In this blog post, Priyasa Patnaik, advocate and a student of Diploma in Entrepreneurship Administration and Business Laws by NUJS, provides an overview of periodic compliance and information sharing under SEBI regulations for listed companies. 

Introduction

The significance of listing a company on a recognized stock exchange is to protect the interests of investors in securities[1].In order to protect the interest of the investors in securities; there are listing requirements which the company adheres to so as to be to be listed. Such listing requirements include disclosures which are mandatory for the listed company. The Securities and Exchange Board of India (‘SEBI’) has issued the SEBI (Listing obligations and disclosure requirements) Regulations, 2015(‘Listing Regulations’) specifying the periodic compliances and other disclosures of information to be made by the listed entities. The provisions of the Listing Regulations are aligned with the Companies Act 2013 in respect of the listed companies so as to enhance corporate governance.

Periodic Compliances

The periodic compliances which a listed company has to comply with such as compliance certificate, compliance report, shareholding pattern, quarterly reports, etc. are as described herein below:

1. The listed company is required to submit a compliance certificate to the stock exchange where it is listed, duly signed by the listed company’s compliance officer and authorized share transfer agent, wherever applicable, within one month of end of each half of the financial year and the compliance certificate states of physical and electronic transfer facility either in-house or by Registrar to an issue and share transfer agent registered with the Board, as applicable are maintained in the listed company[2].
2. The listed company is required to file a statement with the stock exchange where it is listed within 21 days from the end of each quarter enumerating the number of investor’s complaints pending at the beginning of the quarter, received during the quarter, disposed of during the quarter and remains unresolved at the end of the quarter[3].
3. The listed company is required to submit a compliance report in every quarter within 15 days from the close of the quarter. However, those listed companies who have paid up equity share capital not exceeding rupees ten crore and net worth not exceeding rupees twenty-five crore, as on the last day of the previous financial year and who have listed their securities on the Small and Medium Enterprise (SME) Exchange, do not have to file compliance reports[4].
4. The listed company is required to furnish its shareholding pattern before and after being listed on the stock exchange, i.e. 1 day prior to the listing of its securities on the stock exchange, within 21 days from the end of the quarter, within 10 days of any capital restructuring of the listed company that has resulted in exceeding 2% of the total paid-up share capital. However, if the listed company is an SME, the said statements are to be furnished biannually within 21 days from the end of six months[5].
5. The listed company is required to furnish standalone quarterly and yearly financial results to the stock exchange within 45 days from the end of the quarter and 60 days from the end one financial year, respectively. The quarterly result shall be submitted along with the Limited Review Report or Audit Report as applicable. In the case of the yearly financial result, the listed company shall also submit the audit report with modified or unmodified opinion. In the case of the quarterly financial result of a listed company which is an SME shall be read as a half-yearly financial result[6].
6. The listed company is required to furnish annual reports to the stock exchange within 21 working days of it being approved and adopted at its annual general meeting as stipulated in the provisions of the Companies Act, 2013[7].
7. The listed company is required to ensure that the share transfer agent or in-house share transfer facility furnishes a certificate from a practicing company secretary certifying that certificates pertaining to the transfer, sub-division, consolidation, renewal, exchange or endorsement of calls/allotment monies has been issued within 30 days from the date of the said activities[8].

Further, the Listing Regulations stipulate that material information about the listed company is required to be furnished to the stock exchange in which it is listed. Such information includes price sensitive information or any action that affects the operation of the listed company[9]. The material information of a listed company is enumerated in Schedule III of the Listing Regulations including disclosure to be made to the stock exchange in an application or without application[10]. Any change in the shareholding pattern by way of acquisition of shares or scheme of arrangement (amalgamation / merger / demerger /restructuring) or sale or disposal of any unit(s), division(s) or subsidiary of the listed entity or agreements (viz. Shareholder agreement(s), joint venture agreement(s), family settlement agreement(s) (to the extent that it impacts management and control of the listed entity) or any other restructuring  reference to the Board for Industrial and Financial Reconstruction (BIFR) or winding up of the listed company require the listed company to disclose this information without making an application.  The stock exchange where the listed company is listed are also required to be informed of any change which has an effect on the Non-convertible Debt Securities & Non -Convertible Redeemable Preference Shares[11], Indian Depository Receipts[12], Securitised debt instrument[13].

Conclusion

By enforcing the Listing Regulations, SEBI has made an effort to create an umbrella of necessary compliances that a listed company needs to ensure and therefore, compliances on the part of the listed companies are enhanced. However, effective implementation of the same is yet to be realized.

References:

[1]The Preamble of the Securities and Exchange Board of India Act, 1992, No. 15 of 1992 – “An Act to provide for the establishment of a Board to protect the interests of investors in securities and to promote the development of, and to regulate, the securities market and for matters connected therewith or incidental thereto”.

[2] Regulation 7 (3) of the Listing Regulations.

[3]Regulation 13 (3) of the Listing Regulations.

[4]Regulation 27 (2) of the Listing Regulations.

[5]Regulation 31 of the Listing Regulations.

[6]Regulation 33 of the Listing Regulations.

[7]Regulation 34 of the Listing Regulations.

[8]Regulation 40 (9) of the Listing Regulations.

[9][9]Regulations 30of the Listing Regulations. See also – http://taxguru.in/sebi/analysis-sebi-listing-obligations-disclosure-requirements-regulations-2015.html accessed on 29^th March 2016.

[10]Regulation 30 (4) of the Listing Regulations.

[11]Regulation 51(2) of the Listing Regulations.

[12]Regulation 68(2) of the Listing Regulations.

[13]Regulation 83(2) of the Listing Regulations.