Amendments in Securities Law

Amendments by SEBI in May 2024

1. Portfolio Managers: facilitating ease in the digital on-boarding process for clients and enhancing transparency through disclosures

SEBI vide Circular SEBI/HO/IMD/IMD-PoD-1/P/CIR/2024/35 dated May 02, 2024, addressed key concerns regarding the digital onboarding process for clients and aims to enhance transparency through disclosures.

a. Ease in the digital on-boarding process for clients of Portfolio Managers– provision shall be applicable from October 01, 2024

While onboarding a client, the Portfolio Manager shall ensure that:

  1. the client has understood the structure for fees and charges.
  2. the new client has separately signed the annexure on fees and charges and added a note, that they have understood the structure for fees and charges, in the following manner:
    • handwritten, in case the client is on-boarded through physical mode.
    • typed using the keyboard or written electronically using fingers/a stylus pen, in case the client is on-boarded through digital mode.

b. Fee Calculation Tool

Portfolio Manager shall provide a fee calculation tool to all clients that highlights various fee options with multi-year fee calculations. The link to access the said tool shall be provided in advance to all new clients, on-boarded on or after October 01, 2024.

c. Additional fee disclosures

Additional fee disclosures will be integrated into the PMS-client agreement for new clients onboarded after October 1, 2024. These disclosures include one-year and multi-year fee illustrations covering different scenarios, such as changes in the portfolio value, aligned with the high watermark principle.

d. Periodic Report– provision shall be applicable from October 01, 2024

Periodic reports provided to clients shall now include an annexure detailing the fee calculation.

e. Most Important Terms and Conditions (MITC) document

To facilitate the ease of understanding of the critical aspects of the Portfolio Manager-Client relationship, the Portfolio Manager shall additionally provide to its client with an MITC document, which the client shall duly acknowledge. The Portfolio Manager shall ensure compliance with the same for new clients, on-boarded on or after October 01, 2024. For existing clients, the MITC shall be informed to the clients via email or any other suitable mode of communication (which can be preserved) by January 01, 2025.

The link to the aforesaid Circular is as follows:
https://www.sebi.gov.in/legal/circulars/may-2024/portfolio-managers-facilitating-ease-in-digital-on-boarding-process-for-clients-and-enhancing-transparency-through-disclosures_83147.html

2. Facilitating collective oversight of distributors for Portfolio Management Services (PMS) through the Association of Portfolio Managers in India (APMI)

SEBI vide Circular SEBI/HO/IMD/IMD-PoD-1/P/CIR/2024/32 dated May 02, 2024, to facilitate collective oversight of PMS distributors at the industry level, provided that any person or entity involved in the distribution of portfolio management services shall obtain registration with APMI. This circular shall be effective from January 01, 2025. APMI is required to issue the criteria for registration of distributors by July 01, 2024.

Portfolio Managers shall ensure that any person or entity engaged in the distribution of its services has obtained registration with APMI, in accordance with the criteria laid down by APMI.

The link to the aforesaid Circular is as follows:
https://www.sebi.gov.in/legal/circulars/may-2024/facilitating-collective-oversight-of-distributors-for-portfolio-management-services-pms-through-apmi_83146.html

3. Framework for administration and supervision of Research Analysts and Investment Advisers

SEBI vide Circular SEBI/HO/MIRSD/MIRSD-SEC-3/P/CIR/2024/34 dated May 02, 2024, announced the framework for administration and supervision of research analysts (RAs) and investment advisers (IAs) by the proposed new supervisory bodies. This circular shall be effective from July 25, 2024.

SEBI on April 26, 2024, notified that a recognized stock exchange may undertake the activities of administration and supervision over specified intermediaries. Accordingly, stock exchanges can now be recognized as Research Analyst Administration and Supervisory Body (RAASB) and Investment Adviser Administration and Supervisory Body (IAASB) for administration and supervision of RAs and IAs, respectively.

For recognition of RAASB and IAASB, an entity must have a minimum of 15 years of existence as a recognized stock exchange. Further, the stock exchange must have a minimum net worth of Rs 200 crore, have nationwide terminals, an investor grievance redressal mechanism including an Online Dispute Resolution Mechanism and capacity for investor service management gauged through the reach of Investor Service Centers in at least 20 cities.

The link to the aforesaid Circular is as follows:
https://www.sebi.gov.in/legal/circulars/may-2024/framework-for-administration-and-supervision-of-research-analysts-and-investment-advisers_83145.html

4. Entities allowed to use e-KYC Aadhaar Authentication services of UIDAI in Securities Market as sub-KUA

The Master Circular on Know Your Client (KYC) norms for the securities market dated October 12, 2023, inter alia has detailed the provision for the adaptation of the Aadhaar-based e-KYC process and e-KYC Authentication facility for Resident Investors under section 11A of the Prevention of Money Laundering Act, 2002 in the securities market as sub-KUA and onboarding process of sub-KUA by UIDAI.

Department of Revenue, Ministry of Finance (DoR-MoF) has from time to time issued gazette notifications notifying entities, to undertake the Aadhaar authentication service of UIDAI under Section 11A of the Prevention of Money Laundering Act, 2002.

In this regard, DoR-MoF, vide Gazette Notification S.O. 1863(E) dated April 30, 2024, notified one entity that is permitted to use the Aadhaar authentication services of UIDAI under section 11A of the Prevention of Money-laundering Act, 2002.

SEBI, vide Circular SEBI/HO/MIRSD/SECFATF/P/CIR/2024/36 dated May 06, 2024, prescribed that the above-mentioned entity shall follow the process as detailed in SEBI circular dated October 12, 2023, and as may be prescribed by UIDAI from time to time. The KUAs shall facilitate the onboarding of the entity as subKUA to provide services of Aadhaar authentication with respect to KYC.

The link to the aforesaid Circular is as follows:
https://www.sebi.gov.in/legal/circulars/may-2024/entities-allowed-to-use-e-kyc-aadhaar-authentication-services-of-uidai-in-securities-market-as-sub-kua_83178.html

5. Periodic reporting format for Investment Advisers

SEBI vide Circular SEBI/HO/MIRSD/MIRSD-PoD-2/P/CIR/2024/38 dated May 07, 2024, issued a standardized format for periodic reporting for Investment Advisers (IAs). This Circular is applicable with immediate effect.

In terms of Regulation 15(12) of SEBI (Investment Advisers) Regulations, 2013 (“IA Regulations”), IAs are required to furnish to SEBI, information and reports as may be specified by SEBI from time to time. SEBI has recognized the Investment Advisers Administration and Supervisory Body (“IAASB”) for the administration and supervision of IAs under regulation 14 of the IA Regulations. At present, the IAASB has been seeking reports from IAs on an ad-hoc basis.

It is decided to specify a standardized format for periodic reporting for IAs. IAs shall submit periodic reports for half-yearly periods ending on September 30 and March 31 of every financial year.

IAs shall submit the periodic report for the half-yearly period ending on March 31, 2024, to IAASB within 15 days from the date of issuance of the circular by IAASB. For the subsequent half-yearly periods, IAs shall submit periodic reports within 7 working days from the end of the half-yearly period for which details are to be furnished.

The format of the report is provided as an Annexure to the Circular.

The link to the aforesaid Circular is as follows:
https://www.sebi.gov.in/legal/circulars/may-2024/periodic-reporting-format-for-investment-advisers_83230.html 

6. Master Circular for Alternative Investment Funds (AIF)

SEBI vide Circular SEBI/HO/AFD-1/AFD-1-PoD/P/CIR/2024/39 dated May 07, 2024, issued a Master Circular related to Alternative Investment Funds (AIFs).

The provisions of all circulars issued until March 31, 2024, regarding the AIFs, have been incorporated in this Master Circular, which supersedes the Master Circular for AIFs dated July 31, 2023.

In addition to the requirements specified under this Master Circular, the AIFs shall be required to independently comply with the other requirements specified by SEBI for market intermediaries such as the ‘Levy of Goods & Services Tax (GST) on the fees payable to SEBI’, ‘Approach to securities market data access and terms of usage of data provided by data sources in Indian securities market’, ‘Digital mode of payment’, ‘Information regarding Grievance Redressal Mechanism’ and ‘Guidelines on Outsourcing of Activities by Intermediaries’, etc.

The link to the aforesaid Master Circular is as follows:
https://www.sebi.gov.in/legal/master-circulars/may-2024/master-circular-for-alternative-investment-funds-aifs-_83229.html

7. Master Circular for Registrar to an Issue and Share Transfer Agents

SEBI vide Circular SEBI/HO/MIRSD/PoD-1/CIR/2024/37 dated May 07, 2024, issued a Master Circular for Registrar to an Issue and Share Transfer Agents.

SEBI, from time to time, has been issuing various circulars/directions to the Registrar to an Issue and Share Transfer Agents. To enable the stakeholders to access the applicable circulars in one place, this Master Circular in respect of RTA is being issued.

This Master Circular supersedes the previous Master Circular for RTAs dated May 17, 2023, and subsequent circulars on the subject. The new Master Circular rescinds previous directives concerning RTAs.

The link to the aforesaid Master Circular is as follows:
https://www.sebi.gov.in/legal/master-circulars/may-2024/master-circular-for-registrars-to-an-issue-and-share-transfer-agents_83226.html 

8. SEBI (Index Providers) Regulations, 2024

SEBI vide Notification SEBI/LAD-NRO/GN/2024/167 dated May 08, 2024, notified the SEBI (Index Providers) Regulations, 2024 which inter alia aim to foster transparency in the governance and administration of indices in the securities market.

These regulations shall apply specifically to Index Providers administering Significant Indices consisting of securities listed on a recognized Stock Exchange in India for use in the Indian securities market.

The new regulations include various definitions, applicability, provisions regarding the registration of Index Providers, governance and conflict of interest, Index Quality and Methodology, accountability and disclosures, provisions regarding special audits, action in case of default, and other miscellaneous provisions.

The link to the aforesaid Notification is as follows:
https://www.sebi.gov.in/legal/regulations/mar-2024/securities-and-exchange-board-of-india-index-providers-regulations-2024_82144.html 

9. Consultation paper on measures towards Ease of Doing Business for Non-Convertible securities

SEBI on May 09, 2024, uploaded a consultation paper on its website seeking comments/suggestions from the public on the proposed measures towards Ease of Doing Business for Non-Convertible Securities.

This consultation paper is in alignment with the announcement made by the Finance Minister for FY 2023-24 to simplify, ease, and reduce the cost of compliance for participants in the financial sector through a consultative approach.

Various measures are proposed inter-alia comprising of:

  1. the deletion of disclosure regarding PAN and personal address of promoters of the issuers in the offer document;
  2. Disclosure in the offer document regarding time for key operational and financial parameters;
  3. Disclosure by way of QR code and web link regarding the details of branches or units of the issuer in the offer document;
  4. Alignment of disclosure requirement in the offer document regarding ‘project cost and means of financing’ with that in case of equity;
  5. Relaxation in the requirement of providing certain business and commercial details in case of purchase or acquisition of immovable property in the offer document;
  6. Providing flexibility in the signatories to provide attestation in the offer document; and
  7. Modification in the timeline for submission of status regarding payment obligations to the stock exchanges by entities that have listed commercial paper etc.

The link to the aforesaid Consultation Paper is as follows:
https://www.sebi.gov.in/reports-and-statistics/reports/may-2024/consultation-paper-on-measures-towards-ease-of-doing-business-for-non-convertible-securities_83286.html 

10. Consultation Paper on enhancement of operational efficiency and Risk Reduction: Pay-out of securities directly to client demat account

SEBI on May 09, 2024, uploaded a draft circular on its website seeking comments from the public on the Enhancement of operational efficiency and Risk Reduction -Pay-out of securities directly to client demat account.

At present, the Clearing Corporation credits the pay-out of securities in the pool account of the broking firm, which then credits them to the respective client’s demat accounts. In a move to enhance operational efficiency and reduce the risk to clients’ securities, it is proposed to make the process of direct payout of securities to the client account mandatory.  

The link to the aforesaid Consultation Paper is as follows:
https://www.sebi.gov.in/reports-and-statistics/reports/may-2024/enhancement-of-operational-efficiency-and-risk-reduction-pay-out-of-securities-directly-to-client-demat-account_83288.html 

11. Consultation Paper on measures towards Ease of Doing Business for REITs and InvITs

SEBI on May 09, 2024, uploaded a consultation paper on its website seeking comments/suggestions from the public on the proposed measures towards Ease of Doing Business for REITs and InvITs.

This consultation paper is in alignment with the announcement made for FY 2023-24 to simplify, ease, and reduce the cost of compliance for participants in the financial sector through a consultative approach.

Various measures are proposed inter-alia comprising of:

A. Proposals for both REITs and InvITs

  1. Revision of timelines for distribution to 5 working days from the declaration.
  2. allowing unitholders to meet with shorter notice.
  3. Disclosure and Review of Statement of Investor Complaints.
  4. Disclosure of Statement of Deviation(s) Alongside Financial Results.
  5. Clarification on Voting Thresholds in terms of percentage, and providing electronic meeting and e-voting options to unitholders.
  6. Allowing maintenance of records in Electronic Form along with Backup And Disaster Recovery Norms for such records.

B. Proposals for both REITs and InvITs

  1. Reduction of a trading lot for privately placed InvITs.
  2. Aligning provision related to Change in Sponsor for InvIT Regulations with REIT Regulations.

The link to the aforesaid Consultation Paper is as follows:
https://www.sebi.gov.in/reports-and-statistics/reports/may-2024/consultation-paper-on-measures-towards-ease-of-doing-business-for-reits-and-invits_83287.html 

12. SEBI (Depositories and Participants) (Amendment) Regulations, 2024

SEBI vide Notification SEBI/LAD-NRO/GN/2024/173 on May 10, 2024, amended the SEBI (Depositories and Participants) Regulations, 2018. The said amendment shall come into force from the date of its publication in the Official Gazette.

Regulation 9 about the payment of annual charges by a depository to the SEBI is substituted and states that a depository shall, within 15 days from the end of each month, pay as provided in the Schedule, a percentage of the annual custody charges received by it from the issuers during the month, to SEBI in the manner provided thereof.

The link to the aforesaid Notification is as follows:
https://egazette.gov.in/(S(yylfa02skw25v4icy4wom0ds))/ViewPDF.aspx

13. Master Circular for Custodians

SEBI vide Circular SEBI/HO/AFD/AFD–PoD-2/P/CIR/2024/40 dated May 10, 2024, issued a Master Circular for Custodians.

SEBI, from time to time, has been issuing various circulars/directions to Custodians. To enable the stakeholders to access the applicable requirements specified in these circulars in one place, the provisions of the said circulars have been consolidated in this Master Circular.

It is provided that in addition to the requirements specified under this Master Circular, the custodians shall be required to independently comply with the other requirements specified by SEBI for market intermediaries such as the ‘Levy of Goods & Services Tax (GST) on the fees payable to SEBI’, ‘Approach to securities market data access and terms of usage of data provided by data sources in Indian securities market’, ‘Digital mode of payment’, ‘Information regarding Grievance Redressal Mechanism’ and ‘Guidelines on Outsourcing of Activities by Intermediaries’, etc.

With respect to any other directions or guidance issued by SEBI, as specifically applicable to Custodians, the same shall continue to remain in force in addition to the provisions of this Master Circular or any other law for the time being in force.

The link to the aforesaid Master Circular is as follows:
https://www.sebi.gov.in/legal/master-circulars/may-2024/master-circular-for-custodians_83305.html 

14. Effective Date for Enforcement of Norms w.r.t Eligibility Criteria for AIF Manager

SEBI vide Notification SEBI/LAD-NRO/GN/2024/175 dated May 10, 2024, notified the effective date for enforcement of regulation 3(III) of SEBI (AIF) Regulations, 2023. This regulation deals with provisions regarding eligibility criteria for AIF managers. It states that the key investment team of the AIF Manager must have at least one key personnel with relevant certification as specified by the Board. Also, a fresh certification must be obtained before the expiry of the validity of the existing certification to ensure continuity with these requirements.

The link to the aforesaid Notification is as follows:
https://www.sebi.gov.in/legal/gazette-notification/may-2024/commencement-notification-for-certain-provisions-of-the-securities-and-exchange-board-of-india-alternative-investment-funds-second-amendment-regulations-2023_83321.html 

15. Certification requirement for key investment team of manager of AIF

SEBI vide Circular SEBI/HO/AFD-1/AFD-1-PoD/P/CIR/2024/42 dated May 13, 2024, issued certification requirements for the key investment team of Alternative Investment Funds (AIFs). This Circular shall come into force with immediate effect.

It mandates at least 1 key personnel amongst the associated persons functioning in the key investment team of the Manager of an AIF to obtain certification specified by SEBI. This regulation is effective from May 10, 2024.

Additionally, amendments to the SEBI (Certification of Associated Persons in the Securities Markets) Regulations, 2007 require key personnel in the AIF manager’s investment team to pass the NISM Series-XIX-C: Alternative Investment Fund Managers Certification Examination.

The circular shall be complied with on or before May 09, 2025, by all the existing AIFs and Schemes of AIFs whose application for the launch of the scheme is pending with SEBI as on May 10, 2024. Trustees/sponsors must ensure compliance and include it in the Compliance Test Report.

The link to the aforesaid Circular is as follows:
https://www.sebi.gov.in/legal/circulars/may-2024/certification-requirement-for-key-investment-team-of-manager-of-aif_83328.html

16. Master Circular for Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs)

SEBI vide Circular SEBI/HO/DDHS-PoD-2/P/CIR/2024/43 dated May 15, 2024, issued a Master Circular for REITs and vide Circular SEBI/HO/DDHS-PoD-2/P/CIR/2024/44 dated May 15, 2024, issued a Master Circular for InvITs.

For effective regulation of REITs and InvITs, SEBI has been issuing various circulars from time to time. To enable the stakeholders to access all the applicable circulars in one place, the provisions of the circulars issued till May 15, 2024, are incorporated in this Master Circular for REITs and InvITs.

With respect to the directions or other guidance issued by SEBI, as specifically applicable to REITs and InvITs, the same shall continue to remain in force in addition to the provisions of any other law for the time being in force. Pursuant to the issuance of this Master Circular, the entities that are required to ensure compliance with various provisions shall submit necessary reports as envisaged in this Master Circular on a periodic/ continuous basis.

The link to the aforesaid Master Circular for REITs is as follows:
https://www.sebi.gov.in/legal/master-circulars/may-2024/master-circular-for-real-estate-investment-trusts-reits-_83375.html

The link to the aforesaid Master Circular for InvITs is as follows:
https://www.sebi.gov.in/legal/master-circulars/may-2024/master-circular-for-infrastructure-investment-trusts-invits-_83376.html

17. Master Circular for ESG Rating Providers (“ERPs”)

SEBI vide Circular SEBI/HO/DDHS/POD3/P/CIR/2024/45 dated May 16, 2024, issued a Master Circular for ESG rating Providers.

ESG Rating Providers are regulated under the provisions of SEBI (Credit Rating Agencies) Regulations, 1999 that inter-alia prescribes guidelines for the registration of ERPs, general obligations of ERPs, manner of inspection, and code of conduct applicable to ERPs.

While the broad framework for ERPs has been laid down in the CRA Regulations, the procedural/disclosure requirements and obligations are being specified through this master circular, which will enable the industry and other users to have access to all the applicable directions to ERPs in one place.

ERPs are directed to comply with the conditions laid down in this master circular and have the necessary systems and infrastructure in place for the implementation of this circular. The Board of Directors of the ERP shall be responsible for ensuring compliance with these provisions.

The link to the aforesaid Master Circular is as follows:
https://www.sebi.gov.in/legal/master-circulars/may-2024/master-circular-for-esg-rating-providers-erps-_83421.html

18. Master Circular for Debenture Trustees

SEBI vide Circular SEBI/HO/DDHS-PoD3/P/CIR/2024/46 dated May 16, 2024, issued a Master Circular for Debenture Trustees.

Debenture Trustees are regulated under the provisions of SEBI (Debenture Trustees) Regulations, 1993 (‘DT Regulations’). While the broad framework for Debenture Trustees has been laid down in the DT Regulations, over the years, procedural/ disclosure requirements and obligations have been specified by SEBI through circulars.

For effective regulation of the corporate bond market and to enable the Debenture Trustees and other market stakeholders to get access to all the applicable circulars in one place, this Master Circular has been prepared compiling the existing circulars as on May 16, 2024, with consequent changes.

The link to the aforesaid Master Circular is as follows:
https://www.sebi.gov.in/legal/master-circulars/may-2024/master-circular-for-debenture-trustees-dts-_83419.html

19. Informal Guidance in relation to Regulation 41A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2012

Jagatjit Industries Limited (JIL), a public company listed on BSE, sought interpretive guidance from SEBI on the following issue:

  1. Whether the existing DVR shares of the Company JIL shall continue to retain their distinct characteristics of differential voting rights or they will be treated as ordinary equity shares at par with the other equity shares of the Company.
  2. Whether the Company is required to comply with the conditions prescribed in Regulation 41A of SEBI LODR and compliance, if any is required to be made by the Company.

SEBI vide Informal Guidance CFD/PoD/OW/2024//7086/1 dated May 16, 2024, stated that before July 21, 2009, listed companies could issue differential right equity shares. However, a circular issued by SEBI on July 21, 2009, disallowed fresh issuances of “superior” rights equity shares. This circular did not address the treatment of already issued superior right equity shares.

In 2019, SEBI introduced an SR equity shares framework. This framework allowed companies that have issued SR equity shares to their promoters or founders to undertake an IPO of ordinary shares under certain conditions. Additionally, the SCRA was amended to require that these SR equity shares be listed along with the ordinary shares offered to the public. However, the SR framework does not address superior right equity shares already issued by listed companies.

As per the Companies (Share Capital and Debentures) Amendment Rules, 2014, DVR shares issued under the Companies Act, 1956, continue to be regulated under those provisions. In conclusion, Regulation 41A of SEBI LODR i.e., other provisions relating to outstanding SR equity shares, does not apply to JIL’s existing DVR shares.

The link to the aforesaid Informal Guidance is as follows:
KM_554e-20240517092239 (sebi.gov.in)

20. Master Circular for Credit Rating Agencies

SEBI vide Circular SEBI/HO/DDHS/DDHS-POD3/P/CIR/2024/47 dated May 16, 2024, issued a Master Circular for Credit Rating Agencies.

SEBI (Credit Rating Agencies) Regulations, 1999 (“CRA Regulations”) prescribes guidelines for the registration of Credit Rating Agencies (CRAs), general obligations of CRAs, manner of inspection and investigation, and code of conduct applicable to CRAs. Multiple circulars have been issued, over the years, covering the operational and procedural aspects thereof.

To enable the industry and other users to have access to all the applicable circulars/ directions in one place, a Master Circular for CRAs has been prepared compiling the existing circulars as on May 16, 2024, with consequent changes.

The link to the aforesaid Master Circular is as follows:
https://www.sebi.gov.in/legal/master-circulars/may-2024/master-circular-for-credit-rating-agencies-cras-_83417.html

21. Consultation Paper on facilitating investments by Indian Mutual Funds in such overseas funds that invest a certain portion of their assets in Indian Securities

SEBI on May 17, 2024, placed a consultation paper to seek comments from the public on the proposal of facilitating investments by Indian Mutual Funds in such Overseas Mutual Funds (‘MFs’)/ Unit Trusts (‘UTs’) that invest a certain portion of their assets in Indian securities.

As per the present regulatory framework, SEBI registered Mutual Funds are allowed to invest in eligible overseas securities for its overseas investment. However, the framework does not explicitly permit Indian Mutual Funds to invest in overseas MF/UTs with exposure to Indian securities. Therefore, many Mutual Funds in the industry avoid investing in such overseas MF/UTs that have any kind of exposure to Indian securities.

The link to the aforesaid Consultation Paper is as follows:
https://www.sebi.gov.in/legal/master-circulars/may-2024/master-circular-for-credit-rating-agencies-cras-_83417.html

22. SEBI (Prohibition of Insider Trading) (Amendment) Regulations, 2024

SEBI vide Notification SEBI/LAD-NRO/GN/2024/181 on May 17, 2024, amended the SEBI (Prohibition of Insider Trading) Regulations, 2015. The said amendment shall come into force from the date of its publication in the Official Gazette.

The definition of generally available information is now amended to not include unverified events or information reported in print or electronic media. The revised definition now reads as follows:

“Generally available information is information that is accessible to the public on a non-discriminatory basis and shall not include unverified events or information reported in print or electronic media”.

The link to the aforesaid Notification is as follows:
https://egazette.gov.in/(S(yylfa02skw25v4icy4wom0ds))/ViewPDF.aspx

23. SEBI (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations, 2024

SEBI vide Notification SEBI/LAD-NRO/GN/2024/179 on May 17, 2024, amended the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2015. The said amendment shall come into force from the date of its publication in the Official Gazette.

The amendment states the exclusion of the effect on the price of equity shares of a target company due to material price movement and confirmation of reported events or information. This exclusion aligns with the framework specified under regulation 30(11) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 for determining the offer price and the price of such equity shares under the regulations.

The link to the aforesaid Notification is as follows:
https://egazette.gov.in/(S(no0apfhwour5zgsunlmddxao))/ViewPDF.aspx

24. SEBI (Buy-Back of Securities) (Amendment) Regulations, 2024

SEBI vide Notification SEBI/LAD-NRO/GN/2024/180 on May 17, 2024, amended the SEBI (Buy-Back of Securities) Regulations, 2015. The said amendment shall come into force from the date of its publication in the Official Gazette.

The amendment states the exclusion of the effect on the price of equity shares of a company due to material price movement and confirmation of reported events or information. This exclusion is as per the framework specified under regulation 30(11) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. The aim is to determine the volume-weighted average market price and lower end of the price range for buy-back of securities.

The link to the aforesaid Notification is as follows:
https://egazette.gov.in/(S(no0apfhwour5zgsunlmddxao))/ViewPDF.aspx

25. SEBI (Issue of Capital and Disclosure Requirements) (Amendment) Regulations, 2024

SEBI vide Notification SEBI/LAD-NRO/GN/2024/178 on May 17, 2024, amended the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018. The said amendment shall come into force from the date of its publication in the Official Gazette.

The amendments are briefly detailed below:

  1. Minimum Promoters Contribution: Regulation 14: The 1st proviso to Sub-regulation (1) is amended and now reads as follows:
    In case the post-issue shareholding of the promoters is less than 20%, alternative investment funds or foreign venture capital investors, scheduled commercial banks, public financial institutions, insurance companies registered with the Insurance Regulatory and Development Authority of India or any non-individual public shareholder holding at 5% of the post-issue capital or any entity (individual or non-individual) forming part of promoter group other than the promoter(s) may contribute to meet the shortfall in minimum contribution as specified for the promoters, subject to a maximum of 10% of the post-issue capital without being identified as promoter(s).

    Our Comments: The said amendment will now inter-alia permit promoter group entities other than the promoters and any non-individual shareholders holding more than 5% of the post-issue capital to contribute towards minimum promoters' contribution without being identified as a promoter, to meet any shortfall in the minimum promoters' contribution, subject to a maximum of 10% of the post-issue capital.

  2. Securities Ineligible for Minimum Promoters Contribution Regulation 15:

    a. The clause (b) of Sub-regulation (1) is amended and now reads as follows:

    Specified securities acquired by the promoters and alternative investment funds or foreign venture capital investors or scheduled commercial banks or public financial institutions or insurance companies registered with Insurance Regulatory and Development Authority of India or any non-individual public shareholder holding at least five per cent. of the post-issue capital or any entity (individual or non-individual) forming part of promoter group other than the promoter(s) during the preceding one year at a price lower than the price at which specified securities are being offered to the public in the initial public offer.

    Our Comments: The said amendment has now made the specified securities acquired inter-alia by promoter group entities other than the promoters and any non-individual public shareholder holding at least 5% of the post-issue capital acquired during the preceding one year at a price lower than the price at which specified securities are being offered to the public in the initial public offer, ineligible for contribution towards meeting any shortfall in the post-issue shareholding of the promoters.

    b. The clause (i) of first proviso of clause (b) of Sub-regulation (1) is amended and now reads as follows:

    If the promoters and alternative investment funds or foreign venture capital investors or scheduled commercial banks or public financial institutions or insurance companies registered with Insurance Regulatory and Development Authority of India or any non-individual public shareholder holding at least five per cent. of the post-issue capital or any entity (individual or non-individual) forming part of promoter group other than the promoter(s), as applicable, pay to the issuer the difference between the price at which the specified securities are offered in the initial public offer and the price at which the specified securities had been acquired.

    Our Comments: The said amendment will allow the specified securities acquired inter-alia by promoter group entities other than the promoters and any non-individual public shareholder holding at least 5% of the post-issue capital acquired during the preceding one year at a price lower than the price at which specified securities are being offered to the public in the initial public offer, eligible for contribution towards meeting any shortfall in the post-issue shareholding of the promoters, if they pay to the issuer the difference between the price at which the specified securities are offered in the initial public offer and the price at which the specified securities had been acquired during the preceding one year.

    c. New clause (iv) has been inserted after the clause (iii) of first proviso of clause (b) of Sub-regulation (1) which reads as follows:

    “(iv) to equity shares arising from the conversion or exchange of fully paid-up compulsorily convertible securities, including depository receipts, that have been held by the promoters and alternative investment funds or foreign venture capital investors or scheduled commercial banks or public financial institutions or insurance companies registered with Insurance Regulatory and Development Authority of India or any non-individual public shareholder holding at least five per cent. of the post issue capital or any entity (individual or non-individual) forming part of promoter group other than the promoter(s), as applicable, for a period of at least one year prior to the filing of the draft offer document and such fully paid-up compulsorily convertible securities are converted or exchanged into equity shares prior to the filing of the offer document (i.e., red herring prospectus in case of a book built issue and prospectus in case of a fixed price issue), provided that full disclosures of the terms of conversion or exchange are made in such draft offer document;”

    Our Comments: The said amendment will allow equity shares arising from the conversion or exchange of fully paid-up compulsorily convertible securities, including depository receipts, that have been held by the entities in the newly inserted clause (iv) above and have been held for a period of at least one year prior to the filing of the draft offer document and are converted or exchanged into equity shares prior to the filing of the offer document (i.e., red herring prospectus in case of a book built issue and prospectus in case of a fixed price issue), if full disclosures of the terms of conversion or exchange are made in such draft offer document.

    d. The clause (c) of Sub-regulation (1) is amended and now reads as follows:

    Specified securities allotted to the promoters and alternative investment funds or foreign venture capital investors or scheduled commercial banks or public financial institutions or insurance companies registered with Insurance Regulatory and Development Authority of India or any non-individual public shareholder holding at least five per cent. of the post-issue capital or any entity (individual or non-individual) forming part of promoter group other than the promoter(s) during the preceding one year at a price less than the issue price, against funds brought in by them during that period, in case of an issuer formed by conversion of one or more partnership firms or limited liability partnerships, where the partners of the erstwhile partnership firms or limited liability partnerships are the promoters of the issuer and there is no change in the management:

    Our Comments: The said amendment has now made the specified securities allotted by issuer formed by conversion of one or more partnership firms or limited liability partnerships, inter-alia to promoter group entities other than the promoters and any non-individual public shareholder holding at least 5% of the post-issue capital during the preceding one year at a price less than the issue price, ineligible for contribution towards meeting any shortfall in the post-issue shareholding of the promoters.

  3. Lock-in of specified securities held by the promoters Regulation 16:>

    The clause (a) of Sub-regulation (1) is amended and now reads as follows:

    Minimum promoters’ contribution including contribution made by alternative investment funds or foreign venture capital investors or scheduled commercial banks or public financial institutions or insurance companies registered with Insurance Regulatory and Development Authority of India or any non-individual public shareholder holding at least five per cent. of the post-issue capital or any entity (individual or non-individual) forming part of promoter group other than the promoter(s) referred to in proviso to sub-regulation (1) of regulation 14, shall be locked-in for a period of eighteen months from the date of allotment in the initial public offer:

    Our Comments: The said amendment requires the contribution made to minimum promoters’ contribution under Regulation 14(1), inter-alia by promoter group entities other than the promoters and any non-individual public shareholder holding at least 5% of the post-issue capital to be locked in for a period of 18 months from the date of allotment in the initial public offer.

  4. Security Deposit Regulation 38:

    Regulation 38 regarding Security Deposit in case of Initial Public Offer on the Main Board has been omitted thereby removing the requirement of depositing an amount calculated at the rate of one per cent. of the issue size available for subscription to the public before the opening of the subscription list.

  5. Period of Subscription in case of Initial Public Offer on Main Board Regulation 46:

    The Sub-regulation (3) is amended and now reads as follows:

    (3) In case of force majeure, banking strike or unforeseen circumstances, the issuer may, for reasons to be recorded in writing, extend the bidding (issue) period disclosed in the red herring prospectus (in case of a book-built issue) or the issue period disclosed in the prospectus (in case of a fixed price issue), for a minimum period of one working day, subject to the provisions of sub-regulation (1).

    Our Comments: The said amendment provides that in case of force majeure, banking strike or unforeseen circumstances, the issuer may extend the bidding (issue) period disclosed in the red herring prospectus or prospectus, as the case may be, for a minimum period of three working days, subject to the total bidding (issue) period not exceeding ten working days.

  6. Security Deposit Regulation 80:

    Regulation 80 regarding Security Deposit in case of Rights Issue has been omitted thereby removing the requirement of depositing an amount calculated at the rate of one per cent. of the issue size available for subscription to the public before the opening of the subscription list.

  7. Security Deposit Regulation 135

    Regulation 135 regarding Security Deposit in case of Further Public offer has been omitted thereby removing the requirement of depositing an amount calculated at the rate of one per cent. of the issue size available for subscription to the public before the opening of the subscription list.

  8. Period of Subscription in case of Further Public Offer Regulation 142:

    The Sub-regulation (3) is amended and now reads as follows:

    (3) In case of force majeure, banking strike or unforeseen circumstances, the issuer may, for reasons to be recorded in writing, extend the bidding (issue) period disclosed in the red herring prospectus (in case of a book-built issue) or the issue period disclosed in the prospectus (in case of a fixed price issue), for a minimum period of one working day, subject to the provisions of sub-regulation (1).

    Our Comments: The said amendment has widened the scope by substituting the words “similar circumstances” with “unforeseen circumstances” of the instances where the issuer can extend the bidding period and has reduced the period for which the issuer can extend the bidding period in case of unforeseen circumstances to 1 (one) working day from 3 (three) working days.

  9. Adjustments in pricing - Frequently and Infrequently traded shares Regulation 166:

    The existing regulation under Regulation 166 has been re-numbered as Sub-regulation (1) and new Sub-regulation (2) has been inserted which reads as follows:

    “(2) The effect on the price of the equity shares of the issuer due to material price movement and confirmation of reported event or information may be excluded as per the framework specified under sub-regulation (11) of regulation 30 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 for determination of the price for a preferential issue in accordance with regulations 164, 164A, 164B or 165 of these regulations.”

    Our Comments: The said amendment specifies that the unaffected price may be considered for the transaction under regulations 164, 164A, 164B or 165. In other words the effect on the price of the equity shares of the issuer due to material price movement and confirmation of reported event or information as per the framework specified under sub-regulation (11) of regulation 30 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 may be disregarded.

  10. Regulation 176:

    New Sub-regulation (5) after Sub-regulation (4) has been inserted which reads as follows:

    “(5) The effect on the price of the equity shares of the issuer due to material price movement and confirmation of reported event or information may be excluded as per the framework specified under sub-regulation (11) of regulation 30 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 for calculation of the issue price under this regulation.”

    Our Comments: The said amendment specifies that the unaffected price may be considered for the transaction under regulation 176. In other words the effect on the price of the equity shares of the issuer due to material price movement and confirmation of reported event or information as per the framework specified under sub-regulation (11) of regulation 30 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 may be disregarded.

  11. Security Deposit Regulation 197:

    Regulation 197 regarding Security Deposit in case of Initial Public Offer of Indian Depository Receipts has been omitted thereby removing the requirement of depositing an amount calculated at the rate of one per cent. of the issue size available for subscription to the public before the opening of the subscription list.

  12. Period of Subscription in case of Initial Public Offer of Indian Depository Receipts Regulation 203:

    The Sub-regulation (3) is amended and now reads as follows:

    (3) In case of force majeure, banking strike or unforeseen circumstances, the issuer may, for reasons to be recorded in writing, extend the bidding (issue) period disclosed in the red herring prospectus (in case of a book-built issue) or the issue period disclosed in the prospectus (in case of a fixed price issue), for a minimum period of one working day, subject to the provisions of sub-regulation (1).

    Our Comments: The said amendment has widened the scope by substituting the words “similar circumstances” with “unforeseen circumstances” of the instances where the issuer can extend the bidding period and has reduced the period for which the issuer can extend the bidding period in case of unforeseen circumstances to 1 (one) working day from 3 (three) working days.

  13. Minimum Promoters Contribution: Regulation 236: The 1st proviso to Sub-regulation (1) is amended and now reads as follows:

    In case the post-issue shareholding of the promoters is less than 20%, alternative investment funds or foreign venture capital investors, scheduled commercial banks, public financial institutions, insurance companies registered with the Insurance Regulatory and Development Authority of India or any non-individual public shareholder holding at 5% of the post-issue capital or any entity (individual or non-individual) forming part of promoter group other than the promoter(s) may contribute to meet the shortfall in minimum contribution as specified for the promoters, subject to a maximum of 10% of the post-issue capital without being identified as promoter(s).

    Our Comments: The said amendment will now inter-alia permit promoter group entities other than the promoters and any non-individual shareholders holding more than 5% of the post-issue capital to contribute towards minimum promoters' contribution without being identified as a promoter, to meet any shortfall in the minimum promoters' contribution, subject to a maximum of 10% of the post-issue capital.

  14. Securities Ineligible for Minimum Promoters Contribution Regulation 237:

    a. The clause (b) of Sub-regulation (1) is amended and now reads as follows: Specified securities acquired by the promoters and alternative investment funds or foreign venture capital investors or scheduled commercial banks or public financial institutions or insurance companies registered with Insurance Regulatory and Development Authority of India or any non-individual public shareholder holding at least five per cent. of the post-issue capital or any entity (individual or non-individual) forming part of promoter group other than the promoter(s) during the preceding one year at a price lower than the price at which specified securities are being offered to the public in the initial public offer.

    Our Comments: The said amendment has now made the specified securities acquired inter-alia by promoter group entities other than the promoters and any non-individual public shareholder holding at least 5% of the post-issue capital acquired during the preceding one year at a price lower than the price at which specified securities are being offered to the public in the initial public offer, ineligible for contribution towards meeting any shortfall in the post-issue shareholding of the promoters.

    b. New clause (iv) has been inserted after the clause (iii) of first proviso of clause (b) of Sub-regulation (1) which reads as follows:

    “(iv) to equity shares arising from the conversion or exchange of fully paid-up compulsorily convertible securities, including depository receipts, that have been held by the promoters and alternative investment funds or foreign venture capital investors or scheduled commercial banks or public financial institutions or insurance companies registered with Insurance Regulatory and Development Authority of India or any nonindividual public shareholder holding at least five per cent. of the post issue capital or any entity (individual or non-individual) forming part of promoter group other than the promoter(s), as applicable, for a period of at least one year prior to the filing of the draft offer document and such fully paid-up compulsorily convertible securities are converted or exchanged into equity shares prior to the filing of the offer document (i.e., red herring prospectus in case of a book built issue and prospectus in case of a fixed price issue), provided that full disclosures of the terms of conversion or exchange are made in such draft offer document;”

    Our Comments: The said amendment will allow equity shares arising from the conversion or exchange of fully paid-up compulsorily convertible securities, including depository receipts, that have been held by the entities in the newly inserted clause (iv) above and have been held for a period of at least one year prior to the filing of the draft offer document and are converted or exchanged into equity shares prior to the filing of the offer document (i.e., red herring prospectus in case of a book built issue and prospectus in case of a fixed price issue), if full disclosures of the terms of conversion or exchange are made in such draft offer document.

  15. Lock-in of specified securities held by the promoters Regulation 238:
    The clause (a) is amended and now reads as follows:

    minimum promoters’ contribution including contribution made by alternative investment funds or foreign venture capital investors or scheduled commercial banks or public financial institutions or insurance companies registered with Insurance Regulatory and Development Authority of India or any non-individual public shareholder holding at least five per cent. of the post-issue capital or any entity (individual or non-individual) forming part of promoter group other than the promoter(s) as applicable, shall be locked-in for a period of three years from the date of commencement of commercial production or date of allotment in the initial public offer, whichever is later;

    Our Comments: The said amendment requires the contribution made to minimum promoters’ contribution under Regulation 14(1), inter-alia by promoter group entities other than the promoters and any non-individual public shareholder holding at least 5% of the post-issue capital to be locked in for a period of 3 years from the date of commencement of commercial production or date of allotment in the initial public offer, whichever is later.

  16. Security Deposit Regulation 259:

    Regulation 259 regarding Security Deposit in case of Initial Public Offer by Small and medium Enterprises has been omitted thereby removing the requirement of depositing an amount calculated at the rate of one per cent. of the issue size available for subscription to the public before the opening of the subscription list.

  17. Period of Subscription in case of Initial Public Offer by Small and Medium Enterprises Regulation 266:
    The Sub-regulation (3) is amended and now reads as follows:

    (3) In case of force majeure, banking strike or unforeseen circumstances, the issuer may, for reasons to be recorded in writing, extend the bidding (issue) period disclosed in the red herring prospectus (in case of a book-built issue) or the issue period disclosed in the prospectus (in case of a fixed price issue), for a minimum period of one working day, subject to the provisions of sub-regulation (1).

    Our Comments: The said amendment has widened the scope by substituting the words “similar circumstances” with “unforeseen circumstances” of the instances where the issuer can extend the bidding period and has reduced the period for which the issuer can extend the bidding period in case of unforeseen circumstances to 1 (one) working day from 3 (three) working days.

  18. Granting companies listed on the Innovators Growth Platform pursuant to an initial public offer, an option to trade under the regular category of the main board of the stock exchange: Regulation 292:
    a. Minimum Promoters Contribution Sub-regulation (4): The 1st has been amended and now reads as follows:

    Provided that in case the total capital held by the promoters is less than twenty per cent, alternative investment funds or foreign venture capital investors or scheduled commercial banks or public financial institutions or insurance companies registered with Insurance Regulatory and Development Authority of India or any non-individual public shareholder holding at least five per cent. of the post-issue capital or any entity (individual or non-individual) forming part of promoter group other than the promoter(s) may contribute to meet the shortfall in minimum contribution as specified, subject to a maximum of ten per cent of the total capital without being identified as promoter(s):

    Our Comments: The said amendment will now inter-alia permit promoter group entities other than the promoters and any non-individual shareholders holding more than 5% of the post-issue capital to contribute towards minimum promoters' contribution without being identified as a promoter, to meet any shortfall in the minimum promoters' contribution, subject to a maximum of 10% of the total capital.

    Lock-in period Sub-regulation (5): Clause (a) has been amended and now reads as follows:
    (a) The minimum promoters’ contribution including contribution made by alternative investment funds or foreign venture capital investors or scheduled commercial banks or public financial institutions or insurance companies registered with the Insurance Regulatory and Development Authority of India or any non-individual public shareholder holding at least five per cent. of the post-issue capital or any entity (individual or non-individual) forming part of promoter group other than the promoter(s), shall be locked in for a period of three years from the date on which trading approval in regular category of main board is granted, and any excess over and above the 20% of promoter’s holding shall be locked-in for a period of one year.

    Our Comments: The said amendment requires the contribution made to minimum promoters’ contribution under Regulation 4, inter-alia by promoter group entities other than the promoters and any non-individual public shareholder holding at least 5% of the post-issue capital to be locked in for a period of 3 years from the date on which trading approval in regular category of main board is granted, and any excess over and above the 20% of promoter’s holding shall be locked-in for a period of 1 year.

  19. Extension of Issue Period Paragraph 9 of Schedule XIII:
    The Sub-paragraph (ii) is amended and now reads as follows:

    (ii) in case of force majeure, banking strike or unforeseen circumstances, the issuer may, for reasons to be recorded in writing, extend the bidding/issue period for a minimum period of one working day, subject to the total bidding/issue period not exceeding ten working days.

    Our Comments: The said amendment has widened the scope by substituting the words “similar circumstances” with “unforeseen circumstances” of the instances where the issuer can extend the bidding period and has reduced the period for which the issuer can extend the bidding period in case of unforeseen circumstances to 1 (one) working day from 3 (three) working days.

  20. Nature of Changes in the Offer Document requiring filing of Updated Offer Document Schedule XVI:
    The item (i) in Sub-paragraph (f) of Paragraph (1) is amended and now reads as follows:

    “In case of a fresh issue: any increase or decrease in estimated issue size (in Rupee value) by more than twenty per cent. or”

    The item (ii) in Sub-paragraph (f) of Paragraph (1) is amended and now reads as follows:

    In case of an offer for sale: any increase or decrease in either the number of shares offered for sale or the estimated issue size (in Rupee value) whichever is disclosed in the draft offer document, by more than fifty per cent.; or”

  21. Nature of Changes in the Offer Document requiring filing of Updated Offer Document Schedule XVIA:
    The item (vi) in Sub-paragraph (a) of Paragraph (1) is amended and now reads as follows:

    ““In case of a fresh issue, any increase or decrease in the estimated issue size by more than fifty percent. (in Rupee value)

    The item (vii) in Sub-paragraph (a) of Paragraph (1) is amended and now reads as follows:

    “In case of an offer for sale, any increase or decrease in the number of shares offered for sale or the estimated issue size (in Rupee value) whichever is disclosed in the draft offer document, by more than fifty percent.”
    The link to the aforesaid Notification is as follows:https://egazette.gov.in/(S(no0apfhwour5zgsunlmddxao))/ViewPDF.aspx

26. SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2024

SEBI vide Notification SEBI/LAD-NRO/GN/2024/177 dated May 17, 2024, amended the SEBI (Listing and Disclosure Requirements) Regulations, 2015 (LODR or LODR Regulations). The amendment to SEBI (LODR) Regulations, 2015 came into force from the date of its publication in the Official Gazette, however, the amendments in Regulations 3, 17, 21(5), 25, 30 [omission of the Explanation under sub-regulation (11)], 34, 43A and 44 shall come into force with effect from December 31, 2024.

The amendments to SEBI (LODR) 2015 are briefly detailed below:

1. Market Capitalization: Regulation 3(2): concerning the applicability of the LODR Regulations to a listed entity based on Market Capitalization is substituted as follows:

The applicability shall be determined as follows:

  •  Every recognized stock exchange shall, at the end of the calendar year i.e., 31stDecember, prepare a list of entities that have listed their specified securities ranking such entities based on their average market capitalization from 1st July to 31st December of that calendar year.

     

  • The relevant provisions shall then become applicable to a listed entity that is required to comply with such requirements for the first time (or if applicable, required to comply after any interim period) after 3 months from December 31(i.e. April 1) or from the beginning of the immediate next financial year, whichever is later

    However, the listed entity, which is required to comply with this regulation for the first time or after a period of cessation, shall
    put in place systems and processes for compliance with Regulation 34(2)(f) (Business Responsibility and Sustainability Report) within 3 months from December 31 (i.e. on or before April 1) or from the beginning of the immediate next financial year, whichever is later.

    Such listed entity is further required to
    disclose the Business Responsibility and Sustainability Report (BRSR) and/or assurance as per the BRSR Core in the Annual Report prepared for the financial year in which systems and processes were required to be put in place.

    Our Comments: This means if, as of 31.12.2024 the Company is listed as per average Market Capitalisation, which will attract various provisions including reporting BRSR and/or assurance as per the BRSR Core. Then such entities are required to put in place the

    systems and processes from FY 2025-26 and the Annual Report for FY 2025-26 needs disclosure of BRSR.

  • The listed entity shall continue to comply with relevant provisions that applied to it based on the market capitalization of the previous year and continue(s) to remain applicable based on its rank in the list prepared by recognized stock exchanges as per clause (a) of this sub-regulation.A new Sub-Regulation 3(2A) with respect to the applicability of the LODR Regulations is inserted which states:The provisions of these regulations, which become applicable to a listed entity based on the criteria of market capitalization, shall continue to apply to such an entity unless its ranking changes in the list prepared as per regulation 2(2) and such change results in the listed entity remaining outside the applicable threshold for three (3) consecutive years.

    Our comments:
    The listed entity continues to remain compliant with provisions related to market capitalization unless, for three consecutive years, it is outside the threshold of market capitalization.

    A new Sub-Regulation 3(2B) with respect to the applicability of the LODR Regulations is inserted which states:

    Listed entities that remain outside the applicable threshold for three (3) consecutive years in terms of Regulation 3 (2A), the provisions that apply based on criteria of market capitalization shall cease to apply at the end of the financial year following the 31st December of the 3rd consecutive year.

    However, for listed entities that follow January to December as their financial year, the provisions shall cease to apply at the end of 3 months from 31st December of the third consecutive year (i.e. on 31st March).

2. High-value debt-listed (HVDL) entities: Regulation 15:There are few changes in existing Regulation 15(1A) of LODR Regulations concerning High-value debt-listed (HVDL) entities regarding the compliance with Regulations 16 to 27 on comply or explain basis.

The period for compliance with Regulations 16 to 27 by HVDL entities has been further extended from March 31, 2024, to March 31, 2025.

3. Independent Woman Director: Regulation 17:Regulation 17 (1)(a) of LODR Regulations is with respect to the Board of Directors. The amendment read that now the top 1000 listed entities are required to have at least One (1) Independent Woman Director on its Board.

It was initiated earlier for the top 500 listed entities by 01.04.2019 and for the top 100 listed entities by 01.04.2020, which is now deleted, and the Explanation regarding market Capitalisation as at the end of the immediate previous financial year has been deleted.

Board of Directors: Regulation 17 (1)(c) of LODR Regulations concerning the Board of Directors, reads that now the top 2000 listed entities are required to have not less than Six (6) Directors on its Board.

It was initiated earlier for the top 1000 listed entities by 01.04.2019 and for the top 2000 listed entities by 01.04.2020, which is now deleted, and the Explanation regarding market Capitalisation as at the end of the immediate previous financial year has been deleted.

The quorum of the meeting of the Board: In Regulation 17 (2A) of LODR Regulations with respect to the quorum of the meeting of the Board of Directors, now the quorum of the meeting of the Board of Directors of the top 2000 listed entities shall be 1/3rd of the total strength of Directors or Three (3) Directors, whichever is higher, including at least One (1) Independent Director.  Explanation remains that participation of the directors by video conferencing or by other audio-visual means shall also be counted for such quorum.

It was initiated earlier for the top 1000 listed entities by 01.04.2019 and for the top 2000 listed entities by 01.04.2020, which is now deleted, and Explanation II regarding market Capitalisation as at the end of the immediate previous financial year has been deleted.

4. Gap between two meetings of the Risk Management Committee: Regulation 21: In Regulation 21(3C) of LODR Regulations concerning the Risk Management Committee, now it is amended that the meetings of the Risk Management Committee shall be conducted in such a manner that continuously not more than 210 days (earlier 180 days) shall elapse between any two consecutive meetings.

Applicability to have Risk Management Committee: Regulation 21(5) of LODR Regulations concerning the Risk Management Committee, will apply to the top 1000 listed entities and high-value debt-listed entities. Reference to the top 1000 listed entities determined as per market Capitalisation as at the end of the immediate previous financial year has been deleted.

5. Obligations with respect to independent directors: Regulation 25:In Regulation 25(10) of LODR Regulations concerning the obligations of Independent Directors, now the top 1000 listed entities by market capitalization, shall undertake Directors and Officers Insurance (‘D and O Insurance’) for all their Independent Directors of such quantum and such risks as may be determined by its Board of Directors.

The line market capitalization as of March 31 of the preceding financial year has been omitted.

6. Vacancies in respect of Certain Key Managerial Personnel: Regulation 26A:In Regulation 26A of LODR Regulations, concerning vacancies of certain Key Managerial Personnel (KMP) like in the office of Chief Executive Officer, Managing Director, Whole Time Director or Manager, a new proviso has been inserted before the existing proviso which is as follows.

Provided that where the listed entity is required to obtain approval of the regulatory, government, or statutory authorities to fill up vacancies of certain KMP, then such vacancies shall be filled up by the listed entity at the earliest and in any case not later than 6 months from the date of the vacancy.

The first proviso as mentioned below is shifted as proviso no.2

Provided further that the listed entity shall not fill such vacancy by appointing a person in interim capacity unless such appointment is made in accordance with the laws applicable in case of a fresh appointment to such office and the obligations under such laws are made applicable to such person.

Our Comments: The vacancy of KMPs is to be filled as soon as possible but not later than 6 months when the listed entity is required to obtain approval from a regulatory, government, or statutory authority for filling up such vacancy.

7. Prior Intimations: Regulation 29:In Regulation 29 of LODR Regulations, with respect to prior intimations, the following amendments have been made:

  1. In sub-regulation (1)the amendment reads that the listed entity shall give prior intimation of at least 2 working days in advance, excluding the date of the intimation and date of the meeting to the stock exchange about the meeting of the board of directors in which any of the following proposals is due to be considered
  2. In sub-regulation (1) Clause (d)concerning fundraising, the following line which is underlined is insertedFundraising by way of issue of securities (excluding security receipts, securitized debt instruments, or money market instruments regulated by the Reserve Bank of India), through further public offer, rights issue, American Depository Receipts/Global Depository Receipts/Foreign Currency Convertible Bonds, qualified institutions placement, debt issue, preferential issue or any other method and for determination of issue price.Following 2nd proviso is inserted
    Provided further that intimation for determination of issue price in a qualified institution placement is not required if such placement is done in accordance with the provisions of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018.
  3. In sub-regulation (1)after existing clause (f), new clauses (g) and (h) are inserted which read as follows:
    The listed entity is now required to give prior intimations for:
    1. any alteration in the form or nature of  any of its securities that are listed on the stock exchange or in the rights or privileges of the holders thereof;
    2. any alteration in the date on which, the interest on debentures or bonds, or the redemption amount of redeemable shares or debentures or bonds, shall be payable.
  4. Sub-regulation (2) along with proviso is substituted with the following clause:
    The intimation required under sub-regulation (1) shall mention the date of such meeting of the Board of Directors

    Our comments:
     This is to bring uniformity of intimation, for financial results earlier there was a requirement to give prior intimation of at least five days in advance (excluding the date of the intimation and date of the meeting), which is now deleted and brought in line with all other prior intimations.

     

  5. Sub-regulation (3) is omitted: with respect to giving intimation of at least eleven working days for any proposal of alteration in the form or nature of any of its securities that are listed on the stock exchange or any alteration in the date of interest on debentures or bonds, or redemption amount of redeemable shares or debentures or bonds.
    These provisions are inserted in sub-regulation (1) after existing clause (f), new clauses (g) and (h)

8. Disclosure of events or information: Regulation 30:In Regulation 30 (11) of LODR Regulations there are certain amendments and now clause 30 (11) reads as follows:

The listed entity may on its initiative also, confirm or deny any reported event or information to stock exchange(s).

Provided that the top 100 listed entities and thereafter the top 250 listed entities with effect from the date specified by SEBI shall confirm, deny, or clarify upon the material price movement as may be specified by the stock exchanges any reported event or information in the mainstream media which is not general in nature and which indicates that rumor of an impending specific event or information is circulating amongst the investing public, as soon as reasonably possible but in any case not later than 24 hours from the trigger of material price movement.

Provided further that if the listed entity confirms the reported event or information, it shall also provide the current stage of such event or information.

Further, a new proviso is inserted which reads as follows:

Provided further that when the listed entity confirms within 24 hours from the trigger of material price movement, any reported event or information on which pricing norms provided under SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 or SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 or SEBI (Buy-back of Securities) Regulations, 2018 or any other pricing norms specified by SEBI or the stock exchanges are applicable, then the effect on the price of the equity shares of the listed entity due to the material price movement and confirmation of the reported event or information may be excluded for calculation of the price for that transaction as per the framework as may be specified by SEBI.

9. A new sub-regulation 30(11A)with respect to the disclosure of events or information is inserted as follows:

The promoter, director, key managerial personnel, or senior management of a listed entity shall provide adequate, accurate, and timely responses to queries raised or explanations sought by the listed entity to ensure compliance with the requirements under sub-regulation (11) and the listed entity shall disseminate the response received from such individual(s) promptly to the stock exchanges.

10. Annual Report: Regulation 34:In Regulation 34 (2) (f) of LODR with respect to the Business Responsibility and Sustainability Report (BRSR) following explanation is omitted

Explanation-1: For the purpose of this clause:

  • market capitalization shall be calculated as on the 31st day of March of every financial year;
  • Business Responsibility and Sustainability Report Core shall comprise such key performance indicators as may be specified by the Board from time to time
  • “value chain” for the listed entities shall be specified by the Board from time to time.

Our comments: Since there has been an amendment in the determination of Market Capitalization by stock exchanges and also that the SEBI Circular dated 12 July 2023 clarified KPIs on BRSR Core and specified value chain, this explanation is redundant and hence deleted.

11. Dividend Distribution Policy: Regulation 43A:

The top 1000 listed entities based on market capitalization (calculated as on March 31 of every financial year) shall formulate a dividend distribution policy which shall be disclosed on the website of the listed entity and a web link shall also be provided in their annual reports.

Our comments: Since there has been an amendment in the determination of Market Capitalization by stock exchanges, this line is deleted.

12. Meetings of shareholders and voting: Regulation 44:

In Regulation 44 (5) and (6) of LODR, there are minor changes with respect to the holding of annual general meetings by the top 100 listed entities by market capitalization and providing a one-way live webcast of the proceedings of the annual general meetings.

Our comments: Since there has been an amendment in the determination of Market Capitalization by stock exchanges, the Explanation to regulation 44 (6) has been deleted.

The link to the aforesaid Notification is as follows:
egazette.gov.in/(S(vekr4v2k1tw4czjeh5z05lep))/ViewPDF.aspx

27. Industry Standards on verification of market rumors

SEBI vide Circular SEBI/HO/CFD/CFD-PoD-2/P/CIR/2024/52 dated May 21, 2024, in consultation with the Industry Standards Forum (“ISF”) comprising of representatives from three industry associations, viz. ASSOCHAM, CII, and FICCI, under the aegis of the Stock Exchanges, on a pilot basis, formulated industry standards for effective implementation of the requirement to verify market rumors under Regulation 30(11) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR Regulations”).

It is provided that the industry associations that are part of ISF (ASSOCHAM, FICCI, and CII) and the stock exchanges shall publish the industry standards note on their websites, and listed entities are required to follow the aforesaid industry standards to ensure compliance with Regulation 30(11) of LODR Regulations.

The requirement to verify market rumors under Regulation 30(11) of LODR Regulations applies to the top 100 listed entities with effect from June 01, 2024, and to the top 250 listed entities (i.e., the next top 150) with effect from December 01, 2024, as specified by SEBI circular dated January 25, 2024.

The link to the aforesaid Circular is as follows:
https://www.sebi.gov.in/legal/circulars/may-2024/industry-standards-on-verification-of-market-rumours_83485.html

28. Industry Standards Note on verification of market rumours under Regulation 30(11) of LODR Regulations

This Note has been published to:

  • Facilitate a uniform approach and assist listed entities in complying with their obligations for confirmation/ denial/ clarification of market rumours, as per the proviso to Regulation 30(11) of (“LODR Regulations”) (the “Rumour Verification Requirement”); and
  • Set out standard operating procedures for compliance with the Rumour Verification Requirement.

The listed entities shall follow this Industry Standards Note to ensure compliance with the Rumour Verification Requirement.

The Industry Standard states about the following:

  1. Mainstream Media: includes Indian Newspapers like English National Dailies, Business/ Financial News Dailies, and Regional Dailies, Digital/ Online News Sources, International Media, and News Channels. It does not include social media platforms, personal blogs, and informal gossip channels.

  2. Not General in Nature: For a market rumor to require a confirmation/ denial/ clarification under Regulation 30(11), it must provide specifically identifiable details of the matter/ event; or provide quotes or be attributed to sources who are reasonably expected to be knowledgeable about the matter. Further, if a specific rumor is false, the company shall issue a statement to deny the rumor. Regulation 30(11) does not apply to market rumors that are vague or general.

  3. Material Price Movement: If the market rumor is specific and impending, then it shall require a specific confirmation/ denial/ clarification under Regulation 30(11), only if the market rumor results in a material price movement, as per the framework issued by the stock exchanges. It is clarified that Regulation 30(11) shall not apply to market rumors that do not result in a Material Price Movement, as per the framework issued by the stock exchanges.

  4. Market Rumor reported post-issuance of a pre-intimation notice under Regulation 29(1) of the LODR Regulations: If there is a market rumor during the period between issuance of the pre-intimation notice of a Board meeting under Regulation 29(1) and conclusion of the Board meeting, no confirmation/ denial/ clarification will be required. Appropriate disclosures may be made by the company as required under Regulation 30 read with Schedule III of the LODR Regulations, following the conclusion of the Board meeting.

The Industry Standards also provide for the following:

  1. Rumour verification standards for various stages of a potential M&A transaction
  2. Considering the unaffected price – in situations where rumour verification impacts price
  3. Guiding principles for rumor verification in respect of non-M&A transaction scenarios and illustrative non-M&A scenarios like Whistle-blower complaints, Internal Review/ Investigation in respect of operational/ financial aspects, Potential change in key managerial personnel (including resignation and removal of KMPs); and Health of the MD/ CEO.

The link to the SEBI Circular in regard to the above is as follows:
https://www.sebi.gov.in/legal/circulars/may-2024/industry-standards-on-verification-of-market-rumours_83485.html

29. Framework for considering the unaffected price for transactions upon confirmation of the market rumour

SEBI vide Circular SEBI/HO/CFD/CFD-PoD-2/P/CIR/2024/51 dated May 21, 2024, issued a framework for considering the unaffected price for transactions upon confirmation of market rumours as Annexure to this Circular. The same shall apply to the top 100 listed entities with effect from June 01, 2024, and to the top 250 listed entities (i.e., the next top 150) with effect from December 01, 2024.

The listed entity is required to verify market rumours, upon material price movement. As per proviso to Regulation 30(11) of LODR Regulations, the unaffected price shall be considered for transactions on which pricing norms specified by SEBI or the stock exchanges are applicable, provided that the rumour pertaining to such transaction has been confirmed within 24 hours from the trigger of material price movement.

Further, it has been specified that the unaffected price shall be considered by excluding the effect on the price of the equity shares of the listed entity due to the material price movement and confirmation of the rumour.

The link to the aforesaid Circular is as follows:
https://www.sebi.gov.in/legal/circulars/may-2024/framework-for-considering-unaffected-price-for-transactions-upon-confirmation-of-market-rumour_83483.html

30. Consultation Paper on the recommendation of the Expert Committee for facilitating ease of doing business under the provision of SEBI (Merchant Bankers) Regulations 1992, SEBI (Bankers to an Issue) Regulations 1994, and SEBI Buyback Regulations 2018

SEBI on May 21, 2024, uploaded a consultation paper on its website to seek comments/ views/suggestions from the public and other stakeholders on recommendations of the Expert Committee for facilitating ease of doing business under the provision of SEBI (Merchant Bankers) Regulations 1992, SEBI (Bankers to an Issue) Regulations 1994 and SEBI Buyback Regulations 2018.

Recommendations of the Expert Committee are as follows:
The summary of the recommendations made by the Expert Committee_p.pdf (sebi.gov.in)

The link to the aforesaid Consultation Paper is as follows:
https://www.sebi.gov.in/reports-and-statistics/reports/may-2024/consultation-paper-on-the-recommendations-of-the-expert-committee-for-facilitating-ease-of-doing-business-under-mb-regulations-bti-regulations-and-buyback-regulations_83503.html 

31. Master Circular for listing obligations and disclosure requirements for Non-convertible Securities, Securitized Debt Instruments and/ or Commercial Paper

SEBI vide Circular SEBI/HO/DDHS/DDHS-PoD-1/P/CIR/2024/48 dated May 21, 2024, issued a Master Circular for listing obligations and disclosure requirements for Non-convertible Securities, Securitized Debt Instruments and/ or Commercial Paper.

SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 prescribes the continuous disclosure requirements for issuers of listed Non-convertible Securities, Securitized Debt Instruments, and Commercial Paper. In this regard, SEBI has been issuing various circulars from time to time. This Master Circular incorporates the provisions of all the circulars/directions issued to date and enables the stakeholders to access them in one place.

The circulars mentioned in Annex-1 to this Master Circular shall stand superseded with the issuance of the Master Circular except for circulars issued to ‘all listed entities’, which shall continue to apply to entities that have listed specified securities.

The link to the aforesaid Master Circular is as follows:
https://www.sebi.gov.in/legal/master-circulars/may-2024/master-circular-for-listing-obligations-and-disclosure-requirements-for-non-convertible-securities-securitized-debt-instruments-and-or-commercial-paper_83481.html

32. Master Circular for Research Analysts

SEBI vide Circular SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2024/49 dated May 21, 2024, issued a Master Circular for Research Analysts (RAs) to enable users to have access to the applicable circulars related to RAs in one place. Various guidelines/directions were issued to the RAs by way of circulars/advisories. The provisions of such circulars issued until May 15, 2024, have been incorporated in this Master Circular, which supersedes the Master Circular for RAs dated June 15, 2023.

The link to the aforesaid Master Circular is as follows:
https://www.sebi.gov.in/legal/master-circulars/may-2024/master-circular-for-research-analysts_83487.html

33. Master Circular for Investment Advisers

SEBI vide Circular SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2024/50 dated May 21, 2024, issued a Master Circular for Investment Advisers (IAs) to enable users to have access to the applicable circulars related to IAs in one place. Various guidelines/directions were issued to the IAs by way of circulars/advisories. The provisions of such circulars issued until May 15, 2024, have been incorporated in this Master Circular, which supersedes the Master Circular for IAs dated June 15, 2023.

The link to the aforesaid Master Circular is as follows:
https://www.sebi.gov.in/legal/master-circulars/may-2024/master-circular-for-investment-advisers_83488.html

34. Master Circular for Stock Brokers

SEBI vide Circular SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2024/53 dated May 22, 2024, issued a Master Circular for Stock Brokers to enable users to have access to the applicable circulars related to Stock Brokers in one place. Various guidelines/directions were issued to the Stock Brokers by way of circulars/advisories. The provisions of such circulars issued until March 31, 2024, have been incorporated in this Master Circular, which supersedes the Master Circular for Stock Brokers dated May 17, 2023.

The link to the aforesaid Master Circular is as follows:
https://www.sebi.gov.in/legal/master-circulars/may-2024/master-circular-for-stock-brokers_83521.html 

35. Consultation Paper on recommendations of the Expert Committee for Facilitating Ease of Doing Business with respect to the Business Responsibility and Sustainability Report (BRSR)

SEBI on May 22, 2024, placed a consultation paper to seek comments from the public on recommendations of the Expert Committee for facilitating ease of doing business with respect to the Business Responsibility and Sustainability Report (BRSR).

Recommendations have been received from the Expert Committee on the following:

  1. Value Chain
  2. Green Credits
  3. Substituting the term “Assurance” with “Assessment”

The rationale behind the above proposals is to provide flexibility to listed entities to undertake either assessment (which is cost-effective and not burdensome) or assurance (which may be requested by investors/ clients of listed entities). The option of undertaking assessment rather than assurance of ESG data shall facilitate ease of doing business.

The link to the aforesaid Consultation Paper is as follows:
https://www.sebi.gov.in/reports-and-statistics/reports/may-2024/consultation-paper-on-the-recommendations-of-the-expert-committee-for-facilitating-ease-of-doing-business-with-respect-to-business-responsibility-and-sustainability-report-brsr-_83551.html

36. Consultation Paper on the review of certain aspects of the framework for the valuation of the investment portfolio of AIFs

SEBI on May 23, 2024, placed a consultation paper to seek comments from the public on the review of certain aspects of the framework for the valuation of the investment portfolio of AIFs.

Proposals are made to provide relaxation on the following aspects of the framework for the valuation of the investment portfolio of AIFs:

  1. Applicability of valuation norms to compute the valuation of the investment portfolio of AIFs;
  2. Change in valuation methodology and approach being considered as ‘material change’;
  3. Eligibility criteria of independent valuers to be appointed by AIFs; and,
  4. Timeline for reporting valuation of investment portfolio by AIFs to Performance Benchmarking Agencies.

The link to the aforesaid Consultation Paper is as follows:
https://www.sebi.gov.in/reports-and-statistics/reports/may-2024/consultation-paper-on-review-of-certain-aspects-of-the-framework-for-valuation-of-investment-portfolio-of-aifs_83552.html

37. Audiovisual (AV) presentation of disclosures made in Public Issue Offer Documents

SEBI vide Circular SEBI/HO/CFD/CFD-TPD-1/P/CIR/2024/55 dated May 24, 2024, allowed Audiovisual (AV) presentation of disclosures made in Public Issue Offer Documents.

It has been decided that all the salient disclosures made in the Draft Red Herring Prospectus (DRHP), Red Herring Prospects (RHP), and Price Band Advertisement for public issues shall also be made available in Audio Visual format (AV) for ease of understanding the features of public issues.

Such AV shall be prepared and placed in the public domain for all main board public issues. The same shall initially be in bilingual format i.e. English and Hindi. The Hindi version shall contain text in the Devanagari script.

The contents of the AV shall be as per the following guidelines:

  1. AV to comply with the provisions regarding “Public communications and publicity materials” prescribed under Schedule IX of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018.
  2. It shall contain the following disclosure to investors:
    “Investors are advised not to rely on any other document, content, or information provided regarding the public issue on the internet/online websites/social media platforms/micro-blogging platforms by influencers. Investors are advised to rely only on the information in the Offer Document and Price Band Advertisement for making investment decisions.”
  3. Each bilingual version of the AV shall be approximately 10 minutes.
  4. The total duration of the AV shall be equitably distributed to cover material disclosures made under various sections of the DRHP and RHP viz. about the company, risk factors, capital structure, objects of the offer, business of the issuer, promoters, management, summary of financial information, litigations, material developments and terms of the offer, etc.
  5. The content of the AV must be factual, non-repetitive, non-promotional, and shall not be misleading in any manner.

This framework will apply to all DRHP filed with SEBI on or after July 1 voluntarily and from October 1 onwards on a mandatory basis.

The AV must be uploaded on the issuer’s and AIBI’s websites within 5 working days of filing the DRHP with SEBI. For documents pre-filed under CHAPTER IIA of SEBI regulations, the AV must be made available within 5 working days of filing the Updated Draft Red Herring Prospectus-I.

The AV should also be available on the digital and social media platforms of the issuer and AIBI. The web link to the AV should be accessible via the websites of stock exchanges and lead managers to the issue. The AV must also be accessible through a QR code provided in offer-related documents.

The AV should be updated with the information from the RHP/prospectus and the price band advertisement, including details about the issue opening/closing date and price/price band. These updates should be uploaded on the date of the price band advertisement publication or the filing date of the prospectus for fixed price issues. Issuers and lead managers are responsible for ensuring the accuracy and content of the AV.

The link to the aforesaid Circular is as follows:
https://www.sebi.gov.in/legal/circulars/may-2024/audiovisual-av-presentation-of-disclosures-made-in-public-issue-offer-documents_83569.html

38. Self-Regulatory Organizations (SROs) for Social Impact Assessors in the context of Social Stock Exchange (“SSE”)

SEBI vide Circular SEBI/HO/CFD/PoD-1/P/CIR/2024/0060 dated May 27, 2024, added two more agencies with which Social Impact Assessors can be registered.

A Social Impact Assessor is an individual registered with the SROs under the Institute of Chartered Accountants of India or such other agency, as may be specified by SEBI, who has qualified for a certification program conducted by the National Institute of Securities Market.

In addition to the SROs under the Institute of Chartered Accountants of India, SEBI specified the following agencies as SROs for Social Impact Assessors in the context of the Social Stock Exchange:

  1. ICMAI Social Auditors Organization (ICMAI SAO) under the Institute of Cost Accountants of India
  2. ICSI Institute of Social Auditors (ICSI ISA) under the Institute of Company Secretaries of India.

The link to the aforesaid Circular is as follows:
https://www.sebi.gov.in/legal/circulars/may-2024/self-regulatory-organizations-for-social-impact-assessors-in-the-context-of-social-stock-exchange-sse-_83583.html

39. Timelines for disclosures by Social Enterprises on the Social Stock Exchange (“SSE”) for FY 2023-24

SEBI vide Circular SEBI/HO/CFD/PoD-1/P/CIR/2024/0059 dated May 27, 2024, prescribed timelines for disclosure by Social Enterprises on the Social Stock Exchange (“SSE”) for FY 2023-24.

In terms of Regulation 91C (1) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“SEBI LODR Regulations’) Not for Profit Organizations (NPOs) registered on SSE including NPOs whose designated securities are listed on SSE, shall be required to make annual disclosures to the SSE on matters specified under the SEBI Circular dated September 19, 2022, by October 31, 2024, for the Financial Year 2023-24.

In terms of Regulation 91E (1) of SEBI LODR Regulations, 2015, Social Enterprises which has registered or raised funds through SSE shall be required to submit an Annual Impact Report to SSE by October 31, 2024, for the Financial Year 2023-24.

The link to the aforesaid Circular is as follows:
https://www.sebi.gov.in/legal/circulars/may-2024/timelines-for-disclosures-by-social-enterprises-on-social-stock-exchange-sse-_83582.html

40. SEBI (Infrastructure Investment Trusts) (Amendment) Regulations, 2024

SEBI vide Notification SEBI/LAD-NRO/GN/2024/182 on May 27, 2024, amended the SEBI (Infrastructure Investment Trusts) Regulations, 2014. The said amendment shall come into force from the date of its publication in the Official Gazette.

The following amendments are made to the regulations:

1. A new explanation is added to the definition of Net Asset Value, which states that to calculate the number of outstanding units, any outstanding subordinate units shall not be included.

2. A new definition of sub-ordinate unit is inserted which states that subordinate unit means an instrument issued by an InvIT which can be reclassified as an ordinary unit.

3. The definition of a unit is modified and now states that a unit or ordinary unit means the beneficial interest of the InvIT.

4. Regulation 4(2)(h) with respect to Eligibility Criteria is substituted and reads as follows:
“subject to the provisions of Chapter IVA of these regulations, there shall be only one class of units and all units shall carry equal voting  rights and distribution rights associated  with  such units.”

5. A new sub-regulation 4(2)(i) with respect to Eligibility Criteria is inserted which reads as follows:
“the unitholder(s)holding  not  less  than  10%  of  the  total  outstanding  units  of  the  InvIT, either individually or collectively, shall:

  1. be entitled to nominate 1 director on the board of directors of the Investment Manager, in such manner as may be specified by the Board:
    Provided that the director so nominated shall recuse from voting on any transaction where such nominee director or  associate  of  such  nominee  director  or  the unitholder  who nominated such nominee director or associate of such unitholder is a party;
  2. comply with the stewardship code specified in Schedule VIII of these regulations.

6. A new sub-regulation 12(4) and 12(5) with respect to the rights and responsibilities of the Sponsor is inserted which reads as follows:
“(4) For the purpose of calculating the minimum unitholding requirements as mentioned in sub-regulations (3) and (3A) above, subordinate units shall not be considered in computing total outstanding units of the InvIT
(5) Subordinate units shall not be eligible for meeting the minimum unitholding requirement as mentioned in sub-regulations (3) and (3A) above.”

7. A new sub-regulation 15(5B) with respect to the issue of units and allotment is inserted which reads as follows:
“No InvIT shall raise funds through the public issue if any subordinate units have been issued and are outstanding.”

SEBI has also issued the ‘Framework for Issuance of Subordinate Units’ in Chapter IVA of SEBI (Infrastructure Investment Trusts) Regulations, 2014.

The link to the aforesaid Notification is as follows:
https://www.sebi.gov.in/legal/regulations/may-2024/securities-and-exchange-board-of-india-infrastructure-investment-trusts-amendment-regulations-2024_83616.html

41. Investor Charter for Stock Exchange

SEBI vide Circular SEBI/HO/MRD/MRD-PoD-2/P/CIR/2024/63 dated May 29, 2024, issued an Investor Charter for Stock Exchanges to enhance investor awareness and protection in the securities market.

Significant modifications are made to the existing Investor Charter for Stock Exchanges. The updated charter incorporates new mechanisms such as the Online Dispute Resolution (ODR) platform and the upgraded SCORES 2.0 system, which aim to streamline and improve the grievance redressal process for investors.

This Charter highlights the services provided to Investors, the Rights of Investors, various activities of stock exchanges with timelines, Dos and DON’T for Investors, Responsibilities of Investors, Code of Conduct for Stock Exchanges, and Grievance Redressal Mechanism.

The link to the aforesaid Investor Charter is as follows:
https://www.sebi.gov.in/legal/circulars/may-2024/investor-charter-for-stock-exchanges_83653.html

42. Investor Charter for Depositories and Depository Participant

SEBI vide Circular No. SEBI/HO/MRD/MRD-PoD-1/P/CIR/2024/66 dated May 29, 2024, issued an Investor Charter addressing all registered depositories and depository participants.

The modified Investor Charter for Depositories and Depository Participants is issued to enhance investor awareness and protection about various activities such as dematerialization/ rematerialization, transmission of securities, settlement instruction, consolidated account statement, grievance redressal mechanism, etc.

The updated charter incorporates new mechanisms such as the introduction of Online Dispute Resolution (ODR) and SCORES 2.0 for improved grievance redressal, as well as a requirement for depositories to publish the Investor Charter on their websites.

This Charter highlights the services provided to Investors, the Rights of Investors, various activities of Depository through DPs with timelines, Dos and DON’T for Investors, Responsibilities of Investors, Code of Conduct for Depositories and DPs, and Grievance Redressal Mechanism.

The link to the aforesaid Investor Charter is as follows:
https://www.sebi.gov.in/legal/circulars/may-2024/investor-charter-for-depositories-and-depository-participants_83649.html

43. Master Circular for Foreign Portfolio Investors, Designated Depository Participants and Eligible Foreign Investors

SEBI vide Circular SEBI/HO/AFD/AFD-PoD-2/P/CIR/2024/70 dated May 30, 2024, issued a Master Circular related for Foreign Portfolio Investors (FIs), Designated Depository Participants (DDPs) and Eligible Foreign Investors (EFIs).

Earlier SEBI vide Circular SEBI/HO/AFD-2/CIR/P/2022/175 dated December 19, 2022, had issued Master Circular for FPIs, DDPs and Eligible Foreign Investors under the Securities and Exchange Board of India (Foreign Portfolio Investors), Regulations 2019. Subsequently, various circulars has been issued pertaining to FPIs and DDPs.

Accordingly, the Master Circular dated May 30, 2024 supersedes the Master Circular dated December 19, 2022 and the circulars mentioned in Annexure A of the Master Circular dated May 30, 2024 shall stand rescinded.

The link to the aforesaid Master Circular is as follows:
https://www.sebi.gov.in/legal/master-circulars/may-2024/master-circular-for-foreign-portfolio-investors-designated-depository-participants-and-eligible-foreign-investors-_83689.html 

44. Comprehensive guidelines for Investor Protection Fund (IPF) and Investor Services Fund (ISF) for Stock Exchanges having commodity derivatives segment

SEBI vide issue of circulars in 2016, 2017, 2018 and 2021 has issued provisions for Investor Protection Fund (IPF) and Investor Service Fund (ISF) for Commodity Derivatives Segment and Price Dissemination through SMS/Electronic Communication Facility. The aforementioned circulars were rescinded with issuance of Master Circular for Commodity Derivatives Segment in 2023.

Further SEBI vide issue of another circular in 2023 has issued Comprehensive guidelines for IPF and ISF at Stock Exchanges and Depositories but excluded the Commodity Derivatives Exchanges. In view of the aforementioned representations were received from market participants with respect to propositions on Ease of Doing Business in Commodity Derivatives Segment. Accordingly, the IPF and ISF guidelines for Commodity Derivatives Segment have been revised vide Circular SEBI/HO/MRD/MRD-PoD-1/P/CIR/2024/71 dated May 30, 2024.

The link to the aforesaid Circular is as follows:
https://www.sebi.gov.in/legal/circulars/may-2024/comprehensive-guidelines-for-investor-protection-fund-ipf-and-investor-services-fund-isf-for-stock-exchanges-having-commodity-derivatives-segment_83718.html

45. Revision of eligibility criteria for launching commodity futures contracts

SEBI vide Master Circular dated August 04, 2023 for Commodity Derivatives segment has prescribed Criteria for Eligibility, Retention and Re-introduction of Derivative Contracts on Commodities and Permission for Trading in Futures Contracts, respectively.

Some of these norms were prescribed by erstwhile Forward Market Commission (FMC) and were continued after the merger of FMC with SEBI. However, due to evolution of commodity derivatives market with the introduction of new products, participants, entry of new stock exchanges the norms are ought to be reviewed. Accordingly, based on representations received from market participants and deliberations by Commodity Derivatives Advisory Committee (CDAC) of SEBI, vide Circular SEBI/HO/MRD/MRD-PoD-1/P/CIR/2024/69 dated May 30, 2024 has modified the norms under Paragraph 2.2 and Paragraph 10.1 of the Master Circular dated August 04, 2023 which relates to Criteria for Eligibility, Retention and Re-introduction of Derivative Contracts on Commodities and Permission for Trading in Futures Contracts, respectively.

The link to the aforesaid Circular is as follows:
https://www.sebi.gov.in/legal/circulars/may-2024/revision-of-eligibility-criteria-for-launching-commodity-futures-contracts_83684.html 

46. Ease of Doing Business – Internet Based Trading for Stock Brokers

SEBI, to improve ease of doing business and remove obsolete compliance requirements related to activities of Market Infrastructure Institutions (MIIs), had sought inputs or suggestions from various stakeholders. The Industry Standard Forum (ISF) of stock brokers made requests pertaining to Internet Based Trading (IBT).

The Working Group of MIIs and Secondary Market Advisory Committee (SMAC) of SEBI examined the above requests and decided the following:

  1. The timeline for stock exchange to communicate its decision on application of the broker seeking permission to provide IBT Service has been reduced from 30 calendar days to 7 calendar days. (Clause 1.1 of Chapter 2 of SEBI Master Circular for Stock Exchanges and Clearing Corporations dated October 16, 2023);
  2. The stock brokers periodically report IBT terminal details to the Stock Exchanges. The exchanges compute IBT trade statistics for each stock broker on the basis of IBT terminal details provided by the stock broker. Accordingly, the requirement of obtaining periodic confirmation from the stock brokers on the IBT statistics before they are published by Stock Exchange has been done away with. The Stock Exchanges in this regard, may obtain information/declaration about IBT terminals from stock brokers as deemed fit by them. (Clause 1.1.2.4.3.3 of Chapter 2 of SEBI Master Circular for Stock Exchanges and Clearing Corporations dated October 16, 2023)

The link to the aforesaid Circular is as follows:
https://www.sebi.gov.in/legal/circulars/may-2024/ease-of-doing-business-internet-based-trading-for-stock-brokers_83681.html

47. Settlement Calculator BETA - SEBI (Settlement Proceedings) Regulations, 2018

SEBI vide Press release dated May 30, 2024 has informed the stakeholders that it has launched a BETA version of the Settlement Calculator. The purpose of the said calculator is to simplify and provide more transparency in the process of arriving at the indicative settlement amount in terms of the parameters laid down in the SEBI (Settlement Proceedings) Regulations, 2018.

This Settlement Calculator contains fields that the applicant may identify in terms of the violations and also enables the applicant to select the appropriate options with respect to their past regulatory track record on the basis of actions of SEBI as well as the details of other ongoing proceedings, if any, as on date of filing the settlement application.

A user friendly guide video has also been included in the Settlement Calculator for the ease of understanding the process of arriving at the indicative settlement amount.

The BETA version of the Settlement Calculator is available on the SEBI website from today and can be accessed from the link https://www.sebi.gov.in/set-cal.html or the QR Code provided in the press release.

The link to the aforesaid Press Release is as follows:
https://www.sebi.gov.in/media-and-notifications/press-releases/may-2024/settlement-calculator-beta-sebi-settlement-proceedings-regulations-2018_83688.html 

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