To encourage listing of start-ups, capital market regulator Securities and Exchange Board of India (SEBI) on March 25 approved a slew of relaxations to norms, including reducing holding period for pre-issue capital.
Besides, the regulator approved revamping of delisting rules and rationalising the existing framework related to reclassification of promoter and promoter group entities.
At the meeting of SEBI board, it was also decided to introduce new requirements for sustainability reporting by listed entities. This new report will be called the Business Responsibility and Sustainability Report (BRSR) and will replace the existing Business Responsibility Report (BRR).
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The BRSR will be applicable to the top 1,000 listed entities (by market capitalisation) for reporting on a voluntary basis for FY 2021-22 and on a mandatory basis from 2022-23.
Here are key highlights taken by SEBI board on Thursday:
1) In line with the provisions of main board IPO, the issuer companies -- issued superior voting rights (SR) equity shares to promoters/founders -- shall be allowed to do listing under IGP framework.
2) For listed firm under IGP framework, stipulation for triggering open offer has been relaxed from existing 25 percent to 49 percent under Takeover Regulations, 2011.
3) Delisting under IGP framework shall be considered successful if the post offer acquirer/promoter shareholding, taken together with the shares tendered and accepted, reaches 75 percent of the total issued shares of that class; and at least 50 percent shares of the public shareholders are tendered and accepted.
4) The board reduced the capital requirement for a firm for migration from IGP to main board by QIBs as on date of application for migration from current 75 percent to 50 percent.
5) The board decided to introduce new requirements for sustainability reporting by listed entities, and for that it renamed BRR to BRSR. The BRSR will be applicable to the top 1000 listed entities or reporting on a voluntary basis for FY 2021–22 and on a mandatory basis from FY 2022–23.
6) The market regulator approved the proposal to amend SEBI (Alternative Investment Funds) Regulations, 2012 to:
a) Provide a definition of ‘startup’ as specified by the Indian government for investment by Angel Funds.
b) Remove the list of restricted activities or sectors from the definition of Venture Capital Undertaking to provide flexibility to Venture Capital Funds registered under Category I Alternative Investment Funds (AIFs) in making investments.
c) Allow AIFs, including Fund of AIFs, to simultaneously invest in units of other AIFs and directly in securities of investee companies subject to certain conditions.
d) Provide clarity on scope of responsibilities of managers and members of Investment Committee.
e) Prescribe a Code of Conduct for AIF, trustee and directors of the Trustee, among others.
7) The Sebi board approved the proposal to rationalize the existing framework pertaining to reclassification of promoter/ promoter group entities.
8) The board decided to reduce the time gap between the date of board meeting and shareholders meeting for consideration of reclassification request, to a minimum of one month and a maximum of three months from the existing requirement of minimum period of three months and maximum six months.
9) The board approved several amendments to SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR Regulations). They include:
a) Extensions of requirement for formulation of dividend distribution policy from existing top 500 listed entities to 1000 on the basis of market capitalisation.
b) The financial results shall be disclosed by listed entities within 30 minutes of end of the board meeting for the day on which the financial results are considered, if the meetings held for more than one day.
c) The provisions of the LODR Regulations which become applicable to listed entities based on market capitalisation criteria or paid-up capital and net-worth shall continue to apply to such entities unless net-worth falls and continues to remain below the threshold for a period of three consecutive financial years.
d) The requirement to seek stock exchange approval for change of name of a listed entity is dispensed with.
e) The timelines for submission of periodic reports will be harmonized to 21 days from the end of each quarter.
f) Frequency of submission of compliance certificates relating to share transfer facility and issuance of share certificates within 30 days of lodgement for transfer, sub-division, etc. is revised from half-year to annual.
g) The requirement to publish newspaper advertisements for the notice to board meetings where financial results are to be discussed and for quarterly statement on deviation or variation in use of funds, is dispensed with.
10) The Board approved amendments to SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 in relation to applicability, constitution and role of the Risk Management Committee (RMC) of listed entities. They include:
a) The requirement to constitute the RMC has been extended to the top 1000 listed entities by market capitalization from the existing top 500 listed entities.
b) The RMC shall have minimum three members with majority of them being members of the board of directors, including at least one independent director.
c) The quorum for a meeting of the RMC shall be either two members or one third of the members of the committee, whichever is higher, including at least one member of the board of directors in attendance.
Other than these, the market regulator in its board meeting approved amendment to the SEBI (Portfolio Managers) Regulations, 2020, mandating Portfolio Managers to obtain prior approval of SEBI for change in control; approved several amendments to the SEBI (Delisting of Equity Shares) Regulations, 2009 (Delisting Regulations) primarily with an objective to make the delisting process more transparent and efficient; and approved the proposal for intermediaries to pay fees only through online payment gateway and doing away with physical mode of payment to encourage digital payment.