Key relaxations provided by SEBI from the disclosure obligations under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015

In view of the COVID 19 pandemic, the Securities and Exchange Board of India (“SEBI”) has provided certain relaxations to listed entities, from compliance with certain provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“SEBI LODR Regulations”) vide its circulars, most recent of which is the circular dated May 12, 2020 (Circular No. SEBI/HO/CFD/CMD1/CIR/P/2020/79), which provides for (i) additional relaxations in line with clarifications released by the Ministry of Corporate Affairs (“MCA”) dated April 8, 2020 and April 13, 2020; and (ii) further extension to certain relaxations already provided by SEBI vide its circulars dated March 19, 2020 (Circular No. SEBI/HO/CFD/CMD1/CIR/P/2020/38), March 26, 2020 (Circular No. SEBI/HO/CFD/CMD1/CIR/P/2020/48), April 17, 2020 (Circular No. SEBI/HO/CFD/CMD1/CIR/P/2020/63) and April 23, 2020 (Circular No. SEBI/HO/CFD/CMD1/CIR/P/2020/71.

Set out below are the key relaxations to the SEBI LODR Regulations provided:

1.          Extension of timelines for submission of certificates

In terms of the SEBI LODR Regulations, listed entities are required to file certain compliance certificates with the stock exchanges, indicating compliance with regulatory requirements. These include

(a)   Certificate on maintenance of share transfer facility as per Regulation 7 (3) which is to be filed within one month of the end of each half of the financial year.

Pursuant to the SEBI circular dated March 19, 2020 (Circular No. SEBI/HO/CFD/CMD1/CIR/P/2020/38), the due date for the submission of the compliance certificate for the half year ended March 31, 2020 has been extended from April 30, 2020 to May 31, 2020.

(b)   Secretarial compliance report for listed entities and their material unlisted subsidiaries in terms of Regulation 24A, which is to be annexed to the annual report.

This requirement has been relaxed vide the SEBI circular dated March 19, 2020 (Circular No. SEBI/HO/CFD/CMD1/CIR/P/2020/38) from May 30, 2020 to June 30, 2020 for the financial year ended March 31, 2020.

(c)   Certificate from practicing company secretary on share certificates as per Regulation 40(9) to be submitted within one month of the end of each half of the financial year, certifying that all certificates have been issued within thirty days of the date of lodgement for transfer, sub-division, consolidation, renewal, exchange or endorsement of calls/allotment monies and submit the same with the stock exchange.

SEBI vide its circular dated March 26, 2020 (Circular No. SEBI/HO/CFD/CMD1/CIR/P/2020/48), has extended the due date for submission of the aforementioned certificate, for the half year ended March 31, 2020, from April 30, 2020 to May 31, 2020.

2.          Financial results

As per Regulation 33(3)(c) of the SEBI LODR Regulations, a listed entity is required to submit with the stock exchange, its standalone and consolidated (if applicable) quarterly financial results within 45 days of the end of the particular quarter. This requirement has been relaxed for the quarter ended March 31, 2020 pursuant to SEBI circular dated March 19, 2020 (Circular No. SEBI/HO/CFD/CMD1/CIR/P/2020/38). The due date for submission of the aforementioned financial results is revised from May 15, 2020 to June 30, 2020.

Further, as per Regulation 33(3)(d) of the SEBI LODR Regulations, a listed entity is required to submit with the stock exchange, its standalone and consolidated (if applicable) annual audited financial results within sixty days of the end of the financial year. This requirement has been relaxed for the quarter ended March 31, 2020 pursuant to SEBI circular dated March 19, 2020 (Circular No. SEBI/HO/CFD/CMD1/CIR/P/2020/38). The due date for submission of the aforementioned financial results is revised from May 30, 2020 to June 30, 2020.

In addition to the above, by way of SEBI circular dated May 12, 2020 (Circular No. SEBI/HO/CFD/CMD1/CIR/P/2020/79), SEBI took note of the representation from listed entities that are banks and insurance companies with relation to the difficulties faced by them in the preparation of consolidated financial results under regulation 33(3)(b) in view of different accounting standards being followed by companies belonging to same group and the difficulties in restating those financials as per Indian Accounting Standards (“Ind AS”) due to the prevailing circumstances in view of COVID 19 pandemic. The Reserve Bank of India through its notification dated March 22, 2019, has deferred the implementation of Ind AS until further notice to provide relief to scheduled commercial banks.

In light of the above, SEBI in the circular dated May 12, 2020 (Circular No. SEBI/HO/CFD/CMD1/CIR/P/2020/79) has clarified that listed entities which are banking and / or insurance companies or having subsidiaries which are banking and / or insurance companies may submit consolidated financial results under regulation 33(3)(b) for the quarter ending June 30, 2020 on a voluntary basis. However, they shall continue to submit the standalone financial results as required under regulation 33(3)(a) of the LODR. If such listed entities choose to publish only standalone financial results and not consolidated financial results, they shall give reasons for the same.

3.          Provisions relating to frequency of meetings

As the lockdown has imposed restrictions on physical gatherings and companies have been facing difficulties in conducting meetings completely through electronic audio-visual means, SEBI has provided certain relaxations pertaining to the frequency of meetings to be held by listed entities. It may be noted that certain of these provisions will also require a corresponding relaxation from the MCA, which one can hope will be forthcoming shortly.

(a)   As per Regulation 17(2), the board of directors of a listed entity is required to meet at least four times a year, with a maximum time gap of one hundred and twenty days between any two meetings and as per the Regulation 18(2)(a), the audit committee of a listed entity is also required to meet at least four times a year, with a maximum time gap of one hundred and twenty days between any two meetings. SEBI vide its circular dated March 19, 2020 (Circular No. SEBI/HO/CFD/CMD1/CIR/P/2020/38) has exempted listed entities from observing the maximum gap between the meetings held or proposed to be held between December 1, 2019 and June 30, 2020. However, it has been clarified that there is no relaxation provided to the board of directors / audit committee from ensuring that they meet four times in a year.

(b)   SEBI has vide its circular dated March 26, 2020 (Circular No. SEBI/HO/CFD/CMD1/CIR/P/2020/48), extended the time limit provided to listed entities to have one meeting of the nomination and remuneration committee, stakeholders relationship committee and risk management committee as required under Regulation 19(3A), Regulation 20(3A) and Regulation 21(3A), respectively, of the SEBI LODR Regulations. A listed entity is now required to comply with this requirement by June 30, 2020 instead of March 31, 2020.

(c)   As per Regulation 44(5) of the SEBI LODR Regulations, the top 100 listed entities by market capitalization, determined as on March 31st of every financial year, shall hold their annual general meetings within a period of five months from the date of closing of the financial year. SEBI vide its circular dated March 26, 2020 (Circular No. SEBI/HO/CFD/CMD1/CIR/P/2020/48), has extended the time limit for conducting the annual general meeting from August 31, 2020 to September 30, 2020. Further, SEBI has in its circular dated April 23, 2020 (Circular No. SEBI/HO/CFD/CMD1/CIR/P/2020/71 clarified that the extended time limit of up to September 30, 2020 shall also be applicable to the top 100 listed entities by market capitalization, whose financial year ended on December 31, 2020.

4.          Provisions relating to publication and dispatch of forms and advertisements

In view of the impact of the current lockdown on postal services and physical newspapers, SEBI has also dispensed with or relaxed requirements relating to postal dispatch of forms or publication in physical newspapers, including:

(a)   SEBI vide its circular dated May 12, 2020 (Circular No. SEBI/HO/CFD/CMD1/CIR/P/2020/79), has temporarily dispended the requirement of sending proxy forms for general meeting to holders of securities as per Regulation 44(4), in case such meetings are held through electric mode. This relaxation is available for listed entities who conduct their AGMs through electronic mode during the calendar year 2020 (i.e. till December 31, 2020).

(b)   Regulation 36 (1)(b) and (c) of SEBI LODR Regulation prescribes that a listed entity shall send a hard copy of the statement containing salient features of all the documents, as prescribed in Section 136 of the Companies Act, 2013 to the shareholders who have not registered their email addresses and hard copies of full annual reports to those shareholders, who request for the same, respectively. Regulation 58 (1)(b) &(c) of the SEBI LODR Regulations extend similar requirements to entities which have listed their NCDs and NCRPS. SEBI vide its circular dated May 12, 2020 (Circular No. SEBI/HO/CFD/CMD1/CIR/P/2020/79), has dispensed the aforementioned requirements for listed entities who conduct their annual general meetings during the calendar year 2020 (i.e. till December 31, 2020).

(c)   SEBI vide its circular dated March 26, 2020 (Circular No. SEBI/HO/CFD/CMD1/CIR/P/2020/48) read with its circular dated May 12, 2020 (Circular No. SEBI/HO/CFD/CMD1/CIR/P/2020/79) has exempted publication of advertisements in newspapers, as required under Regulation 47 of SEBI LODR Regulations, for all events scheduled till June 30, 2020, since some newspapers had stopped their print versions due to the COVID 19 pandemic.

5.          Timelines for provision of intimation to stock exchanges

In view of the difficulties caused by the pandemic to normal operations of companies, SEBI has provided temporary relaxations regarding certain intimations to be provided to stock exchanges:

(a)   As per Regulation 29 (2) of the SEBI LODR Regulations, stock exchanges need to be provided prior intimation about meetings of the board (excluding the date of the intimation and date of the meeting) as follows: (i) at least five days before the meeting if financial results are to be considered; and (ii) two working days in other cases.

SEBI vide its circular dated April 17, 2020 (Circular No. SEBI/HO/CFD/CMD1/CIR/P/2020/63) has decided that the above requirement under Regulation 29 (2) of SEBI LODR Regulations of prior intimation of five days / two working days shall be reduced to two days, for board meetings held till July 31, 2020.

(b)   As per Regulation 39 (3) of the SEBI LODR Regulation, requires listed entities to submit information regarding loss of share certificates and issue of the duplicate certificates, to the stock exchange within two days of the listed entity receiving information.

SEBI vide its circular dated April 17, 2020 (Circular No. SEBI/HO/CFD/CMD1/CIR/P/2020/63) has decided that any delay beyond the stipulated time will not attract penal provisions laid down vide SEBI circular no. SEBI/HO/CFD/CMD/CIR/P/2018/77 dated May 3, 2018. This relaxation is for intimations to be made between March 1, 2020 to May 31, 2020.

6.          Use of digital signature and electronic payment methods

(a)   SEBI vide its circular dated April 17, 2020 (Circular No. SEBI/HO/CFD/CMD1/CIR/P/2020/63) has clarified that authentication / certification of any filing / submission made to stock exchanges under the SEBI LODR Regulations may be done using digital signature certifications until June 30, 2020.

(b)   As per Regulation 12 of the SEBI LODR Regulations, issuance of ‘payable at par’ warrants or cheques in case it is not possible to use electronic modes of payment. Further, in case the amount payable as dividend exceeds Rs.1500, the ‘payable-at-par’ warrants or cheques shall be sent by speed post.

SEBI by way of the circular dated May 12, 2020 (Circular No. SEBI/HO/CFD/CMD1/CIR/P/2020/79) has clarified that the requirements of this regulation will apply upon normalization of postal services and in cases where email addresses of shareholders are available, listed entities shall endeavor to obtain their bank account details and use the electronic modes of payment specified in Schedule I of the SEBI LODR Regulation.

7.          Deferral of effective date of operation of the SEBI circular on standard operating procedure

SEBI vide circular no. SEBI/HO/CFD/CMD/CIR/P/2020/12 dated January 22, 2020 issued the Standard Operating Procedure (“SoP”) on imposition of fines and other enforcement actions for non-compliances with provisions of the SEBI LODR Regulations, the effective date of operation of which is for compliance periods ending on or after March 31, 2020. Pursuant to the SEBI circular dated March 26, 2020 (Circular No. SEBI/HO/CFD/CMD1/CIR/P/2020/48), the said circular dated January 22, 2020 shall now come into force with effect from compliance periods ending on or after June 30, 2020. It may be noted that the SoP circular dated May 3, 2018 would be applicable till such date.