Since our Client Alert dated May 11, 2020 (accessible here), the Securities and Exchange Board of India (‘SEBI’) has taken certain further measures in light of the COVID-19 outbreak, through its Circulars dated May 12, 2020, May 14, 2020 and May 20, 2020. The measures taken by SEBI on May 14, 2020 have been reported in our Client Alert dated May 16, 2020 (accessible here). The key details of the measures taken by SEBI on May 12, 2020 and May 20, 2020 (both effective from their respective dates of circulars), are set out below.

A.     Circular dated May 12, 2020 – Key Updates

1.     Sending Physical Copies of Annual Report to Shareholders

The SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘SEBI LODR’), inter alia, require listed entities to send: (a) a hard copy of the statement containing salient features of all the prescribed documents to the shareholders who have not registered their email addresses; and (b) hard copies of full annual reports to shareholders who request for the same. These requirements have been dispensed with for listed entities (including those who have listed their non-convertible debentures (‘NCDs’) and non-convertible redeemable preference shares (‘NCRPS’)) who conduct their Annual General Meetings (‘AGMs’) during the calendar year 2020 (i.e. till December 31, 2020).

2.     Proxy for General Meetings

The requirement of sending proxy forms, to holders of securities, has been temporarily dispensed with for listed entities who conduct their AGMs during the calendar year 2020 (i.e. till December 31, 2020). This dispensation is available for meetings held through electronic mode only.

3.     Dividend Warrants / Cheques

For the purposes of payment of dividend or interest or redemption/ repayment amounts, the SEBI LODR prescribes: (a) issuance of ‘payable-at-par’ warrants or cheques in case it is not possible to use electronic modes of payment; and (b) sending of ‘payable-at-par’ warrants or cheques by speed post in case the amount payable as dividend exceeds INR 1,500. These requirements will apply upon normalisation of postal services, and in cases where email addresses of shareholders are available, listed entities have also been requested to endeavour to obtain their bank account details and use the electronic modes of payment specified in Schedule I of the SEBI LODR.

4.     Publication of Advertisements in Newspapers

The exemptions that had already been provided by SEBI in relation to publication of advertisements in newspapers under Regulations 47 and 52(8) of the SEBI LODR for listed entities (including those who have listed their NCDs and NCRPS) till May 15, 2020 have now been further extended for all events scheduled till June 30, 2020.

5.     Publishing Quarterly Consolidated Financial Results for Certain Categories of Listed Entities

SEBI has allowed listed entities which are banking and/or insurance companies or have subsidiaries which are banking and/or insurance companies, to submit their quarterly/ year-to-date consolidated financial results under Regulation 33(3)(b) of the SEBI LODR, for the quarter ending June 30, 2020, on a voluntary basis. Such entities are however required to continue to submit their standalone financial results as per Regulation 33(3)(a) of the SEBI LODR, and if they choose to publish only standalone financial results and not consolidated financial results, they are required to give reasons for the same.

B.     Circular dated May 20, 2020 on Disclosure of Material Information

1.      With the objective of preventing distortions in the market due to gaps in the information available to the stakeholders/ investors about the operations of the listed entities and ensuring that all investors have access to timely, adequate and updated information, SEBI has, through its Circular dated May 20, 2020, encouraged listed entities to evaluate the impact of the COVID-19 pandemic on their business, performance and financials, to the extent possible, and to disseminate the same. To this end, SEBI has also provided the following illustrative list of information that listed entities may consider disclosing, subject to the application of materiality:

(a)     impact of the COVID-19 pandemic on the business;

(b)     ability to maintain operations including the factories/ units/ office spaces functioning and closed down;

(c)     schedule, if any, for restarting the operations;

(d)     steps taken to ensure smooth functioning of operations;

(e)     estimation of the future impact of COVID-19 on its operations;

(f)     details of impact of COVID-19 on the listed entity’s capital and financial resources, profitability, liquidity position, ability to service debt and other financing arrangements, assets, internal financing reporting and control, supply chain and demand for its products/ services;

(g)     existing contracts/ agreements where non-fulfilment of the obligations by any party will have a significant impact on the listed entity’s business; and

(h)     other relevant material updates about the listed entity’s business.

2.     Listed entities may also provide regular updates, as and when there are material developments and consider including the impact of COVID-19 pandemic in their financial statements, to the extent possible.

3.     SEBI has also stated that while disclosing information related to the impact of COVID-19, listed entities should not resort to selective disclosures, keeping in mind the principles governing disclosures and obligations of a listed entity under the SEBI LODR. Depending on the circumstances peculiar to a listed entity and on account of passage of time, the listed entity is required to revisit, refresh, or update its previous disclosures.