SEBI amends LODR Regulations impacting disclosure requirements, reporting of cyber security incidents etc.

The Securities and Exchange Board of India further amends the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR Regulations) through the SEBI (Listing Obligations and Disclosure Requirements) (Second Amendment) Regulations, 2023 (Amendment). The Amendment will come into force from 14th July, 2023 (i.e. from the thirtieth day from the date of their publication in the Official Gazette).

Key Highlights of the Amendment :

1. Additional disclosures need to be made by listed entities under Regulation 30 for –

• certain types of agreements binding listed entities;
• any event or information which is material for the listed entity must be announced or communicated through social media intermediaries or mainstream media by directors, promoters, key managerial personnel or senior management;
• any orders passed against the listed entity or its directors, key managerial personnel, senior management, promoter or subsidiary relating to search or seizure, re-opening of accounts, investigation under Companies Act, 2013, suspension, imposition of fine or penalty, settlement of proceedings, debarment, disqualification, closure of operations, sanctions imposed, warning or caution;
• voluntary revision of financial statements or the report of the board of directors of the listed entity;
• the top 100 listed entities (from October 1, 2023) and thereafter the top 250 listed entities (from April 1, 2024) must confirm, deny or clarify any reported event or information in the mainstream media which is not general in nature and which indicates that rumours of an impending specific material event or information in terms of the provisions of this regulation are circulating amongst the investing public, as soon as reasonably possible and not later than twenty four hours from the reporting of the event or information.

2. In addition to the timelines specified in Schedule III, timelines have been imposed for disclosing all events or information which are material as soon as reasonably possible and, in any case, not later than the following:

(i) thirty minutes from the closure of the meeting of the board of directors in which the decision pertaining to the event or information has been taken;

(ii) twelve hours from the occurrence of the event or information, in case the event or information is emanating from within the listed entity;

(iii) twenty four hours from the occurrence of the event or information, in case the event or information is not emanating from within the listed entity

3. Any vacancy in the following offices must be filled within 3 months from such vacancy –

• office of the Compliance Officer
• office of a director
• office of Chief Executive Officer, Managing Director, Whole Time Director or Manager
• office of the Chief Financial Officer

4. From 1st April, 2024 a director serving on the board of directors of a listed entity must obtain approval by the shareholders in a general meeting at least once in every five years from the date of their appointment or reappointment. [Note : This is not applicable to the Whole-Time Director, Managing Director, Manager, Independent Director or a Director retiring under section 152(6) of the Companies Act, 2013 (retirement by rotation) if the approval of the shareholders for the reappointment is provided for under Companies Act, 2013 or the LODR Regulations.

5. Compliance report on corporate governance must now include details of cyber security incidents or breaches or loss of data or documents.

6. Now for determining materiality of events/ information the value or the expected impact in terms of value of the lower of the following will be considered –

• two percent of turnover, as per the last audited consolidated financial statements of the listed entity;
• two percent of net worth, as per the last audited consolidated financial statements of the listed entity, except in case the arithmetic value of the net worth is negative;
• five percent of the average of absolute value of profit or loss after tax, as per the last three audited consolidated financial statements of the listed entity;

7. The policy for determination of materiality, must assist the relevant employees of the listed entity in identifying any potential material event or information and reporting the same to the authorized Key Managerial Personnel.

8. Now listed entities must submit financial results subsequent to the listing, for the quarter or the financial year immediately succeeding the period for which the financial statements have been disclosed in the offer document for the initial public offer within the date that is later of the following –

• within forty-five days of end of each quarter
• within sixty days from the end of the financial year
• or within 21 days from the date of its listing

9. The top one thousand listed entities must now submit a Business Responsibility and Sustainability Report instead of a Business Responsibility Report. The format and specifications for this report will be provided by the Board.

10. A listed entity intending to carry out the sale, lease, or disposal of the entire or substantially the entire undertaking must obtain prior approval from the shareholders through a special resolution and disclose the object of and commercial rationale for carrying out such sale, lease or disposal.

11. Now listed entities must submit a certificate to the stock exchange regarding status of payment of interest or dividend or repayment or redemption of principal of non-convertible securities, within one working day of it becoming due, in the manner and format as specified by the Board from time to time. The quarterly obligations of submitting a certificate confirming the payment of interest/dividend/principal obligations for non-convertible securities and the details of all unpaid interest/dividend/principal obligations in relation to non-convertible securities has been omitted.

Source : Securities and Exchange Board of India