Sebi eases LODR and ICDR Regulations; not all tax penalties and fines need to be disclosed henceforth

Additional time (3 hours instead of 30 minutes) given for disclosure of outcome of the meeting of the board of directors that concludes after trading hours.

The market regulator has given more time to report certain material events, has said that disclosures relating to tax litigations and disputes need to be made based on materiality, and has made disclosure of fines or penalties mandatory only if it crosses a threshold as against disclosure of all fines/penalties within 24 hours.

After meeting with its Board on September 30, the Securities and Exchange Board of India (Sebi) has announced ease-of-doing business measures under Listing Regulations (LODR Regulations) and Capital Issue Regulations (ICDR Regulations.

Among them, there were changes relating to material events/information, including additional time given for certain material events and adding threshold to the reporting of fines and penalties.

Under the new norms, the listed entity need to disclose fines and penalties only if they cross Rs 1 lakh when they are issued by sector regulators / enforcement agencies and only if they cross Rs 10 lakh when they are issued by other authorities. Currently, they have to disclose all fines and penalties within 24 hours.

The other ease-of-doing business measures relating to material events/information are as given below:

1.Additional time (3 hours instead of 30 minutes) for disclosure of outcome of the meeting of the board of directors that concludes after trading hours.

2.Additional time (72 hours instead of 24 hours) for disclosure of litigations or disputes involving claims against the listed entity subject to maintaining such information in structured digital database as specified.

The other changes include:

1.Introduction of single filing system for listed entities to file relevant reports, documents etc. on one exchange which will be automatically disseminated at the other exchange(s)

2.ntegration of periodic filings into two broad categories viz., Integrated Filing (Governance) and Integrated Filing (Financial), to minimize the number of filings done on a periodic basis.

3.System driven disclosure of shareholding pattern and revision in credit ratings by Stock Exchanges thereby reducing the reporting requirements on listed entities.

4.Detailed advertisement of financial results in newspapers would be optional for listed entities.

5.Providing additional time of 3 months to fill up vacancies in Board Committees at listed entities and to fill up vacancies in Board, Committees and Key Managerial positions at listed entities coming out of the CIRP under Insolvency and Bankruptcy Code, 2016.

For entities looking to be listed, following measures were announced:

1.Combining ‘pre-issue advertisement’ and ‘price band advertisement’ as a single advertisement and mandating disclosure of certain information through a QR code link.

2.Permitting issuers to voluntary disclose proforma financials for acquisition or divestment already undertaken or proposed to be undertaken from issue proceeds in case of public issue, rights issue and QIPs.

3. Allowing issuers with outstanding Stock Appreciation Rights (SARs) to file DRHP where such SARs are granted to employees only and are fully exercised for equity shares prior to the filing of the RHP.

4.Harmonization of the provisions of ICDR and LODR Regulations with respect to thresholds for identification of material subsidiary, disclosures related to material litigation, material agreements, qualifications of compliance officer etc