Based upon the recommendation of Primary Market Advisory Committee (PMAC), SEBI in its board
meeting of September 2022 discussed and approved certain amendments to the SEBI (Listing
Obligations and Disclosures) Regulations 2015 (LODR Regulations) primarily comprising of amendment
w.r.t. appointment of independent direction, need of appointing monitoring agency in case of
preferential allotments and QIPs, disclosure requirements w.r.t. entities whose Non-Convertible
Securities (NCS) are listed and introducing provisions of obtaining no-objection from stock
exchanges/SEBI on scheme of arrangements for the NCS listed entities similar to the existing provision
for equity listed entities.
Basis the aforesaid, SEBI (Listing Obligations and Disclosures), Sixth Amendment Regulation 2022 have
been promulgated which becomes effective from the date of its publication in the official gazette i.e.
14th November 2022. The amendments so brought in our summarized herein below:
- Appointment and Removal of an Independent Director:
As per the existing provisions of LODR (Regulation 25(2A)), for a listed company, the appointment,
re-appointment or removal of an independent director is subject to the approval of shareholders by
way of special resolution.
The amendment in the LODR Regulation is aiming to providing more power to Minority shareholders
and to ensure that appointment of an independent director could not be withheld merely at the
whims of promoters who generally hold majority stakes and can easily drive the outcome of the
special resolution. Thus, as per the amended provisions, for the “appointment” and “removal” of an
independent director (first term), in case the special resolution fails, the resolution can still be
considered passed if both the below conditions are satisfied:
. The total votes in favor are more than the votes against (simple majority)
. votes cast by the public shareholders in favor are more than votes cast against by the public
shareholders (simple majority but disregarding the voting of promoters and promoter
It is to be noted that in case of re-appointment as well as removal of re-appointed independent
director, a special resolution in normal course will still be needed. One of the reasons for this being
that in such circumstances, special resolution is required under the Companies Act 2013. Whereas
the requirement of a special resolution under SEBI Regulations, for the appointment and removal of
an independent director (first term), is stricter requirement than Companies Act 2013 which only
requires approval through ordinary resolution.
- Report of Monitoring Agency:
As per provisions of LODR, a listed entity is required to submit to the stock exchanges, statement of
deviation or variation of the proceeds of public issue, right issue, preferential issue etc. (Regulation
32). The provisions further require the listed entity to submit to the stock exchanges, comments/ report of monitoring agency, if so appointed and also that report of such monitory agency shall be
placed before the audit committee immediately upon the receipt (Regulation 32(6)&(7)). These
provisions were earlier applicable only w.r.t. public issue and right issue. Wide latest amendments,
the applicability of these provisions have been further extended to preferential issue and qualified
institutions placements where the monitoring agency is appointed.
This amendment is made to bring the provisions of LODR in consistency with provisions of SEBI
(Listing Obligation and Disclosure Requirements) Regulations 2018 (LODR Regulation). Under LODR
Regulations, the companies with stressed assets or with issue size of more than INR 100 Crore are
required to appoint monitoring agency at time of preferential issue.
- Disclosures of Financial Results by NCS Listed entities:
3.1. The provisions of LODR separately deals with disclosure requirements for listed companies
which has their Non-Convertible Securities (NCS) listed. Under the said provisions a NCS listed
company is required to prepare and submit un-audited or audited quarterly and year to date
standalone financial results on a quarterly basis within forty -five days from the end of the
quarter, other than last quarter, to the stock exchange(s) (Regulation 52(1)). In furtherance to
this existing provision, it is now further provided by way of insertion of a proviso to the existing
provision requiring/clarifying that for the last quarter of the financial year, the listed entity shall
submit un -audited or audited quarterly and year to date standalone financial results within sixty
days from the end of the quarter to the stock exchange(s). This amendment brings the financial
disclosure requirement of NCS listed company in par with equity listed companies.
3.2. Further with respect to the companies which are required to be audited by the Comptroller and
Auditor General of India (C&GA) under applicable law (Proviso to Regulation 52(2)(d)), it is now
provided that such companies (i.e. PSUs) can submit their unaudited results post limited review
either by the C&GA or the auditor or practicing chartered accountant appointed by C&GA within
60 days of end of financial year and subsequently audited financial results within 9 months from
the end of financial year. The erstwhile regulations required a two-way process wherein at first-
level the audit was to be carried out by any auditor appointed by the CAG and submitted to
stock exchanges within 60 days from the end of the financial year and subsequently on
completion of audit by the C&GA, the said financial results were to be again submitted to the
3.3. SEBI has also clarified that a listed entity must submit a statement of assets and liabilities and a
statement of cashflows, half-yearly, by way of a note, accompanying the financial results.
3.4. It is now clarified that a NCS listed entity shall submit a statement of assets and liabilities and
statement of cash flows as at the end of the half year by way of note to the standalone or
consolidated financial results (Regulation 52 (2A)).
3.5. Under the disclosure of various financial and accounting ratios, the requirement of submitting
sector specific equivalent ration has been omitted although it is now required that other
ratio/equivalent financial information as may be required to be maintained under applicable
law, if any, has to be disclosed (Regulation 52 (4)). This is merely a clarificatory amendment not
changing the requirement much.
3.6. With respect to the statement indicating utilization of issue proceeds of NCS, as against the
earlier requirement of making such disclosure within 45 days from end of quarter, it is now
required to be filed such statement along with quarterly financial results in such format as may
be specified by SEBI (Regulation 52(7)).
3.7. It is further amended that a statement of material deviations (if any) in the use of issue proceeds
of NCS from the object of the issue, is to be submitted along with quarterly financial results
3.8. It is clarified that NCS listed companies, which have submitted both standalone and consolidated
financial results to the stock exchanges, shall now be required to publish only the consolidated
financial results along with the ratios in the newspaper (Regulation 52(8)).
- Draft Scheme of Arrangement and Scheme of Arrangement for a Listed entity that has listed non-
4.1. Putting NCS listed entities on same footing as equity listed entities w.r.t. scheme of
arrangement it is now required that any NCS listed entity which intends to undertake or is
involved in a scheme of arrangement under section 230-234 and section 66 of the Companies
Act, 2013. It is now required that no scheme of arrangement shall be filed unless the listed
entity has obtained a Certificate of No-Objection from the Stock Exchange (Regulation 59A). In
a. The entity shall file the draft scheme of arrangement along with non-refundable fees
with the stock exchanges where the entity is listed along with such requirements as
specified by the Board /stock exchanges.
b. A valid NOC shall be placed with the National Company Law Tribunal to seek approval
in a manner specified by the board. A NOC shall be valid for 6 months from the date of
c. Once the scheme is approved and sanctioned by the NCLT, the listed entity shall submit
such documents to the stock exchange and shall ensure such compliances as may be
specified by SEBI /Stock exchanges.
d. Similar to equity listed companies, the requirement w.r.t. filing of scheme of
arrangement with the stock exchanges will not be applicable if the same is pursuant to
the approval of resolution plan by NCLT u/s 31 of the Insolvency and Bankruptcy code,
2016; provided the approved resolution plan is submitted to the stock exchanges within
one day of the approval of the resolution plan.
- Draft Scheme of Arrangement and Scheme of Arrangement in case of entities that have their
specified securities (i.e. equity shares & convertible securities) listed and of entities that have
their NCS listed
5.1. W.r.t. entities whose specified securities are listed (Regulation 94), following are provided:
a. On receipt of draft scheme of arrangement and other documents, stock exchange shall
submit the same to SEBI in the manner as may be prescribed.
b. Stock exchange also to submit the Board its No-objection on the proposed scheme after
ensuring that the same is in compliance with the securities law, within 30 days of receipt
of such documents from listed entity.
c. Within 7 days of receipt of comments from SEBI, the stock exchange shall issue the No-
objection to the entity and the validity of the No-objection will be 6 months.
d. In case of any objections ,the same shall be brought in the notice of NCLT by the stock
e. The stock exchange shall also make its recommendation to the Board on sanction of the
scheme by NCLT and documents submitted to it thereafter.
5.2. W.r.t. entities whose NCS are listed (Regulation 94A), similar provisions are now provided as
enlisted herein above except that there is no timelines prescribed for the stock exchange to
make its recommendation to SEBI and to issue its No-objection.
- Amendment w.r.t. to fees payable in respect of draft scheme of arrangement (Schedule XI)
As per the revised schedule, an entity with only listed non-convertible debt securities or non-
convertible redeemable preference shares, shall, along with the draft scheme of the arrangement,
remit a fee at the rate of 0.1% of the amount of outstanding debt of the listed/ transferee/ resulting
company, whichever is higher, post the sanction of the scheme by the National Company Law
Tribunal. The same has been amended from the erstwhile 0.1% of paid-up share capital. A cap of
five lakh rupees has been maintained.
Transique Corporate Advisors
The information contained in this note is provided for informational purpose only and is not intended to
substitute for professional advice. The author expressly disclaim any financial or other responsibility
arising due to any action taken by any person on basis of this note.