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AGM notice and Annual Report for 2025 – Changes pursuant to LODR amendment December 12, 2024 - MMJC
Introduction
The Securities and Exchange Board of India (SEBI) introduced significant amendments to the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations,2015 (LODR) on December 12, 2024 [‘LODR third amendment’]. This article provides as to how companies should align their annual general meeting notice and annual report disclosure from April 1, 2025.
Key amendments in LODR
- AGM Notice 2025
- Doing away with the requirement of sending physical copies of annual reports to shareholders:
Previously, companies had to send hard copies of annual report to shareholders who hadn’t registered their email IDs[1]. Now, instead of sending a physical copy of annual report, companies need to send a letter (in hard copy) to the shareholder, whose email ids are not registered, with a web link to access the full annual copy of annual report of the listed company[2]. However, shareholders can still request a printed version of annual report of the listed company. Listed companies are obligated under LODR to provide a copy of annual report if requested by shareholders[3].
Hence listed companies/RTA need to ensure that Know Your Customer requirement is completed for all shareholders and listed company/ RTA has updated details relating to address of shareholder, email id, photo, etc. of all shareholders of the listed company.
- Doing away with the requirement to send proxy forms:
As per reg. 44(4) of SEBI LODR listed companies were required to send proxy forms to holder of securities. With LODR third amendment, listed companies need not send proxy forms if listed company is planning to hold annual general meeting through video conferencing or audio-visual mode[4]. This amendment is more of a clarificatory in nature as Ministry of Corporate Affairs has vide its notification[5] extended the facility for holding general meetings through VC or OAVM mode till September 30, 2025.
- Approval of remuneration to non-executive directors exceeding 50% of total remuneration payable to all non-executive directors:
A key update in Regulation 17(6) (ca)[6] is the insertion of the term “financial year,” clarifying that shareholder approval by special resolution is required each financial year if a single non-executive director’s remuneration exceeds 50% of the total payout to all non-executive directors. This approval was required to be taken by every year by listed companies.
Now this approval is required to be taken every financial year. If a listed company is proposing to take approval for payment of remuneration under regulation 17(6)(ca) of LODR at the upcoming AGM for 2025 then approval for payment of remuneration to non-executive directors exceeding 50% of total remuneration payable to all non-executive directors, will have to be taken for a particular financial year. So at that AGM for 2025 approval may be taken for payment of remuneration under regulation 17(6)(ca) for FY 25-26.
This removes any ambiguity about whether approval is a one-time requirement or an annual process.
- Rationale along with recommendations of board of directors needs to be given for all special business:
Regulation 17(11)[7] of LODR provides for board of directors shall provide their recommendations to the shareholders of the company for special business being transacted at the general meeting. Now LODR third amendment has stated that in addition to recommendation of board of directors for special business rationale will have to be provided for recommendations provided. This means that when companies present special business items for shareholder approval, board of directors will have to specify rationale for recommending the special business for members approval. This requires deliberation by the board of directors while approving the AGM notice. This will help ensure that shareholders have clear insights into why certain decisions are being proposed, promoting informed voting.
- Annual Report 2025
- Schedule V, paragraph C, sub-paragraph (9) of LODR – Reduction in disclosures in annual report.
LODR third amendment removed three disclosure requirements from the Corporate Governance Report provided in the annual report —stock code, market price data (high/low for each month), and performance comparison with broad-based indices.
Listed companies had to include these details in their annual reports, but now with effect from annual report for FY 2025 disclosure of these details are no longer mandatory.
This reduces the burden of compiling market-related data, as much of this information is already available through stock exchanges and public platforms.
- Appointment of secretarial auditor for a period of five years[8] – As per regulation 24A(2) of LODR every listed entity has to appoint secretarial auditor for a period of one term of 5 year. In this regard listed companies will have to take appointment of secretarial auditor for a period of 5 year in the annual general meeting. This agenda for appointment of secretarial auditor would be a special business. Section 102 (2)(a)(iv) of Companies act 2013 provides for appointment of auditors at the annual general meeting. This term ‘Auditors’ would include statutory auditors and not secretarial auditors as appointment of secretarial auditors for a term of 5 years is not provided under Companies act 2013.
Conclusion:
Key Takeaways for Listed Companies
With SEBI’s latest amendments to LODR, listed companies must adapt their AGM processes and annual reporting practices to remain compliant from April 1, 2025, onward. These steps will not only ensure seamless AGM execution.
[1] Regulation 36 (1)(b) of LODR: Deleted by amendment dated December 12, 2024: 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;
[2] Regulation 36 (1)(b) of LODR: Added by amendment dated December 12, 2024: A letter providing the web-link, including the exact path, where complete details of the Annual Report is available] to those shareholder(s) who have not so registered;
[3] Regulation 36(1)(c) of LODR
[4] Regulation 44 (4) of LODR: 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
Provided that the requirement to send proxy forms shall not be applicable to general meetings held only through electronic mode.
[5]https://www.mca.gov.in/bin/dms/getdocument?mds=4C8ofg1qraQ0BIj5Bx1IJw%253D%253D&type=open#:~:text=2023%20after%20due%20examination%2C%20it,20%2F2020%20dated%2005.05
[6] The approval of shareholders by special resolution shall be obtained every financial 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.
[7] 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 along with the rationale on each of the specific items.
[8] Every listed entity shall submit a secretarial compliance report in such form as specified, to stock exchanges, within sixty days from end of each financial year
Provided that the listed entity shall ensure that with effect from April 1, 2025, the Secretarial Compliance Report submitted to the stock exchange(s) on annual basis is signed only by the Secretarial Auditor or by a Peer Reviewed Company Secretary who satisfies the conditions mentioned in sub-regulations (1A) and (1B) of this regulation.
This article has been published on Taxmann. The link for the same
The article is written by Mr. CS Vallabh M Joshi – Senior Manager – RND Team, and Mr. Animesh Joshi – Associate – RND Team