The Securities and Exchange Board of India (SEBI) has vide its notification No. SEBI/LAD-NRO/GN/2021/47 dated 7th September 2021 has brought the fifth amendment to SEBI Listing Obligations and Disclosure Requirements, 2015. The Securities and Exchange Board of India has now introduced new rules, compliances, and corporate governance norms for the listed entities which have their debt securities and have an outstanding value of such debt securities of Rs. 500 crores and above. Non-convertible debt securities, non-convertible redeemable preference shares, perpetual debt instruments, and perpetual non-cumulative preference shares are all brought under a single term which is non-convertible securities. The listed entities should comply with SEBI (LODR) (Fifth Amendment) Regulations, 2021 within six months from the date of first trigger i.e. outstanding value of debt securities become Rs. 500 crores and above. SEBI (LODR) (Fifth Amendment) Regulations, 2021 would apply to ‘high value debt listed entity’ on a ‘comply or explain’ basis until March 31, 2023. After March 31, 2023, it would be applicable on a mandatory basis.
A new regulation 61A has also been added in SEBI (LODR) (Fifth Amendment) Regulations, 2021. According to the new regulation 61A, a listed entity cannot forfeit unclaimed interest, dividend, or redemption amount. If the interest, dividend, or redemption amount has not been claimed for 30 days from the date on which it became due, the entity must first transfer the unclaimed amount to an escrow account within seven days from the expiry of thirty days. Any amount in the escrow account will be transferred to the ‘Investor Education and Protection Fund’ if it has not been claimed for a period of seven years. SEBI has also directed that any unclaimed amount for a period of 7 years from the date of notification of this subsection, which is September 7th, 2021 will be transferred to an escrow account within thirty days.
The provisions of Regulation 21 related to the Risk Management Committee shall now to applicable to ‘a high-value debt listed entity’ along with the top 1000 listed entities, determined based on market capitalization as at the end of the immediately preceding financial year. ‘A high value listed entity’ also needs to disclose related party transactions along with its financial results for half a year. With respect to Independent Directors, Directors and Officers Insurance (D and O insurance) shall be done for all the independent directors. The risk and sum assured would be determined by the Board of Directors. ‘A high value listed entity’ shall be excluded for the determination of the number in which a director can be a member or chairperson of a committee.
The regulation regarding intimation to stock exchange has now been changed to listed entities giving prior information to stock exchange at least 2 days prior in which proposals regarding any alternation in form or nature of listed non-convertible securities, the rights of the holder, or the date of any payment of non-convertible securities, financial results or any other matter affecting the rights or interest of holders of non-convertible debentures. The outcomes of the meeting in which financial results and decisions regarding the raising of funds proposed to be taken by non-convertible securities have to be intimated to stock exchange(s) within thirty minutes after the meeting is closed. A listed entity must maintain a hundred percent for higher asset cover for its listed non-convertible debt securities and disclose the asset cover available along with its financial results. The intimation to the stock exchange regarding interest, dividend, or principal becoming due for non-convertible debentures has now been reduced to one day.
The SEBI Listing Obligations and Disclosure Requirements, 2015 was amended to give effect to these norms, rules, and compliances.SEBI (LODR) (Fifth Amendment) Regulations, 2021 would apply to ‘high value debt listed entity’ on a ‘comply or explain’ basis until March 31, 2023. After March 31, 2023, it would be applicable on a mandatory basis.