Key Changes Made in SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations 2021

Recently, the Securities Exchange Board of India has exercised its powers conferred under section 11, 11A (2), and section 30 of the SEBI Act 1992, together with section 31 of SCRA 1956, and issued a notification dated 08.01.2021, wherein it sought to amend the prevailing laws with the new ones. That means the newly introduced SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations 2021 have replaced some of the provisions of the prevailing SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.

Moreover, it shall be pertinent to note that these regulations came into force after that last amendment made, i.e., SEBI (Listing Obligations and Disclosure Requirements) (Third Amendment) Regulations 2020, on 08.10.2020.

Further, the said rules will come into force from the date of publication in the official gazette. Also, the term SCRA stands for Securities Contracts (Regulations) Act 1956^[1].

In this blog, we will discuss the key Changes Made in SEBI 2021 (Listing Obligations and Disclosure Requirements) (Amendment) Regulations 2021.

Features of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015

The brief feature of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 are as follows:

1. The time limit to adhere to these regulations was of 90 Days, starting from the date it became effective, i.e., 01.12.2015;
2. The regulations have been designed and structured in such a way that they are in consonance with the provisions of the Companies Act 2013;
3. To avoid any sort of overlapping and confusion, these regulations prescribe both pre and post listing requirements;
4. The said listing regulations have been bifurcated into two parts as follows:
5. Substantive Provisions (contained in the main regulations);
6. Procedural Provisions (contained in the schedules);

Applicability of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015

The said regulations are made applicable to all the listed entities which have listed there any of the designated securities as follows on RSE (Recognised Stock Exchange):

1. Specified Securities that are listed on either of the following platforms:
2. Main Board;
3. SME Exchange;
4. Institutional Trading Platform;
5. Indian Depository Receipts (IDR);
6. Securitized Debt Instruments;
7. Non-Convertible Debt Securities;
8. Non –convertible Redeemable Preference Shares;
9. Perpetual Debt Instrument;
10. Perpetual Non-cumulative Preference Shares;
11. Units issued by Mutual Funds; and
12. Any other security as may be prescribed by the Board, i.e., SEBI;

Changes Made in SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations 2021

The key Changes Made in SEBI 2021 (Listing Obligations and Disclosure Requirements) (Amendment) Regulations are as follows:

Amendment Made in Sub-clause (l) of Clause 16, Part A of Schedule III

As per the new regulations passed, SEBI has amended the Sub-clause (l) of Clause 16, Part A of Schedule III and has substituted the same with some particular features and details of the resolution plan. These details and features are approved by the Adjudicating Authority established under the Insolvency and Bankruptcy Code 2016.

Further, such specific features will not include Commercial Secrets and other details as follows:

1. Pre and Post Net Worth of the Company;
2. Details of the Company’s Asset post CIRP (Corporate Insolvency Resolution Process);
3. Details of all the Securities that continue to be imposed on the assets of the Company;
4. Any other form of Material Liability imposed on the said Company;
5. Detailed form of Pre and Post Shareholding Pattern supposing 100%conversion of the Convertible Securities;
6. Details concerning the Funds infused in the Company and Creditors paid-off;
7. Additional Liability concerning the Incoming Investors owing to the transaction and source of such funding;
8. Impact on the Investor of the revised P/E (Price Earing), RONW (Return on Net Worth) ratios;
9. Names and Details of the New Promoters, KMPs (Key Managerial Personnel), together with their past experience in the employment or business;
10. If in case Promoters are a company, the, in that case, history and background of such a company, together with the names and details of the people in control;
11. A Brief summary of the business strategy involved;

Insertion of Sub-clause (n), (o), and (p) in Point A of Clause 16 inPart A of Schedule III

The new regulations, i.e., SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations 2021 have further mentioned about the insertion of sub clause (n), (o), (p), in the point A of Clause 16 in Part A of Schedule III. The new provisions inserted are as follows:

• For achieving the MPS (Minimum Public Shareholding), all the incoming investor or acquirer needs to undertake the steps proposed;
• Quarterly Disclosure concerning the status of achieving the Minimum Public Shareholding;
• Details concerning Delisting of Plans, if in case approved by the Resolution Plan;

Conclusion

In a nutshell, the main aim behind the implementation of SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations 2021 was to replace some of the provisions specified under the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. Also, the Changes Made in SEBI 2021 or the features included are duly approved by the Adjudicating Authority established under the Insolvency and Bankruptcy Code 2016.

Further, in case of any other doubt or query, reach out to Swarit Advisors, our proficient Company and SEBI Law experts will solve out all your doubts and will assist in providing details concerning different types of shares as well.

Copy of the Official Notification

SEBI-LODR-2021