COMPLIANCES UNDER SEBI LISTING REGULATIONS, 2015

Transcription

1 COMPLIANCES UNDER SEBI LISTING REGULATIONS, 2015 S.SUDHAKAR VICE-PRESIDENT CORPORATE SECRETARIAL RELIANCE INDUSTRIES LIMITED 1

2 Disclaimer VIEWS EXPRESSED ARE OF MY OWN AS A PROFESSIONAL AND NOT OF THE ORGANISATION IN WHICH I AM EMPLOYED 2

3 Session Objectives 1. Principles Governing Disclosures & Obligations 2. Common Obligations of Listed Entities 3. Obligations of entities listed its Specified Securities 4. Obligations of entities listed its non-convertible Debt securities and Redeemable Preference shares 5. Cost of Compliance & Non-Compliance

4 TYPES OF COMPLIANCES

5 Types of Compliances One time Compliances Quarterly Compliances Half-yearly Compliances Yearly Compliances Event based Compliances 5

6 One time Compliances Execution of two page listing agreement Appointment of Compliance Officer Appointment of Share transfer Agent / Category II share transfer agent registration Constitution of Committees Framing of Policies 6

7 Quarterly Compliances Within 21 days from end of each quarter file a statement with details of complaints Within 15 days from closure of quarter file quarterly compliance report on Corporate Governance Within 21 days from the end of each quarter file a statement of shareholding pattern for each class of securities Within 45 days of end of each quarter submit Financial Results with Limited Review report 7

8 Half-yearly Compliances Within one month of end of each half of financial year to file a certificate with exchanges certifying compliance with regard to appointment of share transfer agent or Registration As a part of financial results for the half year, by way of a note, a statement of assets and liabilities shall be filed Within one month of the end of each half of the financial year file a certificate from a practicing company secretary in regard to share transfers, sub-division, consolidation, renewal or endorsement of call / allotment monies etc 8

9 Yearly compliances Compliance report on Corporate Governance at the end of the financial year (no time limit is prescribed) Compliance report on Corporate Governance within six months from end of financial year (may be filed with second quarter report) Submit annual report to the exchanges within 21 working days of it being approved and adopted in the AGM 9

10 Event based Compliances Obtain in-principle approval before issuing Securities Disclosure of events / information having material impact Reclassification of Promoters Statement of deviation or variations File draft scheme of arrangement Intimation of Record Date Declaration of Dividend E-voting report Change in the name 10

11 Kind of compliances under Listing Regulations Constitution of Committees Formulation of Policies Intimation to Stock Exchanges Filings with Stock Exchanges Obtaining Approvals 11

12 Committees to be constituted Audit Committee Nomination & Remuneration Committee Stakeholder Relationship Committee Risk Management Committee Vigil mechanism 12

13 Policies to be formulated Policy for Preservation of Documents Policy for determining material subsidiary Vigil mechanism for directors and employees of the company Policy on materiality of related party transactions and on dealing with related party transactions Policy for determination of materiality for intimation to stock exchanges Authorize one or more KMPs to determine materiality of an event or information and disclose the contact particulars to stock exchanges and also put on website Archival policy for retention of disclosures uploaded on website of the company Lay down a code of conduct for Directors and senior management 13

14 Number of Days to intimate At some places it was mentioned number of working days At some places only it was mentioned number of days At some places it was mentioned to exclude the date of intimation and the date of the meeting At some other places it was not even mentioned to exclude the date of intimation 14

15 Statutory force to Listing Regulations The new Regulations got a greater statutory force and noncompliance would lead to violation of Securities Laws including SEBI Act and consequential penal provisions would be applicable 15

16 Listing Agreement Listing Agreement a 2 page agreement is to be signed by the listed entity while getting its securities listed. existing listed entities as on the date of the notification, to sign such agreement within 6 months of the notification of the regulations 16

17 Applicability of the Regulations The Regulations shall apply to the listed entity who has listed any of the following designated securities on recognised stock exchange(s) Specified securities listed on main board or SME exchange or institutional trading platform Non-convertible debt securities, non-convertible redeemable preference shares, perpetual debt instruments, perpetual non-cumulative preference shares Indian Depository Receipts Securitised debt instruments Units issued by mutual funds Any other securities as may be specified by the Board 17

18 Principles of governing disclosures & obligations (chapter II) 18

19 Principles governing disclosures & obligations Listed entities shall make disclosures and abide by its obligations in accordance with these principles These principles underlie specific requirements prescribed in different chapters of the Regulations In the event of the absence of specific requirements or ambiguity these principles would serve to guide the listed entities These Governing principles are applicable to all listed entities The principles substantially raise the bar of Corporate Governance 19

20 Common obligations of the listed entity (chapter III) 20

21 5 General obligations for compliance Listed entities shall ensure that KMPs, Directors, Promoters or any other person dealing with the listed entity complies with the responsibilities and obligations, assigned to them under this chapter 21

22 6 Appointment of Compliance Officer Qualified Company Secretary is to be appointed as Compliance Officer 22

23 7 Share Transfer Agent Share transfer agent or in house share transfer facility In house share transfer facility with security holders exceeds one lakh obtain Registration as category II share transfer agent Submit a compliance certificate within one month of each half of the financial year certifying the above such compliance certificate shall be signed by Compliance officer and the share transfer agent In case of change in share transfer agent, enter into tripartite agreement and intimate the exchanges within seven days Place the agreement before the Board of Directors at its subsequent meeting 23

24 Other miscellaneous obligations co-operate and submit correct and adequate information to the intermediaries registered with SEBI, such as credit rating agencies, registrar to an issue and share transfer agent, debenture trustee etc policy for preservation of documents approved by the board of directors The policy shall have at least two categories, classifying preservation of documents permanent in nature and for a period of not less than 8 years after completion of the relevant transactions Scheme of arrangements / amalgamations / mergers / reconstruction / reduction of capital etc shall not violate, over ride or limit the provisions of any securities laws or requirement of exchanges 24

25 Other miscellaneous obligations contd. Use electronic payment facility approved by RBI for payment of Dividend, Interest, Redemption or Repayment amounts Physical instruments for amounts exceeding Rs1,500 payable at par warrants, shall be sent by speed post Ensure registration on SCORES platform Ensure expeditious redressal of investor complaints File a statement with stock exchanges on quarterly basis within 21 days from the end of each quarter, the status of complaints at the end of the quarter Such statement shall be placed before the Board on quarterly basis Timely payment of listing fee to stock exchanges 25

26 Obligations of listed entity which has listed its specified securities - (chapter IV) 26

27 Compliances relating to constitution of Board & Committees 27

28 17 Board of Directors Optimum combination of executive and non-executive directors with at least one woman director Non-executive chairperson - at least one-third of the board shall comprise independent directors Executive chairperson - at least half of the board shall comprise independent directors At least four meetings in a year with 120 days gap between two meetings Board shall periodically review compliance reports pertaining to all applicable laws, as well as steps taken to rectify instances of noncompliances 28

29 Board of Directors contd.. Succession plans for appointment of Board and senior management shall be in place Board shall lay down a code of conduct for Board and senior management No stock options to independent directors Specified information in Part A of Schedule II shall be placed before the Board CEO and CFO shall provide the compliance certificate to the Board as specified in Part B of Schedule II Performance evaluation of independent directors shall be done by the entire board 29

30 18 Audit Committee Audit committee shall have minimum three directors as members Two-thirds of committee shall be independent directors All members shall have the ability to read and understand the financial statements Chairperson shall be independent director and shall be present at the AGM Company secretary shall be the secretary of the Committee Committee shall meet at least four times in a year and not more than 120 days shall elapse in between two meetings 30

31 19 Nomination & Remuneration Committee The committee shall comprise at least three directors All committee members shall be non-executive directors At least fifty percent of the directors shall be independent directors Chairperson of the committee shall be an independent director Chairperson of the company may be member but shall not chair Chairperson shall be present at the AGM of the company 31

32 Shareholders Relationship Committee Chairperson shall be a non-executive director Board shall decide other members of the committee Role as specified as part D of schedule II 32

33 Risk Management Committee Majority shall consist of members of Board of Directors Senior executives may be members of the committee Chairperson shall be a member of the Board Board shall define the role of the Committee Applicable to top 100 entities based on market capitalisation 33

34 Vigil mechanism Formulate a vigil mechanism for Directors and employees to report genuine concerns Vigil mechanism shall provide for adequate safeguards to vigil blowers Direct access to the Chairperson and Audit Committee shall be provided in case of exceptional cases 34

35 23 Related party transactions Formulate a policy on materiality of related party transactions and on dealing with related party transactions A transaction exceeding ten percent of the annual consolidated turnover of the listed entity as per the last audited financial statements shall be considered to be material Prior approval of the audit committee Audit committee may grant omnibus approval All material related party transactions shall require approval of the shareholders through a resolution (Ordinary) All related parties shall abstain from voting on such resolutions All material related party transactions entered into prior to the date of notification of these regulations shall be approved by the shareholders 35

36 24 Requirements with respect to subsidiaries At least one independent director of the listed entity shall be on the board of the material subsidiary incorporated in India Audit Committee shall review the financial statements and in particular the investments made by the unlisted subsidiaries Board minutes of unlisted subsidiaries shall be placed before the Board All significant transactions and arrangements entered into by the unlisted subsidiaries shall be placed before the Board Significant transactions mean transactions that exceeds or likely to exceed 10% of the total revenues or expenses or total assets or liabilities as the case may be of the unlisted subsidiary for immediately preceding year 36

37 Disposal of shares or assets of material subs Shareholder approval by way of a special resolution Disposal of shares in material subsidiary (either on its own or together with other subsidiaries) resulting in reduction of its holding to less than fifty percent, sale, disposal or lease of assets amounting to more than 20% of the assets of material subsidiary, unless the same is by way of an arrangement approved by a court / tribunal 37

38 25 Independent Directors To familiarise the independent directors through various programmes about the listed entity, including the following nature of the industry in which the listed entity operates; business model of the listed entity; roles, rights, responsibilities of independent directors; and any other relevant information Entity shall familiarise the independent directors Nature of industry Business model Role, rights and responsibilities Other relevant information 38

39 27 Compliance report on Corporate Governance As against once in a quarter the report is now to be filed as under On quarterly basis i.e. within 15 days from the closure of the quarter At the end of the financial year (for the whole of financial year) Within 6 months from the end of the financial year. This may be submitted along with second quarter report The above reports shall be placed before the board of directors in its next meeting. This report shall be signed either by the compliance officer or of the CEO of the listed entity 39

40 Contents of Corporate Governance Report Quarterly report Composition of Board of directors and Committees Meeting details of Board of directors and Committees Material Related party transactions Affirmations relating to compositions of Board, Committees, Meetings etc Year end report Disclosures on web site Policies, terms & conditions of appointment of independent directors, financial results, shareholding pattern etc Annual affirmations six monthly report after end of financial year Affirmations relating to balance sheet, AGM, presence of committee chairman etc 40

41 29 Prior intimations Two working days prior intimation, excluding the date of intimation and the date of the meeting for the following events Quarterly / half-yearly / annual financial results Buy-back of securities Voluntary delisting Fund raising by way of FOP / Rights / ADR / GDR / FCCB / debt / preferential issues etc Intimation shall also be given while convening AGM / EGM for obtaining shareholder approval for such issues Declaration / recommendation of Dividend, issue of convertible securities Declaration of bonus securities (if not part of agenda prior intimation not required) 41

42 Prior intimations contd.. At least five days advance intimation excluding the date of intimation and the date of the meeting shall be given for the following In case of quarterly / half-yearly / annual financial results At least eleven working days advance intimation to be given to place the following before the Board Alteration in the form or nature of its listed securities Alteration in the rights or privileges of the holders thereof Alteration in the date of interest or redemption payments 42

43 30 disclosure of Material event or information Board is under obligation to disclose any event or information which in their opinion is material Events specified in para A of part A of Schedule III are deemed to be material Events specified in para B of part A of Schedule III based on application of determination of materiality 43

44 Criteria for determination of materiality Board is under obligation to disclose the following Omission of an event or information likely to result in discontinuity or alternation of event or information already available publicly; or Omission of an event or information is likely to result in significant market reaction when it comes to light In the opinion of the board such event / information is material Frame a policy for determination of materiality duly approved by the Board of directors Board shall authorise one or more KMPs to determine the materiality for the purpose of making disclosure Contact details of such person shall be disclosed to the exchanges and also on the entity s website 44

45 Disclosure of material event / information Disclosure of material event / information shall be given not later than twenty four hours If such disclosure is not given in time explain the reasons for such delay Disclosure in respect of events specified in sub-para 4 of para A of part A of schedule III shall be made within 30 minutes of the conclusion of the board meeting All disclosures made to stock exchanges shall be disclosed on the website of the entity and shall be hosted for a minimum period of five years An archival policy shall be framed Even / information though not indicated in para A or para B of schedule III, but which may have material effect shall be disclosed to exchanges 45

46 Deemed material events / information (para A of part A of Schedule III) Acquisitions, Scheme of arrangements, sale or disposal of units, divisions or subsidiaries of listed entity Acquisition shall mean Acquiring control whether directly or indirectly or Acquiring or agreeing to acquire shares or voting rights in a company whether directly or indirectly such that The listed entity holds shares or voting rights aggregating to five percent or more of the shares or voting rights in the said company or There has been change from the last disclosure and such change exceeds 2% Issue, forfeiture, split or consolidation of shares, buyback, restriction on transfer of securities or alteration in the any of these Revision in credit ratings Agreements viz; shareholder agreements, joint venture agreement, family settlement agreement, agreement with media companies which are binding and not in the normal course of business 46

47 Deemed material events / information Fraud / defaults by promoter or KMP or by listed entity or arrest of KMP or promoters Change in Directors, KMPs, Auditors and compliance officer Appointment or discontinuance of share transfer agent Corporate debt restructuring One time settlement with banks Reference to BIFR and winding up filed by creditors Proceeding of AGM / EGMs Amendments to memorandum and articles Schedule of Analyst or Institutional investors meets, presentations on financial results 47

48 Outcome of meetings of Board of Directors Within 30 minutes of the closure of the meetings the following outcomes are to be disclosed Dividends / cash bonuses Cancellation of dividends with reasons thereof Buy-back Fundraising proposals Bonus issue Reissue of forfeited shares or securities Particulars of alterations of capital including calls Financial results Voluntary delisting 48

49 Events for disclosure on application of guidelines Para B events which shall be disclosed upon application of the guidelines for materiality referred sub-regulation (4) Regulation 30 mostly these are operational events commencement or postponement of commercial production Change in general character of business, capacity addition or product launch, award or termination of orders / contracts, agreements which are binding and not in normal course of business Capacity addition or product launch Awarding / bagging new contracts not in the normal course of business Disruption of operations due to natural calamities, strikes / lockouts etc Impact due to change in regulatory frame work Litigations / disputes with impact Fraud / defaults etc by directors (other than KMPs) or employees 49

50 Event / information other than para A or B Any major development that is likely to affect business such as Emergence of new technologies Expiry of patents Change of accounting policy that may have significant impact 50

51 31 Shareholding pattern Listed entities shall submit to the stock exchanges a statement showing holding of securities and shareholding pattern separately for each class of security in the format specified within the following timelines One day prior to the listing of securities On a quarterly basis, within 21 days from the end of each quarter Within 10 days of any capital restructuring resulting in a change exceeding 2% of the total paid-up share capital Hundred percent shareholding of promoter and promoter group shall be in demat form At least fifty percent of non-promoter holding shall be in demat form 51

52 Manner of representation of holding of specified securities - SEBI Circular dated November 30, 2015 Holding shall be divided into three categories viz; Promoter and Promoter group Public and Non-Promoter Non Public Shareholding of promoter and promoter group must be accompanied with PAN number (first holder in case of joint holding) Stock exchanges to ensure that PAN numbers are not disclosed on their websites To be consolidated on the basis of PAN to avoid multiple disclosures In case of Depository Receipts the same are to be shown under public provided the DRs are listed on a overseas exchange and they have the right to issue voting instruction 52

53 Manner of representation of holding of specified securities - SEBI Circular dated November 30, 2015 In case they don t have the right to issue voting instruction they have to be shown under non-promoter non-public category If the DRs are held by the person by promoter or promoter group the same are to be shown accordingly Shares held by employee benefit trusts are to be shown under nonpromoter non-public category 53

54 32 statement of deviations or variations For public issues, right issues and preferential issues, listed entity shall submit following statements on quarterly basis Indicating deviations, if any, in the use of proceeds from the objects stated in the offer documents Indicating category wise variation (capital expenditure, sales, working capital etc) between project utilisation funds and projections given in the offer documents The statements shall be filed till such time the issue proceeds are fully utilised Where the entity appoints a monitoring agency to monitor utilisation of funds, the monitoring report of such agency shall be placed before the audit committee 54

55 33 Financial Results Financial results shall be prepared based on accrual accounting policy with uniform accounting practices Quarterly and year to date results shall be prepared in accordance with the recognition and measurement principles laid down under AS 25 and 31 Standalone and consolidated results shall be prepared under the Indian GAAP Listed entity may also submit the financial results, as per IFRS (International Financial Reporting Standards) notified by the International Accounting Standard Board Limited review or audit reports submitted to the exchanges on quarterly or annual basis are to be given only by an auditor who has subjected himself to the and holds a valid certificate issued by peer review board of ICAI Listed entity shall make disclosures specified in Part A of Schedule IV 55

56 Approval and Authentication Quarterly results submitted shall be approved by the Board of directors While placing the results before the Board, the CEO and CFO shall give a certificate stating that the financial results do not contain any false or misleading statement or figures and do not omit any material fact which may make the statements or figures contained therein misleading The financial results shall be signed by the chairperson, or MD or WTD or any director duly authorised Financial results shall be approved by the board of directors (no committee of the Board can approve) 56

57 Submission of financial results to exchanges Financial results shall be submitted quarterly and year-to-date within 45 days of the end of each quarter other than the last quarter In case the listed entity has subsidiaries, the listed entity in addition to the above, may also submit quarterly / year-to-date consolidated financial results subject to the following Intimate the exchanges in advance that it shall also submit consolidated results but this option shall not be changed during the financial year In case it changes the option next year it has to furnish comparable figures for the previous year 57

58 Financial results to exchanges contd. Quarterly and year-to-date financial results may be audited or un-audited subject to the following Unaudited results shall be accompanied by a limited review by the statutory auditors Public sector undertakings any practicing chartered accountant In case opted for audited results they shall be accompanied by the audit report Shall submit annual audited standalone financial results within 60 days from the end of the financial year, along with the audit report For audit reports with unmodified opinion the listed entity shall furnish a declaration to that effect, while submitting the annual audited financial results For audit reports with modified opinion a statement showing impact of audit qualifications shall be filed with the stock exchanges in the specified format 58

59 34 Annual Report Annual report is to be submitted to the stock exchanges within 21 working days of being approved and adopted in the AGM Annual report shall contain Audited financial statement and consolidated financial statement Cash flow statement Directors report Management & Discussion analysis report and For the top 100 listed companies based on market capitalisation Business Responsibility Report (w.e.f April 1, 2016 top 500 listed companies) 59

60 37 Scheme of Arrangement Before filing the draft scheme of arrangement before any Court or Tribunal, it shall be filed with the stock exchanges An observation letter or no-objection letter shall be obtained before filing such draft scheme such observation letter or no-objection letter shall be placed before the Court or Tribunal at the time of seeking approval of the scheme of arrangement The observation or no-objection letter shall be valid for a period of 6 months from the date of issuance within which the draft scheme of arrangement shall be submitted to the Court or Tribunal 60

61 40 Transfer or Transmission of Securities The Board may delegate the power of transfer of securities to a committee or to a compliance officer or to the share transfer agent Such delegated authority shall attend to share transfer formalities once in a fortnight and shall report on the same to the Board On receipt of proper documentation the transfer is to be effected or issue any valid objection or intimation within a period of 15 days from the date of receipt of request Transmission requests are to be processed within a period of 7 days in case of demat mode and 21 days in case of physical mode When the transfer is restricted by any statutory prohibition or any attachment or prohibitory order of a competent authority, no effect to transfer request to be given No effect to register of transfer shall be given where in the transferor objects, provided he provides within 60 working days of raising objection of a prohibitory order of a court of competent jurisdiction Procedural requirements are specified in Schedule VII 61

62 40 Transfer or Transmission of Securities Where the transfer was not effected within 15 days or not communicated to the transferee any valid objection, the aggrieved party shall be compensated for the opportunity losses caused during the period of delay The aggrieved party shall also be provided with all corporate benefits Within one month of the end of each half of the financial year, a PCS certificate is to be produced, certifying that all certificate have been issued within 30 days of the date of lodgement for transfer, sub-division, consolidation, renewal, exchange or endorsement of calls / allotment monies such certificate shall be filed with the exchanges simultaneously These provisions shall also apply to name deletion, transmission and transposition of securities 62

63 Schedule VII transfer of securities Requirement of PAN For registration of transfer of securities the transferee as well as transferor shall furnish a copy of their PAN For off-market or private transactions involving transfer of shares also both transferor and the transferee shall furnish copy of PAN In case of residents of Sikkim PAN may be substituted by identity card Minor difference in signature Promptly send to the first transferor viz speed post asking him to inform objection support by valid proof within 15 days failing which securities shall be transferred No objection received within 15 days securities are to be transferred provided forgery or fraud is not suspected Proof of delivery shall be maintained a 63

64 Schedule VII transfer of securities (contd.) Major difference or non-availability of signature Send an objection memo to the transferee by speed post marking the reason Send a copy of the objection memo to the transferor by speed post, simultaneously Objection memo shall also state the requirement of additional documents, such as Affidavit to update transferor s signature an original unsigned cancelled cheque and banker s attestation of transferor s signature Contact details of transferor On receipt of requisite documents, the transfer shall be effected provided a fraud or forgery is not suspected 64

65 Additional documentation requirements for transmission of securities Securities held in demat mode in single name without a nominee, simplified documentation as per DP s bye-laws where threshold limit is Rs 5 lacs only per beneficiary account Securities held in physical mode In single name with a nominee Duly signed transmission request form by the nominee Original copy of death certificate duly notarised Self attested copy of PAN In single name without a nominee and value of securities not exceeding Rs 2 lacs Affidavit, Indemnity and NOC from legal heirs If the value of securities is more than Rs 2 lacs also succession certificate or probate or will or letter of administration or court decree Listed entity may increase the value of securities at its discretion 65

66 42 Record Date At least 7 working days notice (date of intimation and record date are to be excluded) shall be given to stock exchanges of record date, specifying the purpose of record date Declare or recommend Dividend and / or bonuses at least five working days (date of intimation and record date are to be excluded) before the record fixed for this purpose. There should be at least 30 days gap between two record dates 66

67 43 & 44 Dividend and Voting Dividend shall be declared and disclosed on per share basis only Remote e-voting shall be provided (no mention about e-voting at the meeting) Voting results shall be submitted within 48 hours of conclusion of the General Meeting Proxy forms shall be sent mentioning that a holder may vote either for or against each resolution 67

68 45 Change of name (new) Change of name is permitted subject to compliance with the following conditions At least one year elapsed from the last name change At least 50% of total revenue in the preceding one year period has been accounted for by the new activity suggested by the new name Amount invested in the new activity/ project Is at least 50% of the assets of the listed entity In case activities of the listed entity are changed which are not reflected in its name, it shall change its name within a period of 6 months from the change of activities Once above conditions are satisfied, the change of name application to be moved to ROC for name availability On receipt of name availability before filing request for change, stock exchange approval shall be sought with a certificate from a Chartered Accountant stating the compliance of the above conditions 68

69 46 website Shall maintain a functional website Disseminate the prescribed information on the website Update changes in the content of website with in two working days form the date of change 69

70 Obligations of an entity listed its nonconvertible debt securities / preference shares - chapter V 70

71 To comply with In case of non-convertible debt securities or non-convertible redeemable preference shares or both following to be complied with: Chapter V (containing regulations 49 to 62) Part B of Schedule III pertaining to disclosure of information having bearing on performance / operation of listed entity Para A of Schedule V additional disclosures in Annual Report relating to Related party disclosures 71

72 50 Intimation to Exchanges Prior intimation of at least 11 working days, shall be given to the exchanges about the date on and from which interest and redemption proceeds shall be payable Prior to issuance of such securities through public issue or private placement, intimation shall be given to the exchanges Above intimation may be given prior to the meeting of the board where in the proposal for issuance of such securities is considered At least 2 working days notice (excluding the date of the intimation and date of the meeting) about the board meeting shall be given, at which declaration of issue of non-convertible debt securities or any other matter affecting the rights or interests of holders is proposed to be considered 72

73 51 Disclosure of price sensitive information Price sensitive information or any action that affect payment of interest or dividend shall be promptly intimated to exchanges price sensitive information means any information or action that affect payment of interest or dividend promptly inform means as soon as practically possible, without any delay and before providing the same to any third party 73

74 52 Financial results Unaudited or audited financial results on a half yearly basis shall be submitted to exchanges within 45 days from the end of the half year Unaudited financial results shall be accompanied by a limited review report prepared by the statutory auditors Such limited review shall be prepared by statutory auditors and by a practising Chartered Accountant in case of a public sector undertaking Audited results shall be submitted within 60 days from the end of the financial year and in such case un-audited financial results for the last half year need not be submitted to stock exchanges 74

75 52 Financial results In case the listed entity opts to submit un-audited results for the last half year, it shall also submit audited financial results for the entire financial year as soon as they are approved by the board Modified opinion in the audit report that have bearing on the interest and dividend payment shall be appropriately and adequately addressed by the Board of directors while publishing the results Half yearly results shall be taken on record by the board of directors and signed by the MD / executive director (only Board to take on record not any Committee) 75

76 52 Financial results For audit reports with unmodified opinion a declaration to that effect shall be submitted For audit reports with modified opinion a statement showing impact of audit qualifications shall be filed as per the prescribed format While submitting above information to exchanges, a certificate signed by the debenture trustees that it has taken note of the contents shall also be submitted to the exchanges Within 2 calendar days of the conclusion of the board meeting the financial results shall be published 76

77 54 & 55 Asset cover & Credit rating An asset cover of hundred percent sufficient to discharge the principal amount at all times for the secured non-convertible debt securities issued, shall be maintained Disclosures shall be made to the exchanges in quarterly, half-yearly and annual financial statements the extent and nature of security created and maintained The credit rating obtained shall be reviewed at least once a year by a credit rating agency registered by SEBI 77

78 56 Documents & intimation to debenture trustees Following documents shall be forwarded to the debenture trustees Copy of annual report at the same time as it is issued along with a copy of certificate from auditors in respect of utilisation of funds during the implementation of projects for which the funds were raised (new) All notices, resolutions and circulars for new issue of non convertible debt securities and the meetings of holders of such securities Intimations regarding revision in credit rating, default in timely payment of interest, redemption or both (new) Failure to create charge on assets Half yearly certificate regarding maintenance of hundred percent asset cover by a PCS or CA along with half yearly financial results 78

79 57 Other submissions to stock exchanges A certificate shall be submitted to the stock exchanges within 2 days, of interest or principal or both becoming due, that the payments have been made An undertaking shall be provided to the stock exchanges on an annual basis, stating that all documents and intimations required to be submitted to the debenture trustees under SEBI (issue and listing of debt securities) Regulations, 2008, have been complied with (new) 79

80 60 Record date Record date shall be fixed for the purposes of payment of interest, dividend and payment of redemption or repayment amount or for such other purposes specified by stock exchanges An advance notice of at least seven working days (excluding the date of intimation and the record date) of the record date shall be given 80

81 62 website (new) Maintenance of functional website is mandatory Listed entity shall maintain a functional website containing the following information Details of business Financial information financial statements Contact information investor grievances address for investor grievance redressal Name of debenture trustees Information, reports, notices, call letters, circulars, proceedings etc Default in payment of interest or redemption amount Failure to create charge on assets Revision of credit rating assigned to debt securities All information and reports including compliance reports filed with stock exchanges Information with respect to Listed entity to issue a press release with respect to the above events Ensure contents of website are correct and updated from time to time. No time line is given here. In case of equity listing to be updated in two working days 81

82 COST OF COMPLIANCE AND OF NON-COMPLIANCE 82

83 Cost of Compliance Regulatory changes have certainly increased the cost of compliance In comparison to cost of non-compliance, the cost of compliance is very less Cost of compliance is to be taken as capital investment for the culture and image building of the organisation When Sarbanes Oxley Act, 2002 was introduced there were lot of complaints on increase in cost of compliances Now the corporates in US say they are able to see the returns on their investment, in identifying the problems much earlier, 83

84 Cost of non-compliance / action in case of default The listed entity or any other person who contravenes any provisions of these regulations, shall be liable to action under the securities laws In addition, would be liable for the following actions by the respective stock exchanges Imposition of fines Suspension of trading Freezing of promoter / promoter group holding of designated securities Any other action prescribed by the Board Revocation of suspense or freeze of securities shall be as specified in circulars or guidance notes issued by the Board 84

85 Questions & Answers 85

86 Thank You! 86