SEBI ( Listing Obligations and Disclosure Requirements) - PowerPoint Presentation

1. SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015Debt Listing RegulationsStrengthening Governance through Listing Regulations 20.02.2016

2. Strengthening Governance through Listing Regulations 20.02.2016Chapter V:Obligations of Listed Entity which has listed its Non-Convertible Debt Securities or Non-Convertible Redeemable Preference Shares or Both.Is it the only Chapter applicable?

3. Strengthening Governance through Listing Regulations 20.02.2016Definitions:Listed Entity: Regulation 2(1)(p)An entity which has listed its:Designated Securities issued by it; orDesignated Securities issued under the schemes managed by it.

4. Strengthening Governance through Listing Regulations 20.02.2016Definitions:Designated Securities: Regulation 2(1)(h)Specified Securities;Non-Convertible Debt Securities;Non-Convertible Redeemable Preference Shares;Perpetual Debt Instrument;Perpetual non-cumulative preference shares;Indian Depository Receipts;Securitized Debt Instruments;Units issued by Mutual Funds;Other Securities specified by SEBI.

5. Strengthening Governance through Listing Regulations 20.02.2016Definitions:Non-convertible Debt Securities: Regulation 2(1)(t)As defined under SEBI (Issue & Listing of Debt Securities) Regulations, 2008. Regulation 2(1)(e) of these regulations define “Debt Securities” as:“Debt Securities” means: non-convertible debt securities which create or acknowledge indebtedness; and include:debenture;bonds; and such other securities;of a body corporate or any statutory body constituted by virtue of a legislation, whether constituting a charge on the assets of the body corporate or not; but excludes:bonds issued by Government; or such other bodies as may be specified SEBI;security receipts; and securitized debt instruments;

6. Strengthening Governance through Listing Regulations 20.02.2016Definitions:Non-convertible redeemable preference shares: Regulation 2(1)(k)As defined under SEBI (Issue & Listing of Non-Convertible Redeemable Preference Shares) Regulations, 2013. Regulation 2(1)(k) of these regulations provides that:“Non-convertible redeemable preference shares” means: a preference share which is redeemable in accordance with the provisions of the Companies Act, 1956 (or Companies Act, 2013); and   does not include a preference share which is convertible into or exchangeable with equity shares of the issuer at a later date, with or without the option of the holder.

7. Strengthening Governance through Listing Regulations 20.02.2016Definitions:Innovative perpetual debt instrument: Regulation 2(1)(h)As defined under SEBI (Issue & Listing of Non-convertible Redeemable Preference Shares) Regulations, 2013. Regulation 2(1)(h) of these regulations define “Innovative Perpetual Debt Instrument” as:“Innovative perpetual debt instrument” means: An innovative perpetual debt instrument issued by a bank in accordance with the guidelines framed by the Reserve Bank of India.

8. Strengthening Governance through Listing Regulations 20.02.2016Definitions:Perpetual non-cumulative preference shares: Regulation 2(1)(l)As defined under SEBI (Issue & Listing of Non-convertible Redeemable Preference Shares) Regulations, 2013. Regulation 2(1)(l) of these regulations define “perpetual non-cumulative preference shares” as:“Perpetual non-cumulative preference share” means: A perpetual non-cumulative preference shares issued by a bank in accordance with the guidelines framed by the Reserve Bank of India;

9. Strengthening Governance through Listing Regulations 20.02.2016Other Chapters Applicable:Being a listed entity, any entity which has listed its Non-Convertible Debt Securities or Non-Convertible Redeemable Preference Shares shall be under an obligation to comply with:Chapter II – Principles Governing Disclosures and Obligations of Listed Entity.Chapter III – Common Obligations of Listed Entities.Additionally, Companies which have listed both specified Securities and NCD/NCRPS shall also be bound to comply with:Chapter IV – Obligations of Listed Entities which as listed its Specified Securities.Provided any information submitted under chapter IV need not be submitted again pursuant to Chapter VI.

10. Strengthening Governance through Listing Regulations 20.02.2016Chapter V:Applicability: Regulation 49Non-Convertible Debt Securities;Non-Convertible Redeemable Preference Shares;Perpetual Debt Instrument;Perpetual non-cumulative preference shares.

11. Strengthening Governance through Listing Regulations 20.02.2016Intimation to Stock Exchanges: Regulation 50S. No.Nature of Intimation No. of Days1Date of payment for:Interest on debentures & bonds.Redemption amount of Debentures & bonds.Dividend on Non-convertible Preference Shares.Redemption amount of Non-convertible Preference Shares.  At least 11 working days in advance   2Intention to raise funds vide NCDs/NCRPS.Matters affecting the rights or interest of NCDs/NCRPS holders   At least 2 working days in advance

12. Strengthening Governance through Listing Regulations 20.02.2016Disclosure of information having bearing on performance/operation of listed entity and/or price sensitive information: Regulation 51S. No.Nature of Disclosure Period 1Information having bearing on the performance/operation of the listed entity.Price Sensitive Information.Action that shall affect payment of Interest/Dividend on NCDs/NCRPS.Redemption amount of NCDs/NCRPS.   Promptly Inform (means “as soon as practically possible” and without any delay)  2Disclosures specified in Part B of Schedule III 

13. Strengthening Governance through Listing Regulations 20.02.2016Disclosures specified in Part B of Schedule III:Expected Default in:Timely payment of interest/dividend;Redemption of NCD/NCRPS;Creation of Security for NCDs.Any attachment/prohibitory orders restraining Co. from transferring NCD/NCRPS.Any action which shall result in redemption/reduction/conversion/cancellation/retirement of NCD/NCRPS.Any action that shall affect adversely payment of interest/dividend including default in redemption & failure to create charge on the assets;Any change in the nature & form of NCDs/NCRPS;Any change in general nature of business/disruption in operations due to natural calamity/commencement of commercial production/operations.

14. Strengthening Governance through Listing Regulations 20.02.2016Disclosures specified in Part B of Schedule III:Strikes/lock-outs having bearing on interest/dividend/principal payment.Details of comments of Debenture Trustee about payment of interests/principal amount or concerning security etc. alongwith company’s comments thereon.Delay/default in payment of interest/dividend/principal for a period of more than 3 months.Failure to create charge on the assets within stipulated time period.Instances of default/delay in timely payment of interest/dividend including any re-scheduling or postponement of repayment programmes.Major change in composition of Board amounting to change in control.Any revision in ratings.

15. Strengthening Governance through Listing Regulations 20.02.2016Disclosures specified in Part B of Schedule III:Board decision to pass on interest payment & increase in capital.All information, report, notices, circulars etc. concerning NCD/NCRPS.Any other change that shall affect the rights and obligations of the holders of NCDs/NCRPS and any other information not in the public domain necessary to enable them to clarify its position or avoid creation of false market.

16. Strengthening Governance through Listing Regulations 20.02.2016Financial Results: Regulation 52Co. to submit un-audited/audited half-yearly results within 45 days of end of half year.Un-audited financial results shall be limited reviewed by statutory auditors. In case of PSU, by any practicing chartered accountant.Half-yearly results shall be taken on record by the Board of Directors and signed by MD/ED.If Co. intimates in advance that it shall submit annual audited results within 60 days from end of FY, it need not submit un-audited financial results for last half year.Format of Audited Results shall be same as for half-yearly results.If un-audited financial results for last half year are submitted, annual audited results shall also be submitted as soon as they are approved by the Board of Directors.Modified opinion in audit report having bearing on interest/dividend/principal payment shall be appropriately addressed by Board while publishing accounts for the said period.Annual Audited results shall be submitted alongwith Audit Report with either Form A/Form B.Annual Audit Reports submitted with Form B shall be reviewed by Qualified Audit Report Review Committee in prescribed manner.

17. Strengthening Governance through Listing Regulations 20.02.2016Financial Results: Regulation 52The Co. shall take rectification steps or submit revised financial results as may be directed by SEBI.Following additional information shall be submitted alongwith half-yearly/annual results:Credit rating and any change therein.Asset cover available in case of NCDs.Debt Equity Ratio.Previous and next due date of payment of interest/dividend/repayment/redemption.Debt service coverage ratio.Interest coverage ratio.Outstanding redeemable preference shares.Capital redemption reserve/debenture redemption reserve.Net worth.Net profit after tax.Earnings per share.In case of NCRPS – profit for half-year and cumulative profit for the year, free reserves as on half-year, Securities Premium Account balance if NCRPS are due for redemption, track record of dividend payment, breach of covenants under NCRPS and in case fresh issue is planned for redemption of NCRPS, the fact shall be disclosed simultaneously at the time of announcement of the fresh issue.

18. Strengthening Governance through Listing Regulations 20.02.2016Financial Results: Regulation 52While submitting above information, a certificate from Debenture Trustee that he has taken above information on record shall also be submitted.Statement on material deviations, if any, in the use of proceeds of NCDs/NCRPS from object mentioned in offer document shall also be submitted alongwith half-yearly results.Publish half-yearly results in at least one English National Daily Newspaper circulating in the whole or substantially the whole of India within 2 calendar days of Board Meeting.

19. Strengthening Governance through Listing Regulations 20.02.2016Financial Results: Comparison ParticularsDebt Listing AgreementSEBI (LODR) Regulations, 2015RemarksFrequency for submission of resultsHalf-yearlyHalf-yearlyNo ChangeTime period for submission 45 days45 daysNo ChangeLimited Review ReportYesYesNo Change Non-submission of results for last half-yearIntimate in advance that annual results shall be furnished within 60 days from end of FYIntimate in advance that annual results shall be furnished within 60 days from end of FYHow much advance intimation is to be sent is not clear. Before the end of last half year or 7 days before the meeting.

20. Strengthening Governance through Listing Regulations 20.02.2016Financial Results: Comparison Format of ResultsBoth half-yearly and annual results are to be given in same format.Both half-yearly and annual results are to be given in same format.No ChangeTaking record of half-yearly resultsUn-audited results shall be taken on record by Board of Directors/Council of Issuer or its Sub-CommitteeHalf-yearly results shall be taken on record by the Board of DirectorsSub-Committee of the Board not allowed to take results on record under LODR Regulations.Signing of ResultsMD or ED of the CompanyMD or ED of the CompanyNo ChangeNewspaper publication Within 48 hours of conclusion of meeting.Within 2 calendar days of the conclusion of meeting.Time limit changed from 48 hours to 2 calendar days.Annual ResultsSubmission of Annual Audited ResultsSubmission of Annual Audited Results with Audit Reports and Form A or Form BAudit Reports are to be submitted alongwith results now. No mention of Form A or Form B earlier.

21. Strengthening Governance through Listing Regulations 20.02.2016Financial Results: Comparison Review of Annual Audit Report-By SE and Qualified Audit Report Review CommitteeNew RequirementInformation to be furnished with resultsCredit RatingAsset CoverageDebt-equity ratioPrevious due dateNext due dateCredit RatingChange in CRAsset CoverageDebt-equity ratioPrevious due dateNext due dateDebt Service Coverage RatioInterest Service Coverage RatioCapital Redemption/Debenture Redemption ReserveNet WorthNet Profit after taxEPSChange in CRDebt Service Coverage RatioInterest Service Coverage RatioCapital Redemption/Debenture Redemption ReserveNet WorthNet Profit after taxEPS

22. Strengthening Governance through Listing Regulations 20.02.2016Financial Results: Comparison Certificate from Debenture TrusteeNACertificate from Debenture Trustee that he has taken note of above information. New ProvisionStatement of Material DeviationsSubmission with half-yearly resultsSubmission with half-yearly resultsNo change100% Asset CoverageCertificate from PCS/PCACertificate from PCS/PCAExemption to banks, NBFC etc. other no Change

23. Strengthening Governance through Listing Regulations 20.02.2016Manner of reviewing Form B Accompanying Annual Audited Results:Review by Stock Exchanges:SE shall carry out preliminary scrutiny of Audit Reports including further explanations received from listed Company.SE shall also evaluate the materiality of the modified opinion. Parameters for determining materiality shall be the impact of these modified opinion on the profit & loss and financial position of the listed entity.Upon examination of audit reports as above, SE shall refer the cases which, in their opinion, need further examination to the Board.SE shall display the name of listed entities which have filed their audit report along with Form B.

24. Strengthening Governance through Listing Regulations 20.02.2016Manner of reviewing Form B Accompanying Annual Audited Results:Review by Qualified Audit Report Review Committee:Qualified Audit Report Review Committee shall comprise of representatives of ICAI, SE and MCA.This Committee shall review the cases received from SE and guide the Board in processing the annual audit reports with modified opinion.This Committee may make the following recommendations to the Board:If the impact of modified opinion is not significant, it may recommend rectification of such modified opinion in subsequent year.If the impact of modified opinion is significant and Committee is not satisfied with the explanation given by the Listed Entity, Committee may refer the matter to Financial Reporting Review Board of ICAI for their opinion on whether the modified opinion is justified.

25. Strengthening Governance through Listing Regulations 20.02.2016Manner of reviewing Form B Accompanying Annual Audited Results:Review by Qualified Audit Report Review Committee:Based on the opinion of the Financial Reporting Review Board, Committee may recommend following:If the Financial Reporting Review Board opines that modified opinion is justified, Committee may recommend submission of revised pro-forma financial results after incorporating the effect of the modified opinion to the SE.If the Financial Reporting Review Board opines that modified opinion is not justified, ICAI may take up the matter appropriately with the statutory auditors of the listed entity.Based on the recommendation of the Committee and/or opinion of the Financial Reporting Review Board, the Board may direct the Listed Entity to rectify its modified opinion and/or submit the revised pro-forma financial results.The Board may, at any stage, in the interest of investors, take any other necessary action as it deems fit.

26. Strengthening Governance through Listing Regulations 20.02.2016Manner of reviewing Form B Accompanying Annual Audited Results:Submission of revised pro-forma financial results:Listed entity shall take following steps for submission of revised pro-forma financial results:Submit the revised pro-forma financial results after incorporating the effect of modified opinion to SE within 2 months from the date of receipt of such direction from Board.The accounting impact of such modified opinion shall be carried out as a prior period item in the financial statements of subsequent financial year.The review of all Form B received shall be carried out twice a year based on the reports received upto half year ending on June and December of every year.The following timelines shall be followed for the purpose:

27. Strengthening Governance through Listing Regulations 20.02.2016Manner of reviewing Form B accompanying Annual Audited ResultsActivityTo be completed byFiling of Annual Audit Report and Form B by Listed Entity As per the Regulations  Preliminary scrutiny of reports received during the half year by SE and referring cases to the BoardOne month from the end of half year ending on June and December each year.Review of cases by Qualified Audit Report Review CommitteeOne month from the date of receipt of report from the stock Exchange.Referring cases to Financial Reporting Review Board of ICAI15 days from the date of decision of Review CommitteeReceipt of reply from Financial Reporting Review BoardOne month from the date of referral by Qualified Audit Report Review Committee.  Communication of decision on the case to the Listed Entity and Stock Exchange15 days from the date of decision of Qualified Audit Report Review Committee/ Financial Reporting Review BoardSubmission of revised pro-forma financial results by the Listed EntityWithin 2 months from the date of letter of communication to the Listed Entity

28. Strengthening Governance through Listing Regulations 20.02.2016Annual Report : Regulation 53 Annual Report shall contain following additional disclosures: Name of the Debenture Trustees and their contact details.Related Party Disclosures as specified in Part A, Schedule V such as: Related party disclosures in accordance with applicable accounting standards.Disclosure about loans & advances given by holding company to subsidiaries/associates/entities where directors are interested.

29. Strengthening Governance through Listing Regulations 20.02.2016Asset Cover : Regulation 54  Co. shall maintain 100% asset cover at all times ensuring sufficient discharge of principal of NCDs.Above is not applicable to unsecured debt securities issued by regulated financial sector entities eligible for meeting capital requirements.Extent & nature of security created shall be disclosed in quarterly/half-yearly/annual financial results (Statements) to SE.

30. Strengthening Governance through Listing Regulations 20.02.2016Credit Rating : Regulation 55Credit rating of NCD obtained by the Co. shall be reviewed at least once every year by a credit rating agency registered with SEBI.

31. Strengthening Governance through Listing Regulations 20.02.2016Documents and Intimation to the Debenture Trustees: Regulation 56Co. shall forward following to Debenture Trustee:Annual Report alongwith certificate from auditors about utilization of funds.All notices etc. about new issue of NCD simultaneously as they are issued to shareholders/NCD holders or about meeting of NCD holders.Revision in Ratings.Default in timely payment of interest/redemption amount.Failure to create charge on the assets.Asset coverage certificate alongwith half-yearly results from a PCS/PCA.Co. to provide any such information to Debenture Trustee & provide access to books of accounts as he may require.With the consent of Debenture Trustee above information may be given by fax/form.

32. Strengthening Governance through Listing Regulations 20.02.2016Other submission to Stock Exchanges: Regulation 57Certificate to the effect within 2 days that payment of interest/dividend/redemption/repayment have been duly made.Annual undertaking that Debenture Trustees have been given all information required to be given to them.Any other information as may be required by the Stock Exchanges.

33. Strengthening Governance through Listing Regulations 20.02.2016Documents/Information to NCD/NCRPS holders: Regulation 58Annual Report of the Company either in email/physical copy as may be applicable.Notice of all meetings of NCD/NCRPS alongwith proxy forms which shall clearly mention that holders may vote either for or against each resolution.

34. Strengthening Governance through Listing Regulations 20.02.2016Structure of NCD/NCRPS: Regulation 59Any material modification to the structure of NCD/NCRPS may be made with following Process:Approval of the Board of Directors.Approval of majority of holders of that class of Security.Approval of the Debenture Trustee in case of NCD.Approval of the Stock Exchanges where securities are listed.

35. Strengthening Governance through Listing Regulations 20.02.2016Record Date: Regulation 60Co. shall fix a record date for payment of interest/dividend/repayment/other purposes as may be required.Intimate SE at least 7 working days in advance about record date. Day of intimation and day of Record date shall not be counted.

36. Strengthening Governance through Listing Regulations 20.02.2016Terms of NCD/NCRPS: Regulation 61Co. shall ensure timely payment of interest/dividend/repayment/redemption.Co. shall not declare/distribute dividend in any year wherein it has defaulted in payment of interest/redemption/creation of security.Co. shall transfer the unclaimed interest/dividend to Investor Education & Protection Fund.Unless terms of issue provide, redemption of NCD/NCRPS shall be done pro-rata or by lot.Co. shall comply with regulation 40/Schedule VII for transfer of securities.

37. Strengthening Governance through Listing Regulations 20.02.2016Website: Regulation 62Co. shall maintain a functional website containing the following information:Name of the Debenture Trustee with full contact details.Information, report, notices, call letters, circulars, proceedings etc. concerning NCD/NCRPS.Information about default to pay interest/redemption amount.Failure to create a charge on the assets.Revision of rating assigned to NCDs.Co. may also issue a press release with respect to above matters.Co. shall ensure that the content of the website are correct and updated at any given point of time.

38. Strengthening Governance through Listing Regulations 20.02.2016Liability for Contravention: Regulation 98Co. & any other person who contravenes the Regulations shall be liable for following actions by SE:Imposition of Fines.Suspension of Trading.Freezing of Promoter/Promoter Group holding.Any other action as may be specified by the Board.Above actions are in addition to liability for action in terms of various Securities Laws.

39. Strengthening Governance through Listing Regulations 20.02.2016Enforceability:The rationale of LODR is to bring in higher enforceability.An agreement has been converted into Regulations giving it more legal sanctity.Even the guiding principles to Corporate Governance have gained the enforceability of being SEBI Regulations.Any non-compliance would be attracting strict Penalties.

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