SEBI proposes to ease disclosure requirement for listed firms

SEBI on Thursday proposed providing additional time for disclosure of litigations or disputes involving claims against the listed firms and allowing companies to conduct virtual or hybrid shareholder meetings on a permanent basis. The markets watchdog has also suggested additional time for disclosure of the outcome of the board meeting that concludes after trading hours.

Additionally, the securities markets regulator has recommended combining pre-issue advertisement and price band advertisement as a single advertisement, proposed disclosing certain information with a quick response (QR) code link and proposed disclosure of pre-issue shareholding and post-issue shareholding for promoter, promoter group and additional top 10 shareholders.

The proposals, based on the recommendations of an expert committee chaired by SK Mohanty, former whole-time Member of SEBI, aimed at facilitating ease of doing business, bringing in clarity and reducing the overall compliance burden, including the cost of compliance while effectively balancing investor protection.

The committee has submitted its recommendations on the LODR (Listing Obligations and Disclosure Requirements) rule and ICDR (Issue of Capital and Disclosure Requirement) norms and on harmonisation of the provisions of the ICDR and LODR norms.

The Securities and Exchange Board of India (SEBI) has sought comments from the public till July 17 on the recommendations made by the committee. In its consultation paper, SEBI proposed that the filing done on one stock exchange be automatically disseminated to other stock exchanges using an API-based integration that is being jointly developed by stock exchanges.

Additionally, SEBI has proposed system-driven disclosure of certain filings like shareholding patterns, revision in credit ratings and suggested that the requirement of publishing detailed advertisements in newspapers for financial results should be made optional for listed entities.

With respect to the information already made available on the website of stock exchanges, it has been suggested that listed entities should provide curated links on their website instead of uploading all the information.

To minimise the number of periodic filings that are required to be done by a listed entity, it has been recommended to merge the periodic filings under the LODR into two broad categories -- integrated filing (governance) consisting of corporate governance report, statement on redressal on investor grievance and integrated filing (financial) comprising financial results, statement of deviation in use of proceeds and related party transactions.

The timeline for integrated filing for governance and integrated filing for financial should be within 30 days and 45 days, respectively, from the end of the quarter. On the timeline to fill up vacancies in board committees, SEBI suggested providing a timeline of three months to fill up vacancies in board committees.

Further, time taken for regulatory, statutory or government approvals should be excluded from the timeline specified for obtaining shareholders' approval for the appointment or reappointment of director of a listed entity.

With regards to promoters and controlling shareholders, the regulator has suggested streamlining the process of reclassification of promoter or promoter group entities of a listed entity, introducing an obligation on promoter, promoter group, directors and key managerial personnel to disclose relevant information to the listed entity for ensuring compliance with LODR rules. Also, it has been recommended to permit listed entities to conduct virtual or hybrid shareholder meetings on a permanent basis.

With regard to related party transactions (RPTs), SEBI proposed exempting transactions which are uniformly applicable or offered to all shareholders public from the definition of RPT. In addition, it has suggested exempting payment of remuneration and sitting fees to director, key managerial personnel or senior management, except those who are part of a promoter or promoter group, from the requirement of audit committee approval and half-yearly disclosures.

SEBI has suggested exempting transactions like payment of statutory dues, fees or charges to the government, and transactions between two public sector companies from approval requirements for RPTs.

To strengthen corporate governance at listed entities, SEBI has suggested voluntary provisions relating to enhancing diversity in the institution of independent directors, increasing the number of meetings of independent directors and expanding the applicability of risk management committees. It proposed mandating compliance officers to be designated as key managerial personnel and to be a whole-time employee not one level below the board of directors.

The regulator proposed introducing provisions relating to appointment, reappointment, removal and disqualifications for secretarial auditors of a listed entity. With regards to ICDR, SEBI has suggested permitting issuers to voluntarily disclose pro-forma financials in public issues, rights issues and for qualified institutional placements (QIPs).

The regulator has suggested permitting issuers to obtain the certificate for utilisation of the loan from a peer-reviewed chartered accountant.