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Compliance of Listed Company

Public Company whose shares are listed & traded on the stock exchange refers to as a listed company. Listed companies are the public limited joint-stock company whose shares get traded on the central stock market. Companies often go for public issues as one of the vital sources of raising funds.

Advantages of Listed Company

Following are the benefits of listing the company apart from the prestigious position the company gets when its shares are listed and traded on the stock exchange:

  • The company can raise additional fund through the issue of more stock
  • Companies offer to give their securities in exchange for acquisition.
  • Employee stock options can be offered to the employees of a listed company that leads to making the right track image in the market.
  • Listed companies get finance easily as compared to an unlisted company.
  • By listing the company's stock in the market, it gets the attention of mutual funds, hedge funds, institutional traders, and market makers.
  • By listing their shares on the stock exchange, the company increases its credibility with the public by making its brand image.

Statutory Provisions for Regulating Listed Companies

The following provisions govern these companies:

  • Companies Act, 2013
  • SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015

Compliance of Listed Company as Per Companies Act 2013

The listed company has to comply with the provisions of SEBI as well as companies act, 2013. Following are the provisions needs to have met:

  • Sec 91: Close Register of Members

    a company can close the register of members, debenture holders, or any other security holder during the year for not more than 45 days. Register can’t be closed for more than 30 days at one time.

  • Sec 92: Annual Return

    Annual return has to be certified by Company Secretary in practice stating that annual return discloses the facts are correct & the company has fulfilled all the provisions applicable to the company. This is required to be done by the following companies:

  1. Listed Company;
  2. Company having paid-up share capital exceeding INR 10 Crore;
  3. A company having a turnover of more than INR 25 Crore;
  • Sec 93: Change in Shareholding Pattern

    Every listed company has to file a return in form MGT-10 for every change in shareholding pattern of 2% or more in value or volume.  Such change has to be filed within 15 days of the date of the change.

  • Sec 108: E-Voting

    every listed company shall provide the facility to its shareholders to exercise their voting rights in the general meeting by electronic means if it has 1000 or more shareholders.

  • Sec 120: Maintenance of Record In Electronic Means

    Every listed company with 1000 or more shareholders, debenture holders, or any security holders shall maintain its records in an electronic mode in a readable format, and it can’t be tampered or changed after affixing the DSC of an authorized person. Record includes:

  1. Registers
  2. Index agreement
  3. Memorandum of association & article of association
  4. Minutes of the meetings
  • Sec 121: Report on Annual General Meeting

    Every listed company is required to prepare a report on its annual general meeting stating that the meeting is held, conducted &convened in proper order and as per the provisions of this act. A report has to be filed to ROC within 30 days of AGM in form MGT-15.

  • Sec 131: Director’s Report

    A listed company needs to disclose in its director report about the:

  1. The formal annual evaluation made by the board of directors. The evaluation has to be conducted on the performance of boards, committees, and that of individual directors.
  2. Evaluation of the performance of internal financial control that it has laid and that they are adequate & operating efficiently.
  3. The ratio of the director's remuneration to the median remuneration of the employees of the company.
  • Sec 136: Mode of Sending Financial Statements

    Every company can dispatch its financial statements in the following ways:

    1. By electronic mode

      financial statement has to be sent through electronic mail to those members whose shareholding is in dematerialized form as their email id is registered with the depositary.

    2. By physical mode

      such as speed post/ courier/ or hand delivery.

    3. On the website

      It is also mandatory for the company to place its financial statement online on its website.

  • Sec 138: Internal Auditor

    Every listed company must have an internal auditor in its place who shall be a qualified Chartered Accountant, Cost Accountant, or Company Secretary. Audit committee fixes their remuneration, scope of work, roles & responsibilities, and periodic and timelines for conducting an internal audit.

  • Sec 139: Rotation of Auditors

    every listed company shall have an individual auditor for only one term of 5 successive years and audit firm as its auditor for two terms of five consecutive years.

  • Sec 149(1): Woman Director

    following class of companies has to mandatorily appoint at least one women director:

  1. Every listed company
  2. Every public company having paid-up share capital exceeding INR 10 Crore.
  3. Every public company having a turnover exceeding INR 100 Crore.
  4. Every public company having aggregate outstanding loans, debentures & deposit exceeding INR 50 Crore.
  • Sec 149(7): Certificate of Independence

    The independent director has to give the declaration about his independence on the very first board meeting he attends as an independent director. If any change in its independence throughout the year, he has to declare the same on the very first board meeting he attends after such change.

  • Sec 151: Small Shareholder’s Director

    A listed company has to compulsorily appoint the small shareholder’s director when it receives the notice from lower of these two:

  1. 1000 shareholders
  2. 1/10thof the total number of shareholders.
  • Sec 177: Audit Committee

    following classes of companies has to constitute an audit committee:

  1. Every listed company
  2. Every public company having paid-up share capital exceeding INR 10 Crore.
  3. Every public company having a turnover exceeding INR 100 Crore.
  4. Every public company having aggregate outstanding loans, debentures & deposit exceeding INR 50 Crore.
  • Sec 178(1): Nomination & Remuneration Committee

    Every listed company has to constitute a nomination & remuneration committee with at least 3 non-executive directors out of which there shall be the majority of independent directors.

  • Sec 178(2): STAKEHOLDERS RELATIONSHIP COMMITTEE

    Every listed company that has more than 1000 shareholders has to appoint this committee necessarily with non-executive directors & chairperson.

  • Sec 203: KMP

    Every listed company and public company with paid-up share capital of INR 10 Crore has to appoint mandatorily whole-time key managerial personnel.

  • Sec 204: Secretarial Audit

    Every listed company shall get it done secretarial audit by a whole-time company secretary in practice. PCS gives it report in form MR-3, which has to be annexed with board report. Following classes of companies shall have to comply with this audit provision:

  1. Every listed company
  2. Every public company having paid-up share capital of INR 50 Crore
  3. Every public company having a turnover of INR 250 Crore.

COMPLIANCE OF LISTED COMPANY AS PER SEBI (LODR) REGULATION 2015

There are certain monthly/quarterly/half-yearly/annual compliances of a listed company as per SEBI (LODR) regulations 2015.

  • REGULATION 7- APPOINTMENT OF NEW SHARE TRANSFER AGENT

    WITHIN 7 DAYS OF APPOINTMENT

  • REGULATION 7(2)

    CONTINUAL DISCLOSURE

  • REGULATION 7(3) - COMPLIANCE CERTIFICATE

    WITHIN ONE MONTH OF END OF HALF-YEAR

  • REGULATION 13(3)- STATEMENT OF INVESTORS COMPLAINT

    WITHIN 21 DAYS FROM THE END OF QUARTER

  • REGULATION 14

    LISTING CHARGES

  • REGULATION 27(2)- CORPORATE GOVERNANCE

    WITHIN 15 DAYS FROM THE END OF QUARTER

  1. Having paid-up capital exceeding INR 10 Crore.
  2. Net worth exceeding INR 25 Crore.
  • REGULATION 29- NOTICE

    WITHIN DUE DATE AS PER THE CASE

  1. 5 days for Financial Result
  2. 11 days for the maters of securities & redemption of debentures.
  3. 2 working days for every other mater
  • REGULATION 30- PRICE SENSITIVE INFORMATION
  • REGULATION 31- SHAREHOLDING PATTERN- WITHIN 21 DAYS FROM THE END OF QUARTER
  1. One day before the listing of its share on the stock exchange
  2. 21 days from the end of the quarter
  3. Within 10 days of capital change exceeding 2% of the paid-up share capital.
  • REGULATION 33- FINANCIAL RESULTS- WITHIN DUE DATE DEPENDING UPON CASE TO CASE
  • REGULATION 34- ANNUAL REPORT-WITHIN 21 DAYS OF AGM
  • REGULATION 40(9)- CERTIFICATE FROM PCS- WITHIN ONE MONTH FROM THE END OF HALF-YEAR
  • REGULATION 42- NOTICE FOR RECORD DATE
  • REGULATION 43A- DIVIDEND DISTRIBUTION POLICY
  • REGULATION 44- VOTING RESULT- WITHIN 48 HOURS OF RESULTS
  • REGULATION 46- COMPANY WEBSITE

Every listed entity shall maintain its official website with all the basic details on it. And it has to update within 2 days of any change on such a website.

FAQs of Compliance of Listed Company

An individual can be appointed as a director in a maximum of 10 public companies. However, it can hold directorship in a total of 20 companies.

Most of the amendments are applicable from the 1st day of April 2019, and few came into force since the 1st day of October 2018. Based on the market capitalization of the top 500 or top 1000 companies, the amendment date varies for each.

As per the Amended Regulations, the board of directors of the top 1000 listed entities and the top 2000 listed entities should have more than 6 directors on its board.

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