SEBI LODR Compliance

Regulation 17(1) of the SEBI LODR Regulations 2015 requires that where the chairperson of the board is a non-executive director, at least one-third of the board must comprise independent directors, and where the chairperson is an executive director or is related to the promoter, at least half the board must consist of independent directors. Every listed entity must have a minimum of six directors on its board under Regulation 17(1)(c) as amended by SEBI vide its notification dated January 5, 2018. An independent director cannot serve on the board of a listed entity for more than two consecutive terms of five years each under Section 149(10) of the Companies Act 2013, which applies concurrently. Board composition must be disclosed quarterly to the stock exchange as part of the corporate governance report under Regulation 27.

The annual secretarial compliance report under Regulation 24A of the SEBI LODR Regulations 2015, read with SEBI Circular CIR/CFD/CMD1/27/2019 dated February 8, 2019, must cover compliance with all SEBI regulations applicable to the listed entity for the full financial year, including LODR, ICDR, SAST, PIT, and any other applicable SEBI regulations. The report must be submitted to the stock exchanges within 60 days of the close of the financial year. It must be signed by a practising Company Secretary who is not the statutory auditor and not the company secretary in employment of the entity, ensuring independence. Material non-compliances identified must be disclosed with reasons, and the listed entity must also submit an Action Taken Report to the exchange within the prescribed time.

Regulation 30 of the SEBI LODR Regulations 2015 read with Schedule III requires listed entities to disclose all related party transactions (RPTs) to the stock exchange within 24 hours of the board or audit committee approval. For RPTs that individually or in aggregate with prior transactions during the financial year exceed 10% of the annual consolidated turnover, prior shareholders' approval is mandatory under Regulation 23(4) of the SEBI LODR Regulations 2015. The audit committee must review and approve all RPTs on a quarterly basis under Regulation 23(2), and a half-yearly report on RPTs on a consolidated basis must be submitted to the exchanges within 15 days from the date of publication of the half-yearly standalone financial results as per SEBI Circular SEBI/HO/CFD/CFD-PoD-2/P/CIR/2023/10 dated January 17, 2023. Transactions with material related parties that are not on arm's length terms require special disclosure.

Listed debt issuers (entities with listed non-convertible debentures or listed non-convertible redeemable preference shares) are governed by Regulation 52 of the SEBI LODR Regulations 2015 rather than Regulation 33, which applies to equity issuers. Under Regulation 52, half-yearly financial results must be submitted within 45 days from the end of the half-year, and full-year audited financial results must be submitted within 60 days from the end of the financial year. Where the listed entity also has listed equity, it must comply with both Regulation 33 (quarterly results) and Regulation 52 (half-yearly asset cover and security disclosures). The asset cover certificate, confirming that the security cover for debentures is maintained, must accompany each half-yearly financial results submission under Regulation 52(4).

Regulation 18 of the SEBI LODR Regulations 2015 (which supplements Regulation 17's board governance framework) requires every listed entity to constitute a qualified and independent audit committee with a minimum of three directors, all of whom must be non-executive directors and at least two-thirds must be independent directors. The chairperson of the audit committee must be an independent director and must be present at the annual general meeting to answer shareholder queries under Regulation 18(1)(d). The audit committee must meet at least four times a year with a maximum gap of 120 days between two meetings under Regulation 18(2). Its mandatory terms of reference include oversight of financial reporting, review of related party transactions, examination of auditors' independence, and scrutiny of internal financial controls as prescribed in Schedule II Part C of the SEBI LODR Regulations 2015.