges;
e. dealing with all matters relating to issue and listing of the units of the InvIT as specified under Chapter IV and any guidelines as may be issued by the Board in this regard.
(10) The investment manager 68[and the merchant bankers(s)], shall ensure that disclosures made in the offer document or placement memorandum contains material, true, correct and adequate disclosures and are in accordance with these regulations and guidelines or circulars issued hereunder.
(11) The investment manager shall declare distributions to the unit holders in accordance with sub-regulation (6) and (7) of regulation 18.
(12) The investment manager shall review the transactions carried out between the project manager and its associates and where the project manager has advised that there may be a conflict of interest, shall obtain confirmation from the 69[practicing chartered accountant or the valuer, as applicable,] that such transaction is on arm's length basis.
65 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
66 Substituted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016. Prior to the substitution it read as filing ‘the draft and final’ offer document with the Board and the exchanges within the prescribed time period;
67 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016.
68 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
69 Substituted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016. Prior to the substitution it read as the investment manager shall review the transactions carried out between the project manager and its associates and where the project manager has advised that there may be a conflict of interest, shall obtain confirmation from the ‘auditor’ that such transaction is on arm's length basis.
(13) The investment manager shall ensure adequate and timely redressal of all unit holders' grievances pertaining to activities of the InvIT.
(14) The investment manager shall ensure that the disclosures or reporting to the unit holders, Board, trustees and designated stock exchanges, are in accordance with these regulations and guidelines or circulars issued hereunder.
(15) The investment manager shall provide to the Board and to the designated stock exchanges, where applicable, any such information as may be sought by the Board or the designated stock exchanges pertaining to the activities of the InvIT.
(16) The investment manager or its associates shall not obtain any commission or rebate or any other remuneration, by whatever name called, arising out of transactions pertaining to the InvIT other than as specified in the offer document or placement memorandum or any other document as may be specified by the Board for the purpose of issue of units.
(17) The investment manager shall ensure that the valuation of the InvIT assets is done by the valuer(s) in accordance with regulation 21.
(18) The investment manager shall submit to the trustee,-
a. quarterly reports on the activities of the InvIT including receipts for all funds received by it and for all payments made, position on compliance with these regulations, specifically compliance with regulations 18, 19 and 20, performance report, status of development of under-construction projects, within thirty days of end of such quarter;
b. valuation reports as required under these regulations within fifteen days of the receipt of the valuation report from the valuer;
c. decision to acquire or sell or develop or bid for any asset or project or expand existing completed assets or projects along with rationale for the same;
d. details of any action which requires approval from the unit holders as maybe required under the regulations;
e. details of any other material fact including change in its directors, change in its shareholding, any legal proceedings that may have a significant bearing on the activity of the InvIT, within seven working days of such action.
(19) In case the investment manager fails to timely submit to the trustee information or reports as specified under sub-regulation (18) above or sub-regulation (9) of regulation 9, the trustee shall intimate the same to the Board and the Board may take action, as it deems fit.
(20) The investment manager shall coordinate with trustee, as may be necessary, with respect to operations of the InvIT.
(21) The investment manager shall ensure that computation and declaration of NAV of the InvIT based on the valuation done by the valuer 70[, shall be disclosed to the stock exchange(s),] not later than fifteen days from the date of valuation.
(22) The investment manager shall ensure that the audit of accounts of the InvIT by the auditor is done not less 71[once in a year] and such report is submitted to the 72[***] stock exchange73[s] within forty five days of end of financial year ending March 31st 74[***].
(23) The investment manager may appoint a custodian in order to provide such custodial services as may be authorised by the trustees.
(24) The investment manager shall place before its board of directors in case of company or the governing board in case of an LLP a report on activity and performance of the InvIT at least once every quarter within thirty days of end of every quarter.
(25) The investment manager shall designate an employee or director as the compliance officer for monitoring of compliance with these regulations
70 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
71 Substituted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016. Prior to the substitution it read as the investment manager shall ensure that the audit of accounts of the InvIT by the auditor is done not less than twice annually and such report is submitted to the designated stock exchange within forty five days of end of financial year ending March 31st and half-year ending September 30th.
72 Omitted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016. Prior to the substitution it read as the investment manager shall ensure that the audit of accounts of the InvIT by the auditor is done not less than twice annually and such report is submitted to the designated stock exchange within forty five days of end of financial year ending March 31st and half-year ending September 30th.
73 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
74 Omitted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016. Prior to the substitution it read as the investment manager shall ensure that the audit of accounts of the InvIT by the auditor is done not less than twice annually and such report is submitted to the designated stock exchange within forty five days of end of financial year ending March 31st and half-year ending September 30th.
and guidelines or circulars issued hereunder and intimating the Board in case of any non-compliance.
(26) The investment manager shall convene meetings of the unit holders in accordance with regulation 22 and maintain records pertaining to the meetings in accordance with regulation 26.
(27) The investment manager shall ensure that all activities of the intermediaries or agents or service providers appointed by the investment manager are in accordance with these regulations and guidelines or circulars issued hereunder.
Responsibilities of project manager
11. (1) The project manager shall undertake operations and management of the InvIT assets including making arrangements for the appropriate maintenance, as may be applicable, either directly or through the appointment and supervision of appropriate agents and as required under any project agreement including a concession agreement in the case of a PPP project.
(2) If the InvIT invests in under construction projects, the project manager shall,–
(a) undertake the operations and management of the projects, either directly or through appropriate agents;
(b) oversee the progress of development, approval status and other aspects of the project upto its completion, in case of appointment of agents for the purpose of execution.
(3) The project manager shall discharge all obligations in respect of achieving timely completion of the 75[project implementation agreement/] infrastructure project, wherever applicable, implementation, operation, maintenance and management of such infrastructure project in terms of the project management agreement.
Rights and responsibilities of sponsor(s)
12. (1) The sponsor(s) shall set up the InvIT and appoint the trustees of the InvIT.
(2) The sponsor(s) shall transfer or undertake to transfer to the InvIT, its entire shareholding or interest in the 76[holdco and/ or] SPV or ownership
75 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
76 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
of the infrastructure projects, subject to a binding agreement and adequate disclosures in the offer document or placement memorandum, prior to allotment of units of the InvIT:
Provided that this shall not apply to the extent of any mandatory holding of shares or interest in the 77[holdco and/ or] SPV by the sponsor(s) as per any Act or regulations or circulars or guidelines of government or any regulatory authority or concession agreement.
(3) With respect to holding of units in the InvIT, the sponsor(s) together shall hold not less than 78[fifteen] per cent. of the total units of the InvIT after initial offer of units, on a post-issue basis for a period of not less than 3 years from the date of the listing of such units79[, subject to the following]:
80[“(i) sponsor(s) would be responsible for all acts, omissions and representations/covenants of the InvIT related to formation of InvIT, sale/ transfer of assets/holdco/SPV to the InvIT.
(ii) the InvIT/the trustee of the InvIT shall also have recourse against the Sponsor for any breach in this regard.
(iii) project Manager of the InvIT shall be the sponsor or an associate of the sponsor and shall continue to act in such capacity for a period of minimum three years from the date of listing of InvIT units unless suitable replacement is appointed by the unit-holders through the Trustee:
Provided that the condition as specified at sub clause (iii) above shall not be applicable where the sponsor(s) together hold not less than twenty five per cent. of the total units of the InvIT after initial offer of units, on a post-issue basis for a period of not less than 3 years from the date of the listing of such units.]
Provided 81[further] that in case of PPP projects 82[where the InvIT is investing in infrastructure assets through SPV(s)], in case such
77 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
78 Substituted “twenty five” Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
79 Inserted Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
80 Inserted Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
81 Inserted Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
82 Inserted Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
acquiring or holding is disallowed by government or under any provisions of the concession agreement or any other such agreement,–
(i) the sponsor may continue to maintain such holding at the SPV level;
(ii) the consolidated value of all such holdings at the SPV level and the value of the units of InvIT held by the sponsor shall not be less than the value of 83[fifteen] per cent. of the total units of the InvIT after initial issue of units on a post-issue basis;
(iii) such units of the InvIT and shares or interest in the SPV shall be held for a period of not less than three years from the date of the listing of units of the InvIT;
(iv) in case such holding of sponsor in the SPV results in the InvIT not having controlling interest and not having more than fifty 84[one] per cent. shareholding or interest in the SPV, the sponsor shall enter into a binding agreement with the InvIT to ensure that decisions taken by the sponsor including voting with respect to the SPV are in compliance with these regulations and not against the interest of the InvITs or the unit holders and shall be subject to further guidelines as may be specified by the Board.
(4) Any holding by sponsor in InvIT, exceeding 85[fifteen] per cent. on a post issue basis, shall be held for a period of not less than one year from the date of listing of such units.
Rights and responsibilities of the valuer and auditor
13. (1) The valuers shall comply with the following conditions at all times,–
(a) the valuer shall ensure that the valuation of the InvIT assets is impartial, true and fair and is in accordance with regulation 21;
(b) the valuer shall ensure adequate and robust internal controls to ensure the integrity of its valuation reports;
(c) the valuer shall ensure that it has sufficient key personnel with adequate experience and qualification to perform valuations;
83 Substituted “twenty five” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
84 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
85 Substituted “twenty five” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
(d) the valuer shall ensure that it has sufficient financial resources to enable it to conduct its business effectively and meet its liabilities;
(e) the valuer and any of its employees involved in valuing of the assets of the InvIT, shall not,–
i. invest in units of the InvIT or in the assets being valued; and
ii. sell the assets or units of InvITs held prior to being appointed as the valuer,
till the time such person is designated as valuer of such InvIT and not less than six months after ceasing to be valuer of the InvIT;
(f) the valuer shall conduct valuation of the InvIT assets with transparency and fairness and shall render, at all times, high standards of service, exercise due diligence, ensure proper care and exercise independent professional judgment;
(g) the valuer shall act with independence, objectivity and impartiality in performing the valuation;
(h) the valuer shall discharge its duties towards the InvIT in an efficient and competent manner, utilizing its knowledge, skills and experience in best possible way to complete given assignment;
(i) the valuer shall not accept remuneration, in any form, for performing a valuation of the InvIT assets from any person other than the InvIT or its authorized representative;
(j) the valuer shall before accepting any assignment,86[ from any related party of the InvIT,] disclose to the InvIT any direct or indirect consideration which the valuer may have in respect of such assignment;
(k) the valuer shall disclose to the InvIT any pending business transactions, contracts under negotiation and other arrangements with the investment manager or any other party whom the InvIT is contracting with and any other factors that may interfere with the valuer’s ability to give an independent and professional valuation of the assets;
(l) the valuer shall not make false, misleading or exaggerated claims in order to secure assignments;
(m) the valuer shall not provide misleading valuation, either by providing incorrect information or by withholding relevant information;
86 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
(n) the valuer shall not accept an assignment which interferes with its ability to do fair valuation;
(o) the valuer shall, prior to performing a valuation, acquaint itself with all laws or regulations relevant to such valuation.
(2) The auditor shall comply with the following conditions at all times,–
(a) the auditor shall conduct audit of the accounts of the InvIT and draft the audit report based on the accounts examined by him and after taking into account the relevant accounting and auditing standards, as may be specified by the Board;
(b) the auditor shall, to the best of his information and knowledge, ensure that the accounts and financial statements give a true and fair view of the state of the affairs of the InvIT, including profit or loss and cash flow for the period and such other matters as may be specified;
(c) the auditor shall have a right of access at all times to the books of accounts and vouchers pertaining to activities of the InvIT;
(d) the auditor shall have a right to require such information and explanation pertaining to activities of the InvIT as he may consider necessary for the performance of his duties as auditor from the employees of InvIT or 87[holdco or] parties to the InvIT or 88[holdco or] SPV or any other person in possession of such information.
87 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
88 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016 - CHAPTER IV OFFER OF UNITS OF InvIT AND LISTING OF UNITS
Issue of units and allotment
14. (1) No initial offer of units by an InvIT shall be made unless,–
(a) The InvIT is registered with the Board under these regulations;
(b) the value of the assets held by the InvIT is not less than 89[rupees] five hundred crore.
Explanation.- Such value shall mean the value of the specific portion of the holding of InvIT in the underlying assets or 90[holdco or] SPVs;
(c) the offer size is not less than rupees two hundred fifty crore:
Provided that the requirement of ownership of assets under clause (b) and offer size under clause (c) may be complied 91[ at any point of time before allotment of units in accordance with offer document/placement memorandum] subject, to a binding agreement with the relevant party(ies) that 92[such] the requirements shall be fulfilled prior to 93[such] allotment 94[and] a declaration to the Board and 95[to] the designated stock exchanges to that effect, where applicable and adequate disclosures in this regard in the 96[***] offer document or placement memorandum.
89 Substituted ”ruppes” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
90 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
91 Substituted “with after initial offer or first offer of units under private placement” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
92 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
93 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
94 Substituted “of units,” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
95 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
96 Omitted “initial” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
97[(1A) The minimum offer and allotment to public through an offer document/ placement memorandum shall be,-
(a) atleast twenty five per cent. of the total outstanding units of the InvIT, if the post issue capital of the InvIT calculated at offer price is less than rupees one thousand six hundred crore:
Provided that this requirement shall be complied along with the requirement under Regulation 14(1)(c) of the InvIT Regulations.
(b) of the value of atleast Rs 400 crore, if the post issue capital of the InvIT calculated at offer price is equal to or more than rupees one thousand six hundred crore and less than rupees four thousand crore;
(c) atleast ten per cent. of the total outstanding units of the InvIT, if the post issue capital of the InvIT calculated at offer price is equal to or more than rupees four thousand crore:
Provided that any units offered to sponsor or the investment manager or the project manager or their related parties or their associates shall not be counted towards units offered to the public.
Provided further that any listed InvIT which has public holding below twenty five per cent on account of sub-clauses (b) and (c) above, such InvIT shall increase its public holding to at least twenty five per cent, within a period of three years from the date of listing pursuant to initial offer.]
(2) If the InvIT 98[ raises funds by way of private placement]–
(a) 99[it shall do it] through a placement memorandum;
(b) from qualified institutional buyers and body corporate only, whether Indian or foreign:
Provided that in case of foreign investors, such investment shall be subject to guidelines as may be specified by Reserve Bank of India and the government from time to time;
(c) with minimum investment from any investor of rupees one crore;
97 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
98 Substituted “invests or proposes to invest in under-construction projects, value of which is more than ten per cent. of the value of the InvIT assets, it shall raise funds,” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
99 Substituted “by way of private placement only” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
100[Notwithstanding the above, if such an privately placed InvIT invests or proposes to invest not less than eighty per cent of the value of the InvIT assets 101[, in completed and revenue generating assets,] the minimum investment from an investor shall be rupees twenty five crore;]
(d) from not less than five and not more than one thousand investors.
102[(e) shall file a placement memorandum with the Board alongwith the fee as specified in Schedule II, atleast 5 days prior to opening of the issue:
Provided that such opening of the issue shall not be at a date later than 3 months from the receipt of in-principle approval for listing, from exchange(s).]
(3) 103[***]
(4) 104[ If the InvIT raises funds by public issue] 105[***] 106[***]–
(a) 107[ it shall be by way of initial public offer];
(b) any subsequent issue of units after initial 108[public] offer may be by way of follow-on offer, preferential allotment, qualified institutional placement, rights issue, bonus issue, offer for sale or any other mechanism and in the manner as may be specified by the Board;
100 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
101 Inserted by the SEBI (Infrastructure Investment Trusts) (Amendment) Regulations, 2017, w.e.f. 15.12.2017.
102 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
103 Omitted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016. Prior to the substitution it read “The InvIT as specified in sub-regulation (2) shall file the draft placement memorandum for making private placement of units with the Board along with the application for registration and the Board may communicate its comments, to such applicant which shall be incorporated by the applicant in placement memorandum prior to grant of registration.”
104 Substituted “with respect to” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
105 The word “InvITs” is omitted by the SEBI (Infrastructure Investment Trusts) (Amendment) Regulations, 2017, w.e.f. 15.12.2017.
106 Omitted “that hold not less than eighty per cent. of its assets in completed and revenue generating infrastructure projects,” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
107 Substituted “initial issue of units shall be by way of initial offer only” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
108 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
(c) minimum subscription from any investor in initial and follow-on offer shall be ten lakh rupees ;
(d) 109[***]
(e) prior to initial 110[public] offer and follow-on offer, the 111[merchant banker] shall file the draft offer document 112[ along with the fee as specified in Schedule II,] with the designated stock exchange(s) and the Board not less than 113[thirty] working days before filing the 114[***] offer document with the designated stock exchange 115[and SEBI];
(f) the draft offer document filed with the Board shall be made public, for comments, if any, 116[***] by hosting it on the websites of the Board, designated stock exchanges and merchant bankers associated with the issue 117[, for a period of not less than twenty one days];
(g) the Board may communicate its comments to the lead merchant banker and, in the interest of investors, may require the lead merchant banker to carry out such modifications in the draft offer document as it deems fit;
(h) the lead merchant banker shall ensure that all comments received from the Board on the draft offer document are suitably
109 Omitted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016. Prior to the substitution it read “the units proposed to be offered to the public is not less than twenty five per cent. of the total of the outstanding units of the InvIT and the units being offered by way of the offer document:
Provided that if prior to the initial offer, units of the InvIT are held by the public, the units proposed to be offered to the public shall be calculated after reducing such existing units for satisfying the aforesaid percentage requirement;”
110 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
111 Substituted “investment manager” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
112 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
113 Substituted “twenty one” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
114 Omitted “final” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
115 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
116 Omitted “to be submitted to the Board, within a period of at least ten days,” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
117 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
addressed prior to the filing of the 118[***] offer document with the designated stock exchanges;
(i) in case no 119[observations] are 120[issued] by the Board in the draft offer document within twenty one working days from the date of receipt of satisfactory reply from the lead merchant bankers or manager, the InvIT may 121[file] the 122[***] offer document or follow-on offer document 123[with the Board and the exchange(s)];
(j) the draft and 124[***] offer document shall be accompanied by a due diligence certificate signed by the 125[***] lead merchant banker;
(k) the 126[***] offer document shall be filed with the designated stock exchanges and the Board not less than five working days before opening of the offer 127[***];
(l) The InvIT may 128[open] the initial 129[public] offer or follow-on offer 130[or rights issue] within a period of not more than 131[one
118 Omitted “final” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
119 Substituted “modifications” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
120 Substituted “suggested” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
121 Substituted “issue” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
122 Omitted “final” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
123 Substituted “to the public” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
124 Omitted “final” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
125 Omitted “investment manager and” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
126 Omitted “final” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
127 Omitted “and such filing with the Board shall be accompanied by filing fees as specified under Schedule II” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
128 Substituted “make” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
129 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
130 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
131 Substituted “six months” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
year] from the date of 132[***] issuance of observations by the Board 133[***]:
Provided that if the initial 134[public] offer or follow-on offer 135[or rights issue] is not made within the prescribed time period, a fresh 136[draft] offer document shall be filed;
(m) The InvIT may invite for subscriptions and allot units to any person, whether resident or foreign:
Provided that in case of foreign investors, such investment shall be subject to guidelines as may be specified by Reserve Bank of India and the government from time to time.
(n) the application for subscription shall be accompanied by a statement containing the abridged version of the offer document detailing the risk factors and summary of the terms of issue;
(o) initial 137[public] offer and follow-on offer shall not be open for subscription for a period of more than thirty days;
(p) in case of over-subscriptions, the InvIT shall allot units to the applicants on a proportionate basis rounded off to the nearest integer subject to minimum subscription amount per subscriber as specified in clause (c);
(q) the InvIT shall allot units or refund application money,as the case may be, within twelve working days from the date of closing of the issue;
(r) the InvIT shall issue units in only in dematerialized form to all the applicants;
(s) the price of InvIT units issued by way of public issue shall be determined through the book building process or any other
132 Omitted “last” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
133 Omitted “, if any and if no observations have been issued by the Board, within six months from the date of filing of final offer document with the designated stock exchanges” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
134 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
135 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
136 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
137 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
process in accordance with the guidelines issued by the Board and in the manner as may be specified by the Board;
(t) the InvIT shall refund money,-
(i) to all the applicants in case it fails to collect subscription of atleast 138[ninety] per cent. of the 139[fresh] issue size as specified in the 140[***] offer document;
(ii) to applicants to the extent of the over subscription, in case the moneys received is in excess of the extent of over-subscription as specified in the 141[***] offer document, money shall be refunded to applicants to the extent of the oversubscription:
Provided that right to retain such over subscription cannot exceed twenty five per cent. of the issue size;
142[Provided further, that the offer document shall contain adequate disclosures towards the utilisation of such oversubscription proceeds, if any, and such proceeds retained on account of oversubscription shall not be utilised towards general purposes.]
(iii) to all the applicants, in case the number of subscribers to the initial 143[public] offer forming part of the public is less than twenty;
(u) If the investment manager fails to allot or list the units or refund the money within the specified time, then the investment manager shall pay interest to the unit holders at the rate of fifteen per cent. per annum, till such allotment or listing or refund and such interest shall be not be recovered in the form of fees or any other form payable to the investment manager by the InvIT;
138 Substituted for “seventy five”by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
139 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
140 Omitted “final” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
141 Omitted “final” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
142 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
143 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
(v) units may be offered for sale to public,–
i. if such units have been held by the sellers for a period of at least one year prior to the filing of draft offer document with the Board:
Provided that the holding period for the equity shares 144[, compulsorily convertible securities (from the date such securities are fully paid-up)] or partnership interest in the 145[holdco or] SPV against which such units have been received shall be considered for the purpose of calculation of one year period referred in this sub-regulation:
146[Provided further that the compulsorily convertible securities, whose holding period has been included for the purpose of calculation for offer for sale, shall be converted to equity shares of the holdco or SPV, prior to filing of offer document.]
ii. subject to other guidelines as may be specified by the Board in this regard;
147[(va) The amount for general purposes, as mentioned in objects of the issue in the draft offer document filed with the Board, shall not exceed Ten per cent of the amount raised by the InvIT by issuance of units.]
(5) If the InvIT fails to make any offer of its units, whether by way of public issue or private placement, within three years from the date of registration with the Board, it shall surrender its certificate of registration to the Board and cease to operate as an InvIT:
Provided that the Board, if it deems fit, may extend the period by another one year:
Provided further that the InvIT may later re-apply for registration, if it so desires.
144 Inserted by the Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2017, w.e.f. 15.12.2017
145 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
146 Inserted by the Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2017, w.e.f. 15.12.2017
147 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
(6) The Board may specify by issue of guidelines or circulars any other requirements, as it deems fit, pertaining to issue and allotment of units by an InvIT, whether by way of public issue or private placement.
Offer document or placement memorandum and advertisements
15. (1) The offer document or placement memorandum of the InvIT shall contain material, true, correct and adequate disclosures to enable the investors to make an informed decision.
(2) Without prejudice to the generality of sub-regulation (1), the offer document or placement memorandum shall,–
(i) not be misleading or contain any untrue statements or mis-statements;
(ii) not provide for any guaranteed returns to the investors; and
(iii) include such other disclosures as may be specified by the Board.
(3) The offer document shall include all information as specified under Schedule III.
(4) 148[The placement memorandum shall contain all information as specified under Schedule III, to the extent applicable.]
(5) No advertisement shall be issued pertaining to issue of units by an InvIT which makes a private placement of its units.
(6) With respect to advertisements pertaining to the offer of units by an InvIT with respect to public issue of its units,-
(i) such advertisement material shall not be misleading and shall not contain anything extraneous to the contents of the offer document;
(ii) if an advertisement contains positive highlights, it shall also contain risk factors with equal importance in all aspects including print size;
(iii) the advertisements shall be in accordance with any circulars or guidelines as may be specified by the Board in this regard.
148 Substituted for “The placement memorandum shall contain all material information about the InvIT, parties to the InvIT, fees and all other expenses proposed to be charged, tenure of the InvIT, investment strategy, risk management tools and parameters employed, key service providers, conflict of interest and procedures to identify and address them, disciplinary history of the sponsor(s), investment manager, trustee and their associates, the terms and conditions on which the investment manager offers investment services, its affiliations with other intermediaries, manner of winding up of the InvIT and such other information as may be necessary for the investor to take an informed decision on whether to invest in the InvIT.” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
Listing and trading of units
16. (1) It shall be mandatory for units of all InvITs to be listed on a recognized stock exchange having nationwide trading terminals, whether publicly issued or privately placed:
Provided that this sub-regulation shall not apply if the initial offer does not satisfy the minimum subscription amount or the minimum number of subscribers under regulation 14.
(2) The listing of the units shall be in accordance with the listing agreement entered into between the InvIT and the designated stock exchanges.
149[(2A) In the event of non-receipt of listing permission from the stock exchange(s) or withdrawal of Observation Letter issued by the Board, wherever applicable, the units shall not be eligible for listing and the InvIT shall be liable to refund the subscription monies, if any, to the respective allottees immediately alongwith interest at the rate of fifteen per cent. per annum from the date of allotment.]
(3) The units of the InvIT listed in the designated stock exchanges shall be traded, cleared and settled in accordance with the bye-laws of designated stock exchanges and such conditions as may be specified by the Board.
(4) The InvIT shall redeem units only by way of a buyback or at the time of delisting of units.
(5) The units shall remain listed on the designated Stock Exchanges unless delisted under regulation 17.
(6) The minimum public holding for the units of the 150[***] InvIT after listing shall be 151[ in accordance with sub-regulation (1A) of regulation 14] failing which action may be taken as may be specified by the Board and by the designated stock exchanges including delisting of units under regulation 17.
(7) The minimum number of unit holders in an InvIT other than the sponsor(s) 152[, its related parties and its associates] ,–
149 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
150 Omitted “publicly offered” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
151 Substituted for “twenty five per cent. of the total number of outstanding units, at all times,” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
152 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
(a) in case of privately placed InvIT, shall be five, each holding not more than twenty five per cent. of the units of the InvIT;
(b) forming part of public shall be twenty, each holding not more than twenty five per cent. of the units of the InvIT,
at all times post listing of the units, failing which action may be taken as may be specified by the Board and by the designated stock exchanges including delisting of units under regulation 17.
(8) With respect to listing of privately placed units,–
(a) its units shall be mandatorily listed on the designated stock exchange(s) within thirty working days from the date of 153[allotment];
(b) trading lot for the purpose of trading of units on the designated stock exchange shall be rupees one crore.
154[ Notwithstanding the above, if an InvIT invests not less than eighty per cent of the value of the InvIT assets, 155[in completed and revenue generating assets,] the trading lot for the purpose of trading of units on the designated stock exchange of such InvIT shall be rupees two crore;]
(9) With respect to listing of publicly offered units,–
(a) its units shall be mandatorily listed on the designated stock exchange(s) within twelve working days from the date of closure of the initial 156[public] offer:
Provided that this sub-regulation shall not apply if the initial 157[public] offer does not satisfy the minimum subscription amount or the minimum number of subscribers as specified in regulation 14;
(b) trading lot for the purpose of trading of units on the designated stock exchange shall be five lakh rupees.
(10) Any person other than the sponsor(s) holding units of the InvIT prior to initial offer shall hold the units for a period of not less than one year from the date of listing of the units.
153 Substituted for “final closing” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
154 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
155 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2017, w.e.f 15.12.2017
156 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
157 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
43
(11) The Board and designated stock exchanges may specify any other requirements pertaining to listing and trading of units of the InvIT by issuance of guidelines or circulars.
Delisting of units and winding up of the InvIT
17. (1) The investment manager shall apply for delisting of units of the InvIT to the Board and the designated stock exchanges if,-
(a) the public holding falls below the specified limit under sub-regulation (6) of regulation 16;
(b) the number of unit holders of the InvIT falls below the limit as specified under sub-regulation (7) 158[of regulation 16];
(c) if there are no projects or assets remaining under the InvIT for a period exceeding six months and InvIT does not propose to invest in any project in future:
Provided that, the period may be extended by further 6 months, with the approval of unitholders in the manner as specified in regulation 22;
(d) the Board or the designated stock exchanges require such delisting for violation of the listing agreement or these regulations or the Act;
(e) the sponsor(s) or trustee requests such delisting and such request has been approved by unit holders in accordance with regulation 22;
(f) unit holders apply for such delisting in accordance with regulation 22;
(g) the Board or the designated stock exchanges require such delisting in the interest of the unit holders:
Provided that if clause (a) or (b) is breached, the trustee may provide a period of six months to the investment manager to rectify the same, failing which shall apply for such delisting:
Provided further that in case of PPP projects, such delisting shall be subject to relevant clauses in the concession agreement.
(2) The Board and the designated stock Exchanges may consider such application for delisting for approval or rejection as may be appropriate in the interest of the unit holders.
158 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
(3) The Board may, instead of delisting of the units, if it deems fit, provide additional time to the InvIT or parties to the InvIT to comply with sub-regulation (1).
(4) The Board may reject the application for delisting and take any other action, as it deems fit, under these regulations or the Act for violation of the listing agreement or these regulations or the Act.
(5) The procedure for delisting of units of InvIT including provision of exit option to the unit holders shall be in accordance with the listing agreement and in accordance with procedure as may be specified by the Board and by the designated stock exchanges from time to time.
(6) After delisting of its units, the InvIT shall surrender its certificate of registration to the Board and shall no longer undertake activity of an InvIT.
(7) The InvIT and parties to the InvIT shall continue to be liable for all their acts of omissions and commissions with respect to activities of the InvIT notwithstanding surrender of registration to the Board. - CHAPTER V INVESTMENT CONDITIONS, RELATED PARTY TRANSACTIONS, BORROWING AND VALUATION OF ASSETS
Investment conditions and dividend policy
18. (1) The investment by an InvIT shall only be in 159[holdco and/ or] SPVs or infrastructure projects or securities in India in accordance with these regulations and the investment strategy as detailed in the offer document or Placement memorandum.
(2) In case of PPP projects, the InvIT shall mandatorily invest in the infrastructure projects through 160[holdco and/ or] SPV.
(3) The InvIT may invest in infrastructure projects through SPVs subject to the following,–
(a) no other shareholder or partner of the SPV shall have any rights that prevents the InvIT from complying with the provisions of these regulations and an agreement shall be entered into with
159 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
160 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
such shareholders or partners to that effect prior to investment in the SPV;
(b) in case the SPV is a company161[/LLP], the investment manager, in consultation with the trustee, shall appoint 162[majority of] the board of directors or governing board of such SPVs 163[as applicable] ;
(c) the investment manager shall ensure that the in every meeting including annual general meeting of the SPV, the voting of the InvIT is exercised.
164[(3A) The InvIT may invest in infrastructure projects through holdcos subject to the following,-
(a) the ultimate holding interest of the InvIT in the underlying SPV(s) is not less than twenty six per cent;
(b) no other shareholder or partner of the holdco or the SPV(s) shall have any rights that prevent the InvIT, the HoldCo or the SPV(s) from complying with the provisions of these regulations and an agreement shall be entered into with such shareholders or partners to that effect prior to investment in the holdco/SPV;
(c) the investment manager, in consultation with the Trustee, shall appoint the majority of the Board of directors or governing board of the holdco and SPV(s);
the investment manager shall ensure that in every meeting including annual general meeting of the Holdco and SPV(s), the voting of the InvIT is exercised;]
(4) 165[ In case of InvIT as specified under sub-regulation (2) of regulation 14, the InvIT shall invest not less than eighty per cent of the value of the
161 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
162 Substituted for “not less than one authorized representative on” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
163 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
164 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
165 Substituted for “In case of InvIT as specified under sub-regulation (2) of regulation 14, the InvIT shall invest only in eligible infrastructure projects or securities of companies or partnership interests of LLPs in infrastructure sector:
Provided that un-invested funds may be invested in liquid funds or government securities or money market instruments or cash equivalents.
Explanation.- Companies or LLPs in infrastructure sector shall mean those companies or LLPs which derive not less than eighty per cent. of their operating income from infrastructure sector as per the audited accounts of the
InvIT assets in eligible infrastructure projects either directly or through holdcos or through SPVs:
Provided that un-invested funds may be invested in instruments as provided under sub-clause (ii), (iii), (iv) and (v) of clause (b) of sub-regulation 5 of Regulation 18.]
(5) In case of InvITs as specified under sub-regulation (4) of regulation 14,–
(a) not less than eighty per cent. of the value of 166[InvIT] the assets shall be invested, proportionate to the holding of the InvITs, in completed and revenue generating infrastructure projects subject to the following;
(i) if the investment has been made through a 167[holdco and/ or] SPV168[(s)], whether by way of equity or debt or equity linked instruments or partnership interest, only the portion of direct investments in 169[completed and revenue generating] projects by such 170[holdco and/ or SPV(s)] shall be considered under this sub-regulation and the remaining portion shall be included under clause (b);
(ii) if any project is implemented in stages, the part of the project which can be categorised as completed and revenue generating project shall be considered under this sub-regulation and the remaining portion shall be included under clause (b);
(b) not more than twenty per cent. of value of the 171[InvIT] assets, 172[***] shall be invested in,–
previous financial year.” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
166 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
167 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
168 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
169 Substituted for “eligible infrastructure” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
170 Substituted for “SPVs” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
171 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
172 Omitted “proportionate to the holding of the InvITs,” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
(i) under-construction infrastructure projects, whether directly or through 173[holdco and/ or] SPVs:
Provided that investment in such assets shall not exceed ten per cent. of the value of the 174[InvIT assets];
(ii) listed or unlisted debt of companies or body corporate in infrastructure sector:
Provided that this shall not include any investment made in debt of the 175[holdco and/ or SPV(s)];
(iii) equity shares of companies listed on a recognized stock exchange in India which derive not less than eighty per cent. of their operating income from infrastructure sector as per the audited accounts of the previous financial year;
(iv) government securities;
(v) money market instruments, liquid mutual funds or cash equivalents;
(c) if the conditions specified in clauses (a) and (b) are breached on account of market movements of the price of the underlying assets or securities, the investment manager shall inform the same to the trustee and ensure that the conditions as specified in this regulation are satisfied within six months of such breach:
Provided that the period may be extended to one year subject to approval from investors in accordance with regulation 22.
176[(5A) The investment conditions as specified at sub-regulation (4) and (5) of regulation 18 and sub -regulation shall be complied at the time of Offer document/placement memorandum and therafter.]
(6) With respect to distributions made by the InvIT and the 177[holdco and/or] SPV,-
(a) not less than ninety per cent. of net distributable cash flows of the SPV shall be distributed to the InvIT 178[/holdco]in proportion of
173 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
174 Substituted for “assets of the InvIT” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
175 Substituted for “SPV” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
176 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
177 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
178 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
its holding in the SPV subject to applicable provisions in Companies Act, 2013 or Limited Liability Partnership Act, 2008;
(b) not less than ninety per cent. of net distributable cash flows of the InvIT shall be distributed to the unit holders;
179[(ba) with regard to distribution of net distributable cash flows by the holdco to the InvIT, the following shall be complied:
(i) with respect to the cash flows received by the holdco from underlying SPVs, 100% of such cash flows received by the holdco shall be distributed to the InvIT; and
(ii) with respect to the cash flows generated by the holdco on its own, not less than 90% of such net distributable cash flows shall be distributed by the holdco to the InvIT.]
(c) such distributions shall be declared and made not less than once every six months in every financial year in case of publicly offered InvITs and not less than once every year in case of privately placed InvITs and shall be made not later than fifteen days from the date of such declaration;
(d) subject to 180[sub-]clause (c), such distribution shall be 181[***] in the manner as mentioned in the offer document or placement memorandum.
(7) If any infrastructure asset is sold by the InvIT or 182[holdco or] SPV or if the equity shares or interest in the 183[holdco/] SPV are sold by the InvIT,–
(a) if the InvIT 184[***] proposes to re-invest the sale proceeds into another infrastructure asset, it shall not be required to distribute any sales proceeds to the InvIT or to the investors;
179 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
180 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
181 Omitted “as per the dates and” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
182 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
183 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
184 Omitted “or SPV” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
(b) If the InvIT 185[***] proposes not to invest the sales proceeds into any other infrastructure asset 186[within a period of one year], it shall be require to distribute the same in accordance with sub-regulation (6).
(8) If the distributions are not made within fifteen days of declaration, then the investment manager shall be liable to pay interest to the unit holders at the rate of fifteen per cent. per annum till the distribution is made and such interest shall be not be recovered in the form of fees or any other form payable to the investment manager by the InvIT.
(9) An InvIT shall not invest in units of other InvITs.
(10) An InvIT shall not undertake lending to any person 187[other than the holdco/ SPV(s) in which the InvIT has invested in]:
Provided that investment in debt securities shall not be considered as lending.
(11) An InvIT shall hold an infrastructure asset for a period of not less than three years from the date of purchase of such asset by the InvIT, directly or through 188[holdco and/or] SPV:
Provided that this shall not apply to investment in securities of companies in infrastructure sector other than SPVs.
(12) In case of any co-investment with any person(s) in any transaction,–
(a) the investment by the other person(s) shall not be at terms more favourable than those to the InvIT;
(b) the investment shall not provide any rights to the person(s) which shall prevent the InvIT from complying with the provisions of these regulations;
(c) the agreement with such person(s) shall include the minimum percentage of distributable cash flows that will be distributed and entitlement of the InvIT to receive not less than pro rata distributions and mode for resolution of any disputes between the InvIT and the other person(s).
(13) No schemes shall be launched under the InvIT.
(14) The Board may specify any additional conditions for investments by the InvIT as deemed fit.
185 Omitted “or SPV” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
186 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
187 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
188 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
Related party transactions
19. (1) All related party transactions shall be on an arms-length basis in accordance with relevant accounting standards, in the best interest of the unit holders, consistent with the strategy and investment objectives of the InvIT.
(2) All related party transactions of an InvIT shall be disclosed,–
(a) in the offer document or placement memorandum with respect to any such transactions entered into prior to the offer of units and any such proposed transactions subsequent to the offer;
(b) to the designated stock exchanges and unit holders periodically in accordance with the listing agreement and these regulations.
(3) With respect to related party transactions with respect to 189[***] InvITs entered into after initial 190[public] offer, if,–
(a) the total value of all the related party transactions, in a financial year, pertaining to acquisition or sale of assets 191[whether directly or through holdco or through SPV,] or investments into securities exceeds five per cent. of the value of 192[the] InvIT 193[assets]; or
(b) the value of the funds borrowed from related parties, in a financial year, exceeds five per cent. of the total consolidated borrowings of the InvIT 194[,holdco and the SPV(s)],
approval from the unit holders shall be obtained prior to entering into any such subsequent transaction with any related party in accordance with regulation 22.
(4) Transaction between two or more of the InvITs with a common investment manager or sponsor, shall be deemed to be related party transactions for each of the InvITs and provisions of regulation 19 shall apply:
189 Omitted “publicly offered” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
190 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
191 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
192 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
193 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
194 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
Provided that this sub-regulation shall also apply if the investment managers or sponsors of the InvITs are different entities but are associates.
(5) With respect to any related party transaction, details of any fees or commissions received or to be received by 195[such related party (ies)] shall be adequately disclosed to the designated stock exchanges.
(6) Where any of the related parties have an interest in a business which competes or is likely to compete, either directly or indirectly, with the activities of the InvIT, the following details shall be disclosed in the offer document or placement memorandum,–
(a) details of the such business including an explanation as to how such business shall compete with the InvIT;
(b) a declaration that the related party shall perform its duty in relation to the InvIT independent of its related business;
(c) declaration as to whether any acquisition of such business by the InvIT is intended and if so, details of the same thereof.
(7) The Board may specify additional guidelines with respect to related party transactions, as it deems fit.
Borrowings and deferred payments
20. 196[(1) An InvIT, whose units are listed on a recognized stock exchange, may issue debt securities in the manner specified by the Board:
Provided that such debt securities shall be listed on recognized stock exchange(s).]
197[(2)] The aggregate consolidated borrowings and deferred payments of the InvIT 198[, holdco and the SPV(s),] net of cash and cash equivalents shall never exceed forty nine per cent. of the value of the InvIT assets.
199[(3)] If the aggregate consolidated borrowings and deferred payments of the InvIT 200[, holdco and the SPV(s),] net of cash and cash equivalents exceed twenty five per cent. of the value of the InvIT assets, for any further borrowing,–
195 Substituted for “any person or entity which is an associate of the related party” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
196 Inserted by the Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2017, w.e.f. 15.12.2017
197 Re-numbered ibid.
198 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
199 Re-numbered by the Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2017, w.e.f. 15.12.2017
200 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
(a) credit rating shall be obtained from a credit rating agency registered with the Board; and
(b) approval of unit holders shall be obtained in the manner as specified in regulation 22.
201[(4)] If the conditions specified in sub-regulations (1) and (2) are breached on account of market movements of the price of the underlying assets or securities, the investment manager shall inform the same to the trustee and ensure that the conditions are satisfied within six months of such breach.
Valuation of assets
21. (1) The valuer shall not be an associate of the sponsor(s) or investment manager or trustee and shall have not less than five years of experience in valuation of infrastructure assets.
(2) Full valuation includes a detailed valuation of all assets of the InvIT by the valuer including physical inspection of every infrastructure project by the valuer.
(3) Full valuation report shall include the mandatory minimum disclosures as specified in Schedule V.
(4) A full valuation shall be conducted by the valuer not less than once in every financial year:
Provided that such full valuation shall be conducted at the end of the financial year ending March 31st within two months from the date of end of such year.
(5) A half yearly valuation of the assets of the InvIT shall be conducted by the valuer for the half-year ending September 30th for a publicly offered InvIT for incorporating any key changes in the previous six months and such half yearly valuation report shall be prepared within one month from the date of end of such half year.
(6) Valuation reports received by the investment manager shall be submitted by the investment manager to the designated stock exchanges within fifteen days from the receipt of such valuation reports.
(7) Prior to any issue of units by publicly offered InvIT other than bonus issue, the valuer shall undertake full valuation of all the InvIT assets and include the same in the Offer Document:
Provided that such valuation report shall not be more than six months old at the time of such offer:
201 Re-numbered by the Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2017, w.e.f. 15.12.2017
Provided further that this shall not apply in cases where full valuation has been undertaken not more than six months prior to such issue and no material changes have occurred thereafter.
(8) For any transaction of purchase or sale of infrastructure projects, whether directly or through 202[holdco and/or] SPVs, for publicly offered InvITs,–
(a) a full valuation of the specific project shall be undertaken by the valuer;
(b) if,–
(1) in case of a purchase transaction, the asset is proposed to be purchased at a value greater than hundred ten per cent of the value of the asset as assessed by the valuer;
(2) in case of a sale transaction, the asset is proposed to be sold at a value less than ninety per cent. of the value of the asset as assessed by the valuer,
approval of the unit holders shall be obtained in accordance with regulation 22.
(9) No valuer shall undertake valuation of the same project for more than four years consecutively:
Provided that the valuer may be reappointed after a period of not less than two years from the date it ceases to be the valuer of the InvIT.
203[***]
(11) In case of any material development that may have an impact on the valuation of the assets of the InvIT, then investment manager of a publicly offered InvIT shall require the valuer to undertake full valuation of the infrastructure project under consideration within not more than two months from the date of such event and disclose the same to the trustee and the designated stock exchanges within fifteen days of such valuation.
202 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
203 Omitted by the Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2017, w.e.f. 15.12.2017. Prior to the omission, the sub-regulation read as follows:
“(10) Any valuation undertaken by any valuer shall be in compliance with by international valuation standards and valuation standards as may be specified by Institute of Chartered Accountants of India for valuation of infrastructure assets or such other valuation standards as may be specified by the Board:
Provided that in case of any conflict, standards specified by Institute of Chartered Accountants of India shall prevail.”
(12) The valuer shall not undertake valuation of any assets in which it has either been involved with the acquisition or disposal within the last twelve months other than such cases where the valuer was engaged by the InvIT for such acquisition or disposal. - CHAPTER VI RIGHTS OF UNIT HOLDERS, GENERAL OBLIGATIONS, DISCLOSURES AND REPORTING
Rights and meetings of unit holders
22. (1) The unit holder shall have the rights to receive income or distributions as provided for in the offer document or placement memorandum.
(2) With respect to any matter requiring approval of the unit holders,-
(a) a resolution shall be considered as passed when the votes cast by unit holders, so entitled and voting, in favour of the resolution exceed a certain percentage as specified in these regulations, of votes cast against;
(b) the voting may also be done by postal ballot or electronic mode;
(c) a notice of not less than twenty one days shall be provided to the unit holders;
(d) voting by any person who is a related party in such transaction as well as associates of such person(s) shall not be considered on the specific issue;
(e) investment manager shall be responsible for all the activities pertaining to conducting of meeting of the unit holder, subject to overseeing by the trustee:
Provided that in issues pertaining to the investment manager such as change in investment manager including removal of the investment manager or change in control of the investment manager, trustee shall convene and handle all activities pertaining to conduct of the meetings:
Provided further that in respect of issues pertaining to the trustee Including change in the trustee, the trustee shall not be involved in any manner in the conduct of the meeting.
(3) 204[For an] InvITs,–
(a) an annual meeting of all unit holders shall be held not less than once a year within one hundred twenty days from the end of financial year and the time between two meetings shall not exceed fifteen months;
(b) with respect to the annual meeting of unit holders,–
(i) any information that is required to be disclosed to the unit holders and any issue that, in the ordinary course of business, may require approval of the unit holders may be taken up in the meeting including,–
(1) latest annual accounts and performance of the InvIT;
(2) approval of auditor and fees of such auditor, as may be required;
(3) latest valuation reports;
(4) appointment of valuer, as may be required;
(5) any other issue;
(ii) for any issue taken up in such meetings which require approval from the unit holders other than as specified in sub-regulation (6) under, votes cast in favour of the resolution shall 205[ be more than] the votes cast against the resolution;
(4) In case of,–
(a) any approval from unit holders required under regulation 18, 19 and 21;
(b) any transaction, other than any borrowing, value of which is equal to or greater than twenty five per cent. of the InvIT assets;
(c) any borrowing in excess of specified limit as required under sub-regulation (2) of regulation 20;
(d) any issue of units after 206[ initial public offer by an InvIT] , in whatever form, other than any issue of units which may be considered by the Board under sub-regulation (5);
(e) increasing period for compliance with investment conditions to one year in accordance with clause (c) of sub-regulation (5) of regulation 18;
204 Substituted for “With respect to publicly offered” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
205 Substituted for “not be less than one and a half times” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
206 Substituted for “initial offer by a publicly offered InvIT” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
(f) any issue, in the ordinary course of business, which in the opinion of the sponsor(s) or trustee or investment manager, is material and requires approval of the unit holders, if any;
(g) any issue for which the Board or the designated stock exchanges requires such approval under this sub-regulation,
approval from unit holders shall be required where votes cast in favour of the resolution shall 207[be more than] the votes cast against the resolution.
(5) In case of,–
(a) any change in investment manager including removal of the investment manager or change in control of the investment manager;
(b) any material change in investment strategy or any change in the management fees of the InvIT;
(c) the sponsor(s) or investment manager proposing to seek delisting of units of the InvIT
(d) any issue, not in the ordinary course of business, which in the opinion of the sponsor(s) or investment manager or trustee requires approval of the unit holders;
(e) any issue for which the Board or the designated stock exchanges requires approval under this sub-regulation;
(f) any issue taken up on request of the unit holders including,–
(i) removal of the investment manager and appointment of another investment manager to the InvIT;
(ii) removal of the auditor and appointment of another auditor to the InvIT;
(iii) removal of the valuer and appointment of another valuer to the InvIT;
(iv) delisting of an InvIT, if the unit holders have sufficient reason to believe that such delisting would act in the interest of the unit holders;
(v) any issue which the unit holders have sufficient reason to believe that is detrimental to the interest of the unit holders;
(vi) change in the trustee if the unit holders have sufficient reason to believe that acts of such trustee is detrimental to the interest of the unit holders,
207 Substituted for “not be less than one and half times” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
approval from unit holders shall be required where votes cast in favour of the resolution shall not be less than 208[one and a half] times the votes cast against the resolution:
Provided that in case of clause (d), if approval is not obtained, the person shall provide an exit option to the unit holder to the extend and in the manner specified by the Board.
(6) With respect to the right(s) of the unit holders under clauses (f) of sub-regulation (5),–
(a) not less than twenty five per cent. of the unit holders by value, other than any party related to the transactions and its associates, shall apply, in writing, to the trustee for the purpose;
(b) on receipt of such application, the trustee shall require the issue with the investment manager to place the issue for voting in the manner as specified in these regulations;
(c) with respect to sub-clause (vi), not less than sixty per cent. of the unit holders by value shall apply, in writing, to the trustee for the purpose.
Disclosures
23. (1) A privately placed InvIT shall ensure that the disclosures in the placement memorandum are in accordance with the sub-regulation (4) of regulation 15 and any circulars or guidelines issued by the Board in this regard.
(2) A publicly offered InvIT shall ensure that the disclosures in the offer document are in accordance with the Schedule III and any circulars or guidelines issued by the Board in this regard.
(3) The investment manager of all InvITs shall submit an annual report to all unit holders electronically or by physical copies and to the designated stock exchanges within three months from the end of the financial year.
(4) The investment manager of shall submit a half-yearly report to the designated stock exchange within forty five days from the end of the every half year ending March 31st and September 30th.
(5) Such annual and half yearly reports shall contain disclosures as specified under Schedule IV.
(6) The investment manager shall disclose to the designated stock exchanges any information having bearing on the operation or performance of the InvIT as well as price sensitive information which includes but is not restricted to the following,–
208 Substituted for “three” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
(a) acquisition or disposal of any projects, directly or through 209[ holdco or] SPV, value of which exceeds five per cent. of value of the InvIT assets;
(b) additional borrowing, at level of 210[holdco or] SPV or the InvIT, exceeding fifteen per cent. of the value of the InvIT assets ;
(c) additional issue of units by the InvIT;
(d) details of any credit rating obtained by the InvIT and any change in such rating;
(e) any issue which requires approval of the unit holders;
(f) any legal proceedings which may have significant bearing on the functioning of the InvIT;
(g) notices and results of meetings of unit holders,
(h) any instance of non-compliance with these regulations including any breach of limits specified under the regulations;
(i) any material issue that in the opinion of the investment manager or trustee needs to be disclosed to the unit holders.
(7) The InvIT shall also submit such information to the designated stock exchanges and unit holders on a periodical basis as may be required under the listing agreement.
(8) The InvIT shall disclose to the designated stock exchanges, unit holders and the Board such information and in the manner as may be specified by the Board.
(9) The InvIT shall also provide disclosures or reports specific to sector or sub-sector in which the InvIT has invested or proposes to invest in the manner as may be specified by the Board.
Submission of reports to the Board
24. The Board may at any time call upon the InvIT or parties to the InvIT to file such reports, as the Board may desire, with respect to the activities relating to the InvIT.
Power to call for information
25. (1) The Board may at any time call for any information from the InvIT or 211[holdco or SPV(s)] parties to the InvIT or 212[holdco or SPV(s)] any unit
209 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
210 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
211 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
212 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
holder or any other person with respect to any matter relating to activity of the InvIT.
(2) Where any information is called for under sub-regulation (1), it shall be furnished within the time specified by the Board.
Maintenance of records
26. (1) The investment manager shall maintain records pertaining to the activity of the InvIT, wherever applicable, including,–
(a) all investments or divestments of the InvIT and documents supporting the same including rationale for such investments or divestments;
(b) agreements entered into by the InvIT or on behalf of the InvIT;
(c) documents relating to appointment of persons as specified in sub-regulation (5) of regulation 10;
(d) insurance policies for infrastructure assets;
(e) investment management agreement;
(f) documents pertaining to issue and listing of units including placement memorandum, draft and final offer document, in-principle approval by designated stock exchanges, listing agreement with the designated stock exchanges, details of subscriptions, allotment of units, etc;
(g) distributions declared and made to the unit holders;
(h) disclosures and periodical reporting made to the trustee, Board, unit holders and the designated stock exchanges including annual reports, half yearly reports, etc.;
(i) valuation reports including methodology of valuation;
(j) books of accounts and financial statements;
(k) audit reports;
(l) reports relating to activities of the InvIT placed before the board of directors of the investment manager;
(m) unit holders' grievances and actions taken thereon including copies of correspondences made with the unit holder and the Board, if any;
(n) any other material documents;
(2) The trustee shall maintain records, wherever applicable, pertaining to,–
(a) certificate of registration granted by the Board;
(b) registered trust deed;
(c) documents pertaining to application made to the Board for registration as an InvIT;
(d) titles of the infrastructure assets:
Provided that where the original title documents are deposited with the lender or any other person in respect of any loan or debt, the trustee shall maintain copies of such title documents;
(e) notices and agenda send to unit holders for meetings held;
(f) minutes of meetings and resolutions passed therein;
(g) periodical reports and disclosures received by the trustee from the investment manager;
(h) disclosures, periodically or otherwise, made to the Board, unit holders and the designated stock exchanges;
(i) any other material documents.
(3) The aforesaid records may be maintained in physical or electronic form:
Provided that where records are required to be duly signed and are maintained in the electronic form, such records shall be digitally signed. - CHAPTER VII INSPECTION
Boards right to inspect
27. The Board may suo motu or upon receipt of information or complaint appoint one or more persons as inspecting officers to undertake inspection of the books of accounts, records and documents relating to activity of the InvIT 213[ or holdco or SPV or parties to the InvIT] for any of the following reasons, namely,--
(a) to ensure that the books of account, records and documents are being maintained by the InvIT or parties to the InvIT in the manner specified in these regulations;
(b) to inspect into complaints received from unit holders, clients or any other person, on any matter having a bearing on the activities of the InvIT;
(c) to ascertain whether the provisions of the Act and these regulations are being complied with by the InvIT and parties to the InvIT; and
(d) to inspect suo motu into the affairs of the InvIT, in the interest of the securities market or in the interest of investors.
Notice before inspection
213 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
28. (1) Before ordering an inspection under regulation 27, the Board shall give not less than ten days notice to the trustee of the InvIT.
(2) Notwithstanding anything contained in sub-regulation (1), where the Board is satisfied that in the interest of the investors no such notice should be given, it may, by an order in writing, direct that the inspection of the affairs of the InvIT be taken up without such notice.
(3) During the course of an inspection, the InvIT against whom the inspection is being carried out and parties to the InvIT shall be bound to discharge their obligations as provided in regulation 29.
Obligation of InvIT, parties to the InvIT and any other associate persons on inspection.
29. (1) It shall be the duty of every InvIT in respect of whom an inspection has been ordered under the regulation 27, parties to the InvIT and any other associate person who is in possession of relevant information pertaining to conduct and affairs of such InvIT, including representative of InvIT, if any, to produce to the inspecting officer such books, accounts and other documents in his custody or control and furnish him with such statements and information as the inspecting officer may require for the purposes of inspection.
(2) It shall be the duty of every InvIT, parties to the InvIT and any other associate person who is in possession of relevant information pertaining to conduct and affairs of the InvIT to give to the inspecting officer all such assistance and to extend all such co-operation as may be required in connection with the inspection and to furnish such information as may be sought by the inspecting officer in connection with the inspection.
(3) The inspecting officer shall, for the purposes of inspection, have power to examine on oath and record the statement of any employees and directors of the InvIT 214[***] parties to the InvIT or 215[ or holdco or SPV(s)] any person responsible for or connected with the activities of InvIT or any other associated person having relevant information pertaining to such InvIT.
(4) The inspecting officer shall, for the purposes of inspection, have power to obtain authenticated copies of documents, books, accounts of InvIT, from any person having control or custody of such documents, books or accounts.
Submission of report to the Board
214 Omitted “or” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
215 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
30. The inspecting officer shall, as soon as possible, on completion of the inspection submit an inspection report to the Board:
Provided that if directed to do so by the Board, he may submit an interim report.
Communication of findings etc. to the InvIT
31. The Board may after consideration of the inspection report and after giving reasonable opportunity of hearing to the InvITs or parties to the InvIT or its representatives or any such person, issue such directions as it deems fit in the interest of securities market or the investors in the nature of,–
(a) requiring the InvIT to delist its units from the stock exchanges and surrender its certificate of registration;
(b) requiring the InvIT to wind up;
(c) requiring the InvIT to sell its assets;
(d) requiring the InvIT or parties to the InvIT to take such action as may be in the interest of the investors;
(e) prohibiting the InvIT or parties to the InvIT from operating in the capital market or from accessing the capital market for a specified period. - CHAPTER VIII PROCEDURE FOR ACTION IN CASE OF DEFAULT
Liability for action in case of default.
32. An InvIT or parties to the InvIT or any other person involved in the activity of the InvIT who contravenes any of the provisions of the Act or these regulations or notifications, guidelines, circulars or instructions issued thereunder by the Board shall be liable for one or more actions specified therein including any action provided under the Securities and Exchange Board of India (Intermediaries) Regulations, 2008. - CHAPTER IX MISCELLANEOUS
Power of the Board to issue clarifications.
33. In order to remove any difficulties in the application or interpretation of these regulations, the Board may issue clarifications or guidelines in the manner as may be appropriate.
216[Power to relax strict enforcement of Regulations
33A.The Board may, in the interest of investors or for the development of the securities market, relax the strict enforcement of any requirement of these regulations, if the Board is satisfied that,-
(a) requirement is procedural or technical in nature; or
(b) the requirement may cause undue hardship to investors; or
(c) the disclosure requirement is not relevant for a particular industry or class of listed entities; or
(d) the non-compliance was caused due to factors beyond the control of the issuer; or
any provision of Act(s), Rule(s), regulation(s) under which the listed entity is established or is governed by, is required to be given precedence to.]
Other InvITs.
34. The Board may lay down framework for InvITs other than the InvITs falling in the categories specified in these regulations.
216 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016 - SCHEDULE I
FORM A
Securities and Exchange Board of India
(Infrastructure Investment Trusts) Regulations, 2014
[See regulation 3]
Application for Grant of Certificate of Registration as Infrastructure investment trustINSTRUCTIONS
1. This form is meant for use by the applicant for grant of certificate of registration as a Infrastructure Investment Trust.
2. The applicant should complete this form, and submit it, along with all supporting documents to the Board.
3. This application form should be filled in accordance with these regulations.
4. The application shall be considered by the Board provided it is complete in all respects.
5. All answers must be legible and all the pages must be numbered with signature/ stamp on each page of the form.
6. Information which needs to be supplied in more detail may be given on separate sheets which should be attached to the application form and appropriately numbered.
7. The application must be signed and all signatures must be original.
8. The application must be accompanied by an application fee as specified in the Second Schedule to these regulations.
1. GENERAL INFORMATION
(a) Name, address, telephone number(s), fax number(s), e-mail address of the InvIT
(b) Name, direct line number, mobile number and e-mail of the contact person(s)
(c) Whether the 217[ applicant/ sponsor(s)/ investment manager/ project manager(s) or their associates or trustee] are registered with SEBI, RBI or any other regulatory authority in any capacity along with the details of its registration
217 Substituted for “applicant or its associates or its sponsor(s)/trustee/ manager is/” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
(d) Details of infrastructure for conducting activities as an Infrastructure investment trust
2. DETAILS OF APPLICANT
(a) Write-up on the activities of the applicant
(b) Whether the Trust Deed is registered under the provisions of the Indian Registration Act, 1908
(c) Whether the Trust Deed has its main objective as undertaking activity of InvIT and includes responsibilities of the Trustee in accordance with Regulation 9 (Enclose relevant extract of the Registered Trust Deed)
(d) Whether any unit holder of the InvIT enjoys preferential voting or any other rights over another unit holder
(e) Whether there are multiple classes of units of InvIT
3. DETAILS OF TRUSTEE
(a) Name, address of registered office, address for correspondence and principal place of business, telephone number(s), fax number(s), e-mail address of the Trustee
(b) Name, direct line number, mobile number and e-mail of the contact person(s).
(c) Brief write up on the activities of the trustee
(d) Details of registration as a Debenture Trustee
(e) 218[***]
(f) Details of infrastructure, personnel, etc. relevant to the activity as trustee of the InvIT
(g) Identity and Address proof of the trustee and its directors
(h) Whether the Trustee Company is registered with any regulatory authority other than SEBI in any capacity along with the details of its registration
4. DETAILS OF SPONSOR(S) (Provide details for every sponsor separately)
(a) Name, address of registered office, address for correspondence and principal place of business, telephone number(s), fax number(s), e-mail address of the sponsor(s)
(b) Name, direct line number, mobile number and e-mail of the contact person(s)
(c) Legal status of the sponsor, date and place of incorporation/ establishment, wherever applicable
(d) Details of the holding pattern and profile of the directors/partners including their professional qualification
(e) Identity proof and address proof of the Sponsor, its directors or partners
218 Omitted “List of associates of the trustee ” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
(f) Write up on the activities of the sponsor/its associates including past experience in development of infrastructure or fund management in the infrastructure sector
(g) Whether the Sponsor has floated any InvITs previously, which are registered with SEBI. If yes, details of the same
(h) Proposed holding of the sponsor in the InvIT on post-issue basis
(i) Copies of the financial statements for the previous financial year
(j) Net-worth certificate of sponsor(s) by a Chartered Accountant, not more than six months old from the date of application
5. DETAILS OF INVESTMENT MANAGER
(a) Name, address of the registered office address for correspondence, telephone number(s), fax number(s), of the Investment Manager
(b) Name, direct line number, mobile number and e-mail of the contact person(s).
(c) Legal status, date and place of incorporation/ establishment, wherever applicable
(d) Copy of Investment Management agreement
(e) Write up on the activities of the Investment Manager including past experience in fund management/ advisory services or development in the infrastructure sector
(f) List of Directors/ Members of Governing Board
(g) Identity proof and address proof of the Investment Manager, its directors or partners
(h) Shareholding/partnership interests and profile of the directors /partners
(i) Details of the key personnel including experience and professional qualification
(j) Copies of the financial statements for the previous financial year
(k) Net-worth certificate of manager by a Chartered Accountant, not more than six months old from the date of application
(l) Whether the Investment Manager has acted as manager to any InvIT previously, which are registered with SEBI. If yes, details of the same
6. DETAILS OF PROJECT MANAGER(s) (Provide details for every project manager separately)
(a) Name, address of the registered office address for correspondence, telephone number(s), fax number(s), of the Project Manager
(b) Name, direct line number, mobile number and e-mail of the contact person(s)
(c) Legal status, date and place of incorporation/ establishment, wherever applicable
(d) 219[***]
(e) Write up on the activities of the Project Manager
(f) Identity proof and address proof of the 220[Project Manager], its directors or partners
7. DETAILS OF BUSINESS PLAN AND INVESTMENT STRATEGY
(a) Investment objective and investment style
(b) Details of proposed initial offer 221[***]
(c) Brief details of the assets proposed to be held under InvIT
(d) Details of leverage at 222[holdco/SPV(s)] and InvIT level (current and proposed)
(e) Fee structure
8. DETAILS OF REGULATORY ACTION TAKEN IN THE PAST, IF ANY
(a) Whether the 223[InvIT or parties to the InvIT or their directors/members of governing board] are / were involved in any litigation connected with the securities market which may have an adverse bearing on the business of the applicant or any order has/ had been passed against them for violation of securities laws. (If Yes, provide details. If No, enclose a declaration to that effect).
(b) Whether any disciplinary action has been taken by the Board or any other regulatory authority against the 224[InvIT or parties to the InvIT or their directors/members of governing board] under any Act or the Regulations/guidelines made thereunder (If Yes, provide details. If No, enclose a declaration to that effect).
219 Omitted “Copy of Project Implementation Agreement” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
220 Substituted for the words “Investment Manager” by the Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2017, w.e.f. 15.12.2017
221 Omitted “including copy of the draft initial offer document/draft placement memorandum, as applicable” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
222 Substituted for “SPV” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
223 Substituted for “applicant or any of its related party(ies)” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
224 Substituted for “applicant or any of its related party(ies)” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
(c) Whether 225[InvIT or parties to the InvIT or their directors/members of governing board] has/ have been refused a certificate by the Board or its/ their certificate has been suspended at any time prior to this application. (If Yes, provide details. If No, enclose a declaration to that effect).
9. OTHER INFORMATION/DECLARATIONS
Declaration that the applicant, Sponsor(s), Investment Manager and Project Manager(s) are fit and proper persons based on the criteria specified in the Securities and Exchange Board of India (Intermediaries) Regulations, 2008.
DECLARATION STATEMENT (To Be Given As Below)
We hereby agree and declare that the information supplied in the application, including the attachment sheets, is complete and true.
AND we further agree that, we shall notify the Securities and Exchange Board of India immediately any change in the information provided in the application.
We further agree that we shall comply with, and be bound by the Securities and Exchange Board of India Act, 1992, and the Securities and Exchange Board of India (Infrastructure Investment Trusts) Regulations, 2014 and any other regulations, circulars or guidelines as may be notified or issued by the Securities and Exchange Board of India from time to time.
We further agree that as a condition of registration, we shall abide by such operational instructions/directives as may be issued by the Securities and Exchange Board of India from time to time.
For and on behalf of____________________________________________________
(Name of the applicant)
Authorized signatory
(Signature)FORM B
Securities and Exchange Board of India
(Infrastructure Investment Trusts) Regulations, 2014
[See regulation 6(2)]
Certificate of registration as a Infrastructure Investment TrustI. In exercise of the powers conferred by sub-section (1) of section 12 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), read with the regulations made there under, the Board hereby grants a certificate of registration to
_______________________________________________________________
as an Infrastructure Investment Trust subject to the conditions specified in the Act and in the regulations made thereunder.
II. The Registration Number of the Infrastructure Investment Trust is:
_____________.
Date :
Place :
- SCHEDULE II
Securities and Exchange Board of India (Infrastructure Investment Trusts)
Regulations, 2014
[See regulation 3(2), 6(1) and 14(4)(k)]
FEES
1. Every applicant shall pay non-refundable application fees of one lakh rupees along with the application for grant of certificate of registration.
2. Every applicant shall pay as non-refundable registration fees a sum of ten lakh rupees within fifteen days from the date of receipt of intimation from the Board.
3. With respect to publicly offered InvIT:
a. The InvIT shall pay non-refundable filing fees of:
i. 0.1% in case of initial and follow-on offer; and
ii. 0.05% in case of rights issue
of the total issue size including intended retention of oversubscription at the time of filing of draft Offer document with the Board
b. If the issue size estimated by the InvIT differs from eventual issue size and thereby:–
i. the fees paid by the InvIT is found to be deficient, the balance fee shall be paid by the issuer 226[ alongwith the filing of the final offer document/ final placement memorandum with the Board and] with the recognised stock exchanges, as the case may be; and
ii. if any excess fee is found to have been paid, it shall be refunded by the Board to the InvIT.
4. With respect to privately placed InvIT, the InvIT shall pay non-refundable filing fees of 0.1% of the total issue size including green shoe option, if any, at the time of filing of 227[***] placement memorandum with the Board;
226 Substituted for “within seven days of registering the prospectus with the Registrar of Companies or filing the letter of offer” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
227 The word “draft” omitted by the Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2017, w.e.f. 15.12.2017
5. Such application, registration and filing fees shall be paid by the applicant or InvIT 228[by way of direct credit in the bank account through NEFT/RTGS/IMPS or any other mode allowed by RBI or] by a demand draft in favor of 'Securities and Exchange Board of India' payable at Mumbai or at respective regional or local office, as may be required.
228 by way of direct credit in the bank account through NEFT/RTGS/IMPS or any other mode allowed by RBI or] by a demand draft in favor of 'Securities and Exchange Board of India' payable at Mumbai or at respective regional or local office, as may be required. - SCHEDULE III
MANDATORY DISCLOSURES IN OFFER DOCUMENT 229[or PLACEMENT MEMORANDUM] or FOLLOW ON OFFER DOCUMENT
1. Introduction
a. Name, registered office address, correspondence address, contact person (s), contact details and email id of the InvIT
b. Place and date of creation of the InvIT
c. Registration number and date of registeration of the InvIT with the Board
2. Details of sponsor(s), Investment Manager, Project Manager, Trustee and other parties
a. Sponsor (s)
(In case of multiple sponsors, provide details for every sponsor)
i. Name, registered office address, correspondence addresses, Contact person (s), contact details, email id
ii. Background of the sponsor including activities being undertaken by the sponsor with respect to infrastructure.
iii. Holding or proposed holding by sponsor in the InvIT
b. Investment Manager and Project Manager
i. Background of the investment or Project Manager including past experience in management or advisory services or development in infrastructure sector
ii. Brief functions, duties and responsibilities of the investment or Project Manager
iii. Brief profiles of directors of the Investment Manager and units held or proposed to held by them in the InvIT, if any
c. Trustee
i. Background of the Trustee including details of registration with the Board in case Trustee is a debenture Trustee
ii. Names and profiles of the Directors
229 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
iii. Functions, duties and responsibilities of the Trustee
d. Other parties
Names, details and functions of other key parties or entities involved in the structure of the InvIT including key terms of agreement with such parties, background and experience, brief functions, duties and responsibilities, Policy of appointment and removal, etc
3. Brief background of the InvIT
a. Glossary of terms or abbreviations
b. Structure and description of the InvIT
c. Details of any arrangements pertaining to underlying InvIT assets, entered into with various parties prior to the issue
d. Holding structure of the InvIT prior to the issue including breakup of the units held by parties to the InvIT and any other unit holder holding greater than five per cent. of the units of the InvIT;
e. Proposed holding structure by the aforesaid parties post-issue
f. Fee and expenses charged or chargeable to the InvIT by various parties including fees charged or proposed to be charged by the Investment Manager, valuer, auditor, Trustees and any other third party and shall also include any set-up costs
g. Details of any Credit rating(s) obtained, if any
4. Terms of the issue
a. Terms of the offer including number of units, price, issue opening date, issue closing date, terms and conditions and any other information as may be required for the investor to make an informed decision
b. Policy of distributions to the unit holders including method of calculation and the frequency for distribution
c. Listing of units
i. Names of designated stock exchanges
ii. Timelines for listing
iii. Declaration that prior in-principle approval has been obtained from the designated stock exchanges
d. Commitment received from strategic investors, if any
5. Market overview
a. General market overview of the infrastructure sector
b. Overview of the sub-sector in which the InvIT has invested or proposes to invest.
6. Description of the assets under the InvIT
a. General consolidated details of all assets of the InvIT
i. Breakup or proposed breakup of InvIT assets in terms of Reg 18(5)(a) and (b)
ii. Details of proposed structure of investment by the InvIT in infrastructure projects
iii. Details of the 230[holdco or the SPV(s)] through which the projects are held or proposed to be held including capital structure, holding pattern, holding of InvIT in the 231[holdco or the SPV(s)], rights of InvIT in the232 [holdco or the SPV(s)], etc. pre-issue (current) and post-issue(proposed). Also, details of key terms of debt and other instruments in the 233[holdco or the SPV(s)] shall be disclosed.
iv. In case the projects are held or proposed to be held directly by the InvIT, details of holding of all the owners of the projects including per cent. of ownership, rights of InvIT vis-à-vis other owners, etc. pre-issue (current) and post-issue(proposed)
v. Status of lender's consent with respect to underlying projects and amendment in lender agreement, if any pursuant to acquisition of the assets by InvIT
vi. Confirmation of adequate Insurance of all the infrastructure assets by the Trustee
b. Project-wise details of infrastructure assets held or proposed to be held by the InvIT
i. Name, location, pictures and other details of the project.
ii. Structure of ownership of the project by the InvIT
iii. Special features of the infrastructure projects, if any
230 Substituted for “SPV” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
231 Substituted for “SPV” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
232 Substituted for “SPV” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
233 Substituted for “SPV” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
iv. Description of key agreements and restrictions relevant to the project such as terms of concession agreement, power purchase agreements, etc.
v. Life of the asset (both contractually and physical life requiring maintenance, replacement) and right available to extend this life
vi. Summary of Land diligence
vii. Technical reports specific to the sub-sector such as traffic data report, wind or solar report, etc.
viii. Month-wise revenue 234[from the date of the latest financial statements included in the offer document or placement memorandum until the completed month before filing of the Draft offer document/offer document or Placement Memorandum]
c. For under-construction projects, the following additional disclosures shall be made project-wise:
i. Stage of construction along with per cent. of completed construction as at the end of the year
ii. Progress of development
iii. Expected completion
iv. Status of approval or assessment from various authorities including statutory assessment & environment considerations
v. Key risks involved in delay
7. Business Details and Strategy
a. Investment strategy
ï‚· Description of investment strategy of the InvIT
ï‚· Description of ROFR, if any, by the sponsor, with respect to any future assets including valuation methodology for future acquisitions from Sponsors in such cases
ï‚· Capital and risk management strategy
b. Use of proceeds
ï‚· purpose of the issue
ï‚· Issue Expenses
8. Leverage
a. Capital structure of the InvIT assets including any borrowings or deferred payments with respect to the InvIT assets prior to the issue and post-issue (Standalone and consolidated)
234 Substituted for “since COD of the project till date” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
b. Borrowing policy
9. Related party transactions
a. Procedure for dealing with related party transactions
b. Details of any related party transactions 235[ which are undertaken in the last three financial years and current financial year] as well as any such transactions proposed in the future
10. Valuation
a. Summary of valuation as per the latest full valuation report
b. Valuation methodology
c. Frequency of valuation and declaration of NAV
11. Financials
a. Operating cash flow from the projects (project-wise) under the InvIT for the previous 3 years
b. Summary of the financial statements of the InvIT, Investment Manager and sponsor for the previous 3 years, as applicable
c. Management’s Discussion and Analysis of factors by directors of the Investment Manager affecting financial condition and results of operations
d. Projections of revenue and operating cash flows by InvIT, project-wise over next three years including assumptions details as certified by the auditor
e. Details on payment history and working capital
f. Contingent liabilities 236[ as on the date of the latest financial information disclosed in the offer document/ placement memorandum]
12. Rights of Unit Holders
a. Rights of unit holders
b. Proposed disclosures to the unit holders either directly or by public dissemination on the designated stock exchange website
c. Frequency and manner of meetings of unit holders
235 Substituted for “undertaken prior to the offer” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
236 Substituted for “as on date” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
13. Title and approval disclosures, litigations and regulatory actions
a. Title disclosure of the projects including any material litigations pertaining to the projects
b. Regulatory authorities involved and status of approvals with respect to the underlying projects and approvals periodically required for the project as per any Act or rules or regulations or guidelines by the government or regulatory authority
c. Brief description of the material litigations and regulatory actions, 237[ which are pending, against the InvIT, sponsor(s), Investment Manager, Project Manager(s),or any of their associates and the trustee], if any in the last 5 years
14. Risk factors
15. Brief details on taxation and regulatory aspects to enable the investors to make an informed decision
16. Other general information
Policy of appointment of auditor and auditing standards to be followed
17. Sector specific information
Any information pertaining to the sector or sub-sector that may be relevant for an investor to invest in units of the InvIT
18. Supporting Documents
a. Full Valuation Report
b. Auditors Report
c. Any other such report
19. Such other information as is material and appropriate to enable the
237 Substituted for “whether completed or pending, against the InvIT, sponsor(s), Investment Manager, Trustee, or any of their associates” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
investors to make an informed decision
20. Declarations 238[(to be signed by the board of directors of the investment manager and sponsor)]
239[The documents to be provided to the Board,-
a) Full valuation report, alongwith offer document/placement memorandum
b) Project implementation/management agreement, alongwith draft offer document or the placement memorandum
c) Due diligence certificate alongwith draft offer document and offer document/placement memorandum
In principle approval from the exchange(s)]
238 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
239 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016 - SCHEDULE IV
MANDATORY DISCLOSURES
Mandatory Disclosures in the Annual Report
(A privately placed InvIT may only disclose the items, as may be applicable to its structure and activities)
1. Investment Manager's brief report of activities of the InvIT and summary of the audited consolidated financial statements for the year of the InvIT
2. Management discussion and analysis by the directors of the Investment Manager on activities of the InvIT during the year, forecasts and future course of action
3. Brief details of all the assets of the InvIT, project-wise
4. Details of revenue during the year, project-wise from the underlying projects
5. Brief summary of the valuation as per full valuation report as at the end of the year
6. Any information or report pertaining to the specific sector or sub-sector that may be relevant for an investor to invest in units of the InvIT
7. Details of changes during the year pertaining to
a. Addition and divestment of assets including the identity of the buyers or sellers, purchase or sale prices and brief details of valuation for such transactions
b. Valuation of assets and NAV (as per the full valuation reports)
c. Borrowings or repayment of borrowings(standalone and consolidated)
d. Credit rating
e. Sponsor, Investment Manager, Trustee, valuer, directors of the Trustee or Investment Manager or sponsor, etc.
f. Clauses in trust deed, investment management agreement or any other agreement entered into pertaining to activities of InvIT
g. Any regulatory changes that has impacted or may impact cash flows of the underlying projects
h. Change in material contracts or any new risk in performance of any contract pertaining to the InvIT
i. Any legal proceedings which may have significant bearing on the activities or revenues or cash flows of the InvIT
j. Any other material change during the year
8. Revenue of the InvIT for the last 5 years, project-wise
9. Update on development of under-construction projects, if any
10. Details of outstanding borrowings and deferred payments of InvIT including any credit rating(s), debt maturity profile, gearing ratios of the InvIT on a consolidated and standalone basis as at the end of the year
11. The total operating expenses of the InvIT along with detailed break-up, including all fees and charges paid to the Investment Manager and any other parties, if any during the year
12. Past performance of the InvIT with respect to unit price, distributions made and yield for the last 5 years, as applicable
13. Unit price quoted on the exchange at the beginning and end of the financial year, the highest and lowest unit price and the average daily volume traded during the financial year
14. 240[(1)] Details of all related party transactions during the year, value of which exceeds five per cent. of value of the InvIT 241[assets]
242[2. Details regarding the monies lent by the InvIT to the holding company or the special purpose vehicle in which it has investment in.]
15. Details of issue and buyback of units during the year, if any
16. 243[ Brief details of material and price sensitive information]
17. Brief details of material litigations and regulatory actions, 244[ which are pending, against the InvIT, sponsor(s), Investment Manager, Project Manager(s), or any of their associates and the Trustee] if any, as at the end of the year
18. Risk factors
19. Information of the contact person of the InvIT
Mandatory annexure to the annual report
1. Summary of the full valuation report
2. Auditor's report
240 Clause numbered by the Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2017, w.e.f. 15.12.2017
241 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
242 Inserted by the Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2017, w.e.f. 15.12.2017
243 Substituted for “Brief report on corporate governance” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
244 Substituted for “whether completed or pending, against the InvIT, sponsor(s), Investment Manager, Trustee or any of their associates,” by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016
Mandatory disclosures in the Half-yearly report
(A privately placed InvIT may only disclose the items, as may be applicable to its structure and activities)
1. All details as provided above (other than clause (2) and mandatory annexures) for annual report for the previous half-year or as at the end of the half-year as applicable
2. 245[***] 246[Financial] statements for the half year; (Standalone and consolidated)
3. Updated valuation report by the valuer taking into account any material developments during the previous half-year
4. Any other material events during the half-year
245
No. LAD-NRO/GN/2014-15/10/1577- In exercise of the powers conferred by Section 30 read with Section 11 and 12 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), laying a framework for Infrastructure Investment Trusts and registration and regulation thereof, the Securities and Exchange Board of India hereby, makes the following regulations, namely, —
- CHAPTER I PRELIMINARY
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