With effect from May 5, 2021, SEBI notified various amendments to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘Listing Regulations’). Certain key amendments notified are as follows:

i.     Regulation 15(2) provides that the specified corporate governance provisions do not apply to listed entities having paid-up equity share capital not exceeding rupees ten crore and net worth not exceeding ₹ 25 crore (approx. US$ 3.37 million), as on the last day of the previous financial year. Such corporate governance provisions include provisions regarding composition of the board and various committees and related party transactions. SEBI has now clarified that once the corporate governance provisions become applicable to a listed entity, then they will remain applicable until the equity share capital or the net worth of such entity reduces and remains below the specified thresholds for a period of three consecutive financial years.

ii.   The risk management committee will now be required to have a minimum of three members with the majority being members of the board of directors, including at least one independent director. In case of a listed entity having outstanding superior rights equity shares, at least two thirds of the risk management committee will comprise independent directors. The committee will meet twice in the year (instead of annually) and not more than 180 days will elapse between any two consecutive meetings. The quorum for these meetings will be the higher of two members or one third of the members of the committee, including at least one member of the board of directors. The provisions relating to this committee will apply to the top 1000 listed entities (determined by market capitalization, as at the end of the previous financial year), instead of the top 500.

iii.   SEBI notified the changes to the procedure for reclassification of promoters and inter alia changed the timelines for reclassification and provided an exemption from the requirement to obtain shareholder approval in cases where the promoter (together with related people) does not hold more than 1% of the total voting rights or where the reclassification is pursuant to a divorce. SEBI also included an exemption from the existing requirements in case: (a) there is an order of the regulator under any law subject to the condition that such promoter(s) seeking reclassification will not remain in control of the listed entity; or (b) if such reclassification is pursuant to an open offer or a scheme of arrangement, subject to the specified conditions.

iv.   SEBI has extended the requirement for formulation of dividend distribution policy from the existing top 500 listed, to the top 1000 listed entities based on market capitalization (calculated as on March 31 of every financial year).

v.     SEBI has introduced a requirement for listed companies to upload the audio/video recordings and transcripts of post earnings/quarterly calls in the prescribed manner on the company’s website. This requirement will be voluntary with effect from April 1, 2021 and mandatory from the following year. Several other amendments and additions were also made to the list of items to be disclosed on the listed entities’ website.