Background
In 1995, the Parliament, by inserting section 11A to the Securities and Exchange Board of India Act, 1992 (“SEBI Act”), gave a mandate to SEBI to make Regulations for specifying “matters relating to issue of capital, transfer of securities and other matters incidental thereto and the manner in which such matters shall be disclosed by the companies”, for the protection of investors with corresponding changes in section 21 of SCRA. In 2002, the Parliament empowered SEBI to specify the requirement for listing and transfer of securities and matters incidental thereto without prejudice to provisions of section 21 of SCRA. In 2004, with the insertion of section 12A in SCRA, the Parliament further empowered SEBI to issue directions to any company whose securities are listed or proposed to be listed in a recognized stock exchange in the interest of investors, or orderly development of securities market.
In light of the above, it was felt desirable by SEBI that the matters relating to listing obligations and disclosures of listed entities would be better enforced through Regulations as envisaged under section 11A (2) of the SEBI Act rather than through the existing Listing Agreements.
Need for review of the framework of listing agreement:
Entities desirous of listing their securities on recognized stock exchange were required to enter into listing agreement. Listing agreement was required to be entered pursuant to Securities Contract Regulations Act, 1947[i]. International Monetary Fund in its Financial Sector Assessment Program updates (FSAP) issued a report giving a detailed assessment about India’s Securities Market Development. In the findings the report inter‐alia mentioned that ʺ……………. Mechanisms to ensure compliance with listing obligations, which include periodic reporting, are a responsibility of the RSEs. Such mechanisms have limitations. ………ʺ. The report recommended that Enforcement of compliance with listing obligations by recognized stock exchanges should be strengthened and SEBI along with the Recognized Stock Exchanges [‘RSEs’] should review whether current arrangements to review material events should be strengthened.
Pursuant to this Securities and Exchange Board of India (‘SEBI’) floated an approach paper on draft SEBI (Listing Obligations and Disclosure Requirements) Regulations 2014 dt: May 5, 2014[ii] [‘LODR’]. LODR finally got notified on September 2, 2015, and came into effect from 1st December 2015. This December LODR completes 10 years. This article evaluates impact LODR has created over a period of 10 years.
- Consistency in entities getting listed on stock exchange: LODR has not acted as a deterrent in fact it acted as an encouragement for entities desiring of listing their shares on stock exchanges. There has been consistency in entities getting listed on stock exchange. SEBI has in its annual report highlighted an increase in total no. of entities getting listed on recognized stock exchanges[iv]. A total of 320 companies tapped the IPO space in 2024-25, up from 272 in 2023-24. 79 Indian corporates raised an all-time high of Rs 1.6 lakh crore through main board IPOs in 2024-25, as against Rs 61,860 crore mobilized by 76 IPOs in 2023-24[v]
- Impact due to LODR’s Approach: A Blend of Principles, Policy, and Engagement.
- Principle-based regulation: LODR principles are helpful to do compliance in true spirit. LODR has a dedicated regulation viz. reg 4 that provides for guiding principles to shareholders, listed entities and board of directors on transparency, governance, disclosure, policies etc. Further regulation 4(3) of LODR which states in case of ambiguity, principles would prevail[iii]. The idea of including principles under LODR was discussed in SEBI board meeting on November 19, 2014, while discussing the SEBI approach paper dt: May 3, 2014, proposing to bring LODR as a separate regulation providing for listing obligations. In this meeting SEBI board recommended that, “overarching principles may be incorporated in the provisions of Listing Regulations in order to ensure that in case of conflict/ambiguity or if specific requirements are not provided for in the Regulations, the principles would serve as guidelines for compliance.” The rationale for same was that “Proposed principles under LODR are broadly in line with IOSCO principles for periodic disclosure by listed entities. These principles would serve to guide the listed entities to make disclosures in cases where certain disclosure requirements have not been specified in the Regulations. Principles by nature are meant to be broad guidelines and cannot be as specific as rules, as otherwise, it becomes the rule itself. Providing clarifications to guiding principles would thus be self-defeating[iv].” Accordingly, these principles were included as part of LODR. These broad principles act as a guiding light for listed entities.
- Policy-based framework: LODR mandates listed entities to frame approx. seven policies on certain subjects viz. policy on vigil mechanism, policy on determining material subsidiaries, policy on diversity of board of directors, policy for preservation of documents etc. Framing policies under LODR establishes a structured framework for governance and compliance, which enhances operational consistency and control. Such policies provide clarity in roles, responsibilities, and procedures, reducing ambiguities for board members and management. They facilitate transparency and timely disclosure of material information to investors and regulators, boosting market confidence. Well-defined policies promote accountability and ethical conduct, reinforcing trust among stakeholders and supporting sustainable business practices. This is evident from the board note of SEBI of its board meeting dt: March 22, 2015. SEBI Board agreed to the recommendation of Primary Market Advisory Committee stating that it is not recommended to introduce materiality threshold for determining material events[vi]. SEBI then introduced materiality threshold for determining material events or information to be disclosed to stock exchange. This move was due to observation of SEBI that listed entities had failed to provide for any specific threshold for determining material events/information in accordance with the principles given in reg. 30(4) of LODR in their policy on determining materiality of events or information to be disclosed to stock exchange.[vii] SEBI’s approach to give discretion to listed entities to have a framework best suited to them also can be seen in SEBI (Prohibition of Inside Trading) Regulations, 2015 whereby SEBI has allowed listed entities to decided on which category of event / information would be unpublished price sensitive information for the listed entity.
- Consultative approach in revamping LODR : SEBI had formed various committees for reviewing and recommending changes to be made to LODR in consultation with public viz. Committee on corporate governance under chairmanship of Mr. Uday Kotak (June 2017) and Expert committee for facilitating ease of doing business, harmonization of provisions of ICDR and LODR [‘Expert Committee’] . Apart from this SEBI has been forming various working groups for revamping provisions of LODR whenever necessary e.g., Report of the Working Group on Related Party Transactions formed in January 2020. SEBI has further taken various steps to bring in ease in compliance with provisions of LODR. Post implementation of the recommendations of Expert Committee, SEBI initiated steps to form a standing committee on LODR to tackle challenges faced by market participants in implementing LODR. This led to formation of ‘The Advisory Committee on Listing Obligations and Disclosures (ACLOD)’.. Its formation reflects SEBI’s approach of actively listening to market participants, including listed entities, investors, and other regulatory bodies, to understand practical difficulties and innovative solutions. Further to bring in ease in compliance with this provision, SEBI had consultation with industry associations, and as a results, Industry Standards Forum [ISF’] was formed. SEBI with ISF has framed detailed procedural guidelines, viz. ISF note on regulation 23, ISF note on rumour verificatio,n and regulation 30 for bringing in ease in compliance. List of updates to LODR highlights that SEBI has been vigilant about compliances with listing obligations and have revamped them whenever necessary.
- LODR aligned with changing market dynamics due to consultative approach:
- Creating a separate class of high value debt listed entities: The concept of High Value Debt Listed Entity (HVDLE) in 2021 was introduced by SEBI to strengthen corporate governance norms specifically for entities that have substantial outstanding listed non-convertible debt securities. Initially, SEBI defined HVDLEs as entities with an outstanding value of listed non-convertible debt securities of ₹500 crore or more. This threshold was later raised to ₹1,000 crore from April 1, 2025, to focus on larger debt issuers and reduce compliance burdens on smaller entities. The introduction of the HVDLE classification was driven by the need to protect the interests of debenture holders and ensure transparency and accountability in the debt market, which had been historically less regulated compared to equity markets.
- Diversity in Board of Directors: SEBI mandates a policy on diversity in the board composition. This focuses on having an optimum mix of executive, non-executive, independent, gender, and other diversity parameters. The aim is to ensure a balanced and effective Board with varied skills and perspectives. This was introduced in phases since 2019 and reinforced through amendments up to 2025, promoting better governance, decision-making, and inclusivity in Boards.
- Risk Management Committee’s Cybersecurity Review: From April 1, 2019, SEBI required listed entities to constitute a Risk Management Committee (RMC) tasked with periodically reviewing risks, including cybersecurity risks. Given increasing cyber threats, this was introduced to enhance risk oversight, safeguard digital assets, and protect investor interests through proactive risk assessment. The introduction of this provision was timely and proactive, given the increasing risk of cyber threats observed during the COVID-19 period.
- Glide Path for BRSR and Impact Assessment: SEBI introduced the Business Responsibility and Sustainability Report (BRSR) as a comprehensive ESG disclosure framework. Starting from FY 2023-24, SEBI mandated a glide path where top 150 listed entities must gradually obtain reasonable assurance on BRSR Core disclosures, with the requirement expanding over time to cover more entities. This facilitates transparency on sustainability impact, accountability, and compliance with global best practices.
- Permanent Board Seats: SEBI abolished permanent or lifetime board seats effective April 1, 2024. Previously, certain non-executive non-independent directors (often promoter-related) enjoyed permanent tenure without shareholders’ periodic approval. SEBI mandated that all directors must seek shareholders’ approval at least once every five years to enhance accountability and reduce the concentration of power on the Board.
- Fixed Tenure for Secretarial Auditor: Amended Regulation 24A mandates that secretarial auditors be appointed for a fixed term of five consecutive years. Individuals can serve only one term, while firms can serve two terms. This was introduced by SEBI in 2024 to strengthen governance by ensuring independence, rotation, and enhanced accountability of secretarial auditors, preventing over-familiarity.
- Mandatory filing of information on exchange in electronic form: SEBI notified LODR on September 2, 2015, mandating electronic filing of reports, statements, and documents with recognized stock exchanges under Regulation 10 of LODR[i]. Bombay Stock Exchange [‘BSE’] vide its circular dt: November 30, 2015[ii] and National Stock Exchange vide its circular dt: December 28, 2015[iii] provided an online portal, titled “Listing Centre,” as the official electronic platform for all filing and compliance submissions. BSE and NSE stated that filing of periodic disclosures would be accepted in XBRL format only. This was a major shift from manual filing to XBRL-based filing. This led to easy accessibility of data for public viewing.
- Automation of stock exchange disclosure: SEBI Expert Committee recommended automation of disclosures relating to shareholding pattern and credit rating being issued to listed entities. Accordingly, BSE and NSE vide their circular dt: August 1, 2025, notified automatic disclosure of credit ratings which would eventually help in bringing ease in compliance.
- Integrated disclosure and single filing of quarterly disclosure
SEBI vide its circular dt: December 31, 2024, notified the integrated disclosure format for quarterly submissions with effect from December 31, 2024. Due to these listed entities, would now be required to use only one integrated form by the 30th of every month. This has brought ease in compliance with the rationalization of due date and helps investors get data under one tab.
- Beyond Compliance: Exploring Opportunities in LODR Implementation:
- Rationalization of compliance cost and increasing its efficacy: SEBI has been proactively considering measures to rationalize the compliance costs associated with the LODR while simultaneously enhancing the efficacy of such compliance. Looking ahead, SEBI may increase their interaction with entities beyond the market capitalization of the top 2000 listed entities by way of a dedicated platform. This initiative would facilitate these entities in providing structured feedback on the current compliance framework under LODR, the challenges they encounter in its implementation, and the key provisions that may require re-evaluation. Such feedback will be instrumental for SEBI as it revisits and refines its policy framework or formulates new regulations under LODR at a broader level. Ultimately, this inclusive consultative process is designed to bring about regulatory changes that not only rationalize compliance costs but also improve the overall effectiveness and efficiency of compliance mechanisms in a manner that benefits all stakeholders.
- Automation: SEBI has implemented automation for certain compliance requirements viz, disclosure of credit ratings, trading disclosures etc. and, in collaboration with stock exchanges, would further intend to extend automation to additional compliances wherever feasible. By leveraging technology for compliance automation, SEBI would seek to reduce manual intervention, improve accuracy, and enable timely submissions, thereby fostering greater operational efficiency and compliance effectiveness.
- Mechanism to review provisions relating to market capitalisation: SEBI has been revisiting compliance requirement under LODR periodically. Going forward it seems that SEBI would also develop a structured mechanism to periodically review the market capitalization of companies beyond top 2000. This framework will regularly assess the corresponding compliance requirements applicable to these companies and provide recommendations on any necessary adjustments. Such a mechanism aims to ensure that regulatory obligations remain aligned with evolving market conditions, thereby fostering a dynamic and responsive compliance environment.
- Public issue of debt securities: SEBI has undertaken significant initiatives to develop the debt market in India, responding to the Ministry of Finance’s emphasis on deepening this market segment. While private placements remain the prevalent mode for raising debt, SEBI is committed to enhancing the depth and accessibility of the debt market, particularly for retail investors. To this end, it seems SEBI would facilitate greater participation by making the public issue of non-convertible securities more accessible and attractive, thereby broadening investor base and improving market vibrancy. These steps are aligned with SEBI’s broader objective of fostering a more inclusive and robust corporate bond market in India.
- Use of Regulatory Technology [‘Reg Tech’]: SEBI has undertaken several initiatives to automate compliance processes, reducing the need for manual intervention. Looking ahead, the adoption of RegTech as a compliance tool may also be considered, which would further automate regulatory obligations. This technology-driven approach would significantly assist companies, particularly those from smaller cities that are now getting listed, in managing compliance complexities effectively. At a broader level, RegTech would enable SEBI to monitor overall compliance levels with LODR, ensuring timely adherence and mitigating risks of non-compliance. By facilitating easier and more efficient compliance, RegTech is poised to encourage greater participation from companies and investors from smaller towns, thereby expanding the depth and inclusivity of the capital markets. It would also act as a part in nation building.
Conclusion:
Mr. Tuhin Kanta Pandey, SEBI Chairman has recently at a seminar emphasized that disclosures should not merely be formal requirements but a means to foster meaningful dialogue with stakeholders, thereby increasing transparency and investor confidence. Disclosure compliance should not be seen as a burden but as a means to stand out[xiii]. SEBI is progressively moving towards optimal regulation to enhance the regulatory framework’s effectiveness and ease of compliance.
The article is published in Taxguru and written by Mr. Vallabh Joshi – Senior Manager R&D Team – vallabhjoshi@mmjc.in
https://taxguru.in/sebi/sebis-lodr-10-years-enhancing-market-integrity.html
[i] https://www.sebi.gov.in/sebi_data/meetingfiles/1417500933558-a.pdf – SEBI board note November 19, 2014
[ii] Section 21 of Securities Contract (Regulation) Act, 1956 (“SCRA”) provided that ʺWhere the securities are listed on the application of any person in any recognized stock exchange, such person shall comply with the conditions of the listing agreement with that stock exchangeʺ.
[iv] https://www.sebi.gov.in/reports-and-statistics/publications/aug-2025/sebi-bulletin-august-2025_96332.html, https://www.sebi.gov.in/reports/annual-reports/dec-2015/annual-report-2014-15_31292.html , SEBI monthly bulletin.
[v] Source SEBI monthly bulletin
[vi] In case of any ambiguity or incongruity between principles and relevant regulations, the principles specified in this chapter shall prevail.
[vii] https://www.sebi.gov.in/sebi_data/meetingfiles/1417500933558-a.pdf – SEBI board note November 19, 2014
[viii] Quantitative criteria should not be introduced for the time being as attempts may be made to bypass the specific thresholds. A few international jurisdictions where quantitative thresholds are present are more mature and prescribing the same in the Indian markets, at this time, may give more room for the entities to flout the disclosures, which is not desirable. Hence, it is recommended that the criteria should be kept principle based rather than rule based. SEBI board meeting note March 22, 2015, page 29
[ix] SEBI CP dt: November 12, 2022,
[x] (1) The listed entity shall file the reports, statements, documents, filings, and any other information with the recognized stock exchange(s) on the electronic platform as specified by the Board or the recognized stock exchange(s). (2) The listed entity shall put in place infrastructure as required for compliance with sub-regulation (1).
[xii] https://nsearchives.nseindia.com//content/equities/NSE_Circular_28122015.pdf