Navigating the Legal Landscape: India's Compliance with Preferential Trade Agreements (PTAs)
- LawDocs Team
- 2024-02-26
The Securities and Exchange Board of India (SEBI) (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR) lays down post listing obligations and disclosures to be given by companies with listed securities such as equity, Non-Convertible Debt Securities (NCDs), and Non-Convertible Redeemable Preference Shares (NCRPS). From the time LODR has been notified, significant amendments have been made to the regulations to streamline its implementation by companies.
Important amendments of the year 2020 and 2021 (till now) have been summarised below along with the important circulars issued in 2020.
Contents hide
1 SEBI (LODR) (AMENDMENT) REGULATIONS, 2021
2 Forensic Audit (Schedule III Part A)-
5 Documents and intimation to Debenture Trustee-
7 Roll over of debt securities-
10 The following timelines have been stipulated by SEBI:
11 Listed debt securities secured by way of receivables/ book debts-
12 SEBI (LODR) (SECOND AMENDMENT) REGULATIONS, 2020
12.1 SEBI (LODR) (AMENDMENT) REGULATIONS, 2020
12.2 CIRCULAR DATED 22ND JANUARY, 2020
12.3 CIRCULAR DATED 31ST JULY, 2020
12.4 CIRCULAR DATED 7TH SEPTEMBER, 2020
12.5 CIRCULAR DATED 13TH NOVEMBER, 2020
12.8 CIRCULAR DATED 9TH DECEMBER, 2020
In the latest amendment issued on 8th January, 2021, SEBI made changes to the Corporate Insolvency Resolution Process (CIRP) which says that the resolution plan (approved by the adjudicating authority)
shall have information regarding the following as well-
Also following elements shall be disclosed in the plan as well:
In the year 2020, there are three amendments which were brought about, they all are discussed below-
SEBI (LODR) (THIRD AMENDMENT) REGULATIONS, 2020
On 8 October 2020, SEBI has issued another set of amendments to the LODR through the SEBI (Listing Obligations and Disclosure Requirements) (Third Amendment) Regulations, 2020. The amendments primarily relate to companies which have listed their NCDS/ NCRPS on the recognised stock exchanges. Additionally, relate amendments have been made to the SEBI (Issue and Listing of Debt Securities) Regulations, 2008 (Debt Listing Regulations) and SEBI (Debenture Trustees) Regulations, 1993 (Debenture Trustees Regulations). The main amendments in SEBI (LODR) Regulations have been summarise below-
Events like fraud or default or arrest of a promoter, KMP (Key Managerial Personnel), changes in directors, KMP, auditor, compliance officer and resignation by the auditor and independent director needs to be report to the stock exchange within 24 hours. Now, in addition to this, the companies are require to disclose to Stock Exchange about the forensic audit initiate along with the details of the fact of initiation, name of entity initiating the audit and the reasons for the audit.
Also Final forensic audit report (other than for forensic audit initiate by regulatory / enforcement agencies) on receipt needs to be disclose by the list entities along with comments of the management.
SEBI has now removed regulation 54(3) of the LODR Regulations, which provided an exemption from the maintenance of asset cover to regulated financial sector entities issuing unsecured debt securities for meeting capital requirements. Also, now the listed entities have to maintain a 100% asset cover for their listed non-convertible debt securities at all times which shall be sufficient to discharge the principal amount
Earlier, the LODR Regulations required listed entities to submit a half-yearly certificate regarding maintenance of 100% asset cover by either a practicing company secretary or a practicing chartered accountant. Pursuant to the LODR Amendment Regulations, the aforesaid half-yearly certificate must now be provide by the statutory auditor and is also required to incorporate compliance with all covenants in respect of the listed debt securities. Also earlier, NBFC’s and bonds secured by a guarantee were exempt from providing this certificate, however,
now only bonds secured by government guarantee are exempt.
All covenants of the issue (including side letters, accelerated payment clause, etc.)
are to be intimate to the Debenture Trustee by all the list entities.
As a result of these changes, the SEBI (Debenture Trustees) Regulation Amendment also introduced in 2020. Following were changes made in this-
The trust deed shall now consist of two parts as-
Part A: containing statutory/standard information pertaining to the debt issue,
Part B: containing details specific to the particular debt issue.
An issuer that desires to roll over the debt securities issued
by it can only do so upon passing of a special resolution. A 21days notice was earlier require but now it has been reduce to a 15days notice now.
The issuer is now require to create a REF in the manner as may be specify by SEBI from time to time. This provision will come into force with effect from January 1, 2021, and all the applications for listing of debt securities made on or after January 1, 2021, are require to comply with the condition of the creation of the REF. For existing issuers, whose debt securities are already list on the stock exchange(s),
SEBI has given an additional time period of 90 days to comply with the terms of this circular for the creation of the REF.
On October 5, 2020, SEBI by way of its circular standardised timelines for listing of securities issued on a private placement. This circular will come into force with effect from December 1, 2020.
S. N. | Details of Activities | Due Date |
1. | Closure of issue | ‘T’ |
2. | Receipt of funds | To be completed by T + 2 trading day |
3. | Allotment of securities | To be completed by T + 2 trading day |
4. | Issuer to make listing application to stock exchange(s) | To be completed by T + 4 trading day |
5. | Listing permission from stock exchange(s) | To be completed by T + 4 trading day |
In case of delay in listing of securities beyond the timelines stipulated above, the issuer will be required to pay penal interest of 1% per annum over the coupon rate for the period of delay to the investor. Further,
the issuer will be permit to utilize the issue proceeds of its subsequent privately place issuances of securities only after receiving final listing approval from stock exchanges.
In cases where list debt securities are secured by way of receivables/ book debts, the DT is require to:
On a quarterly basis- carry out the necessary due diligence and monitor the asset cover in the manner as
may be specified by SEBI; and
On a half yearly basis- obtain a certificate from the statutory auditor of the issuer giving the value of receivables/ book debts,
including compliance with the covenants of the offer document or IM, in the manner as may be specified by SEBI.
RECENT AMENDMENTS TO LISTING REGULATIONS
On 5th August, 2020, SEBI by its notification published the second amendment in the year 2020 relating to SEBI Listing Regulations. The main amendments in this are summarise below-
In January, the first amendment regulations for the year were release, which made only one change of replacing the year 2020 with 2020 in regulation 17 sub- regulation (1B)
extending the format of composition of board of directors till the year 2022
Investors have not been able to participate in open offers, buybacks and delisting of securities of list entities since the securities held by them were not in dematerialize form. It is clarify that shareholders holding securities in physical form are allow to tender shares in open offers, buy-backs through tender offer route and
exit offers in case of voluntary or compulsory delisting. However, such tendering shall be as per the provisions of respective regulations.
With this circular, it has been decide to fix March 31, 2021 as the cut-off date for relodgement of transfer deeds. Further, the shares that are re-lodge for transfer
(including those request that are pending with the listed company / RTA, as on date)
shall henceforth be issue only in demat mode.
In order to ensure effective enforcement of continuous disclosure obligations by issuers of listed Non-Convertible Debt Securities or NCRPS or Commercial Papers,
it has been decide to lay down a uniform structure for imposing fines for non-compliance with continuous disclosure requirements. In view of the above and in the interests of investors and the securities market, it has been provide that-
· The Stock Exchanges shall levy fine and take action in case of non-compliances with continuous disclosure requirements by issuers of listed Non-Convertible Debt Securities and/ or NCRPS and/ or
Commercial Papers as specified in Annexure I and Annexure II of this circular respectively.
RECENT AMENDMENTS TO LISTING REGULATIONS
· In case a non-compliant entity is list on more than one recognize stock exchange,
the concerned recognized stock exchanges shall take uniform action under this circular in consultation with each other.
· The recognized stock exchanges shall take necessary steps to implement this circular and
shall disclose on their website the action(s) taken against the entities for non-compliance(s); including the details of the respective requirement, amount of fine levied/ action taken etc.
· The amount of fine realize as per the structure provide in Annexure I of this circular shall be credit to the
“Investor Protection Fund” of the concerned recognized stock exchange.
· The fines specified in Annexure I of this circular shall continue to accrue till the time of rectification of the non-compliance and
to the satisfaction of the concerned recognized stock exchange. Such accrual shall be irrespective of any other disciplinary/enforcement action(s) initiate by recognize stock exchange(s)/SEBI.
· The recognized stock exchanges may keep in abeyance the action or withdraw the action in specific cases where a specific exemption from compliance with the requirements for continuous disclosures /moratorium on enforcement proceedings has been provided for
under any Act, Court/Tribunal Orders, etc.
· The above provisions are without prejudice to the power of SEBI to take action under the securities laws. 14
RECENT AMENDMENTS TO LISTING REGULATIONS
In order to increase the efficiency of the voting process, pursuant to public consultation, it was decide to enable e-voting to all the Demat account holders, by way of a single login credential,
through their Demat accounts. Demat account holders would be able to cast their vote without having to register again with the ESPs.
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