Amendment to SEBI LODR Regulations! - MMJC

SEBI has vided its gazette notification dt: May 18, 2024, amended Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulations, 2015. These amendments were approved in SEBI board meeting held on March 15, 2024. Below are brief of the amendments:

Amendments effective from May 18, 2024

• Rumour verification Reg. 30(11): Rumour verification by listed companies is now linked to material price movement. Material price movement would be specified by stock exchanges. Exchange circular in this regard is now awaited to understand as to what would be considered as material price movement. SEBI also mandates exclusion of period of material price movement and confirmation while determining price of securities for certain corporate actions if listed entity confirms event or information leading to material price movement.
  • SEBI had extended timeline for rumour verification by top 100 listed companies and top 250 listed companies as per March 31, 2024, market capitalisation with effect from June 1, 2024, and December 1, 2024, respectively vide its circular dt: January 25, 2024.

• Obligations on Promoter, Director, key managerial personnel, and senior management: SEBI mandates promoter, director, key managerial personnel, or senior management to provide adequate, accurate and timely responses to queries raised or explanations sought by listed entity to comply with rumour verification framework. SEBI also mandates listed entity to disseminate the response received from such individual(s) promptly to stock exchange.

• Filling up vacancies [Reg. 26A]: SEBI now permits filing up the vacancies in the office of Chief Executive Officer, Managing Director or Manager, Whole Time Director, Chief Financial Officer within six months (as against three months prior to amendment) from date of vacancy where approval of regulatory, statutory or government authority is required.

• Prior intimation to stock exchanges [Reg. 29]: Uniform time period of two working days is now prescribed for prior intimation for all events prescribed under as reg. 29. Further SEBI has exempted prior intimation to stock exchanges regarding determination of issue price in case of qualified institutional placement if issue is made as applicable SEBI regulations. Listed companies who are yet to announce financial results can now intimate board meeting for considering annual financial results along with corporate action, if any two working days prior. Prior intimation being given to stock exchange under Reg. 29 will now have to necessarily mention the date of the board meeting when the proposals would be discussed.

• SEBI has extended gap between two risk management committee meetings to 210 days. Entities falling in top 1000 market capitalisation and complying with risk management committee provisions can now have gap of 210 days between two meetings.

Amendments effective from December 31, 2024

• Identifying Listed Companies for applicability of provisions of LODR based on average market capitalisation.
  • Market capitalisation would now be determined based on average market capitalisation of a listed company. The list of companies based on average market capitalisation, determined based on market capitalisation from July to December of every year would be released by stock exchanges as against market capitalisation based on March 31. So, for FY 24-25 list of companies based on market capitalisation would be released by stock exchanges based on average market capitalisation of July to December 2024.
  • This list of companies as on December 31, 2024, would be released by stock exchanges post December 31, 2024. Listed companies falling under a particular market capitalisation would have to start complying with compliances applicable to them with effect from April 1. With this amendment SEBI has provided time period of three months to listed companies to brace themselves for compliance with LODR provisions.
  • SEBI has further stated that after falling under a particular market capitalisation, if for a time period of three years listed company remains out of a that particular market cap then it will not be required to comply with compliances applicable to that market capitalisations. – So, for e.g., if a company becomes a top 100 company based on market cap as on December 31, 2024, then it will have to comply with compliances for top 100 companies till FY 27-28. If as per market capitalisation the listed company is not covered in top 100 as on Dec 31, 2025, Dec 31, 2026, and December 31, 2027, then it need not comply with applicable compliances for FY 28-29. SEBI has also clarified compliance with provisions with respect to BRSR reporting viz. when to prepare for compliance with BRSR reporting and when to submit BRSR report in cases where any compliance becomes applicable first time or after an intermittent period.
  • This time period of three years being provided for triggering non-applicability of provisions relating to market capitalisation would reduce compliance burden on companies moving out of a particular market capitalisation and at the same time bringing in certainty for the market.