Compliances

Listed Company Compliances under Companies Act, 2013

A company that is incorporated in India must ensure compliance with the Companies Act 2013. Non-compliance can lead to adverse consequences. Compliance of Listed Company is prescribed under the provisions of Companies Act 2013 and SEBI (LODR) Regulations 2015. The listed companies should adhere to every monthly, quarterly, half-yearly, and annual compliance. In this article, we shall focus on listed company compliances under Companies Act 2013.

What is meant by Listed Company?

A public company whose shares are listed and traded on the stock exchange is called Listed Company. These Companies are the public limited joint-stock company whose shares get traded on the stock market. Companies go for public issues as one of the important sources of raising funds.

Significance of a Listed Company

The significance of a Listed Company can be deduced from the following points:

• The company can raise additional fund through the issue of more stock;
• Companies offer to provide their securities in exchange for acquisition;
• Employee stock options can be provided to the employees of the listed company that causes to make right track image in the market;
• Listed companies get finance easily when compared with an unlisted company;
• When the company’s stock is listed in the market, it obtain the attention of mutual funds, hedge funds, etc.
•  When the company lists its shares on the stock exchange, it increases its credibility with the public by increasing its brand image.

Listed Company Compliances

The listed company has to comply with the provisions of SEBI and Companies Act 2013.

Below are some of the essential compliances:

• Annual return

Annual return should be certified by Company Secretary (CS) in practice stating that the facts are correct and that the company has met all provisions applicable to the company.

• Change in Shareholding Pattern

Every listed company must file a return in form MGT-10 for change in shareholding pattern of 2% or more in value or volume. The change should be filed within 15 days of the date of change.

• E-voting

Every listed company will provide the facility to its shareholders to exercise their voting rights in general meeting by electronic means if such company has 1000 or more shareholders.

• Maintenance of Records in Electronic means

Every listed company with 1000 more shareholders, debenture holders, or any security holders would maintain its records in an electronic mode in a readable format. It is not possible to tamper or change after affixing the Digital Signature Certificate of an authorized person.

• Report on AGM

Every listed company must prepare a report on its AGM stating that the meeting is held, conducted, and convened properly and according to the provisions of the Act. A report should be filed to the Registrar of Companies in Form MGT-15.

• Director’s report

A listed company should disclose in its director report about the formal annual evaluation made by the board of directors. The evaluation should be conducted on the performance of boards, committees, and that of individual directors. Further, the disclosure should be made regarding the evaluation of the performance of internal financial control that is laid and that it’s adequate and efficiently operating and also the ratio of the remuneration of director to the median remuneration of the employees of the company.

• Internal auditor

A listed company should have an internal auditor in its place who is a qualified Chartered Accountant, Cost Accountant, or CS. The audit committee fixes their remuneration, scope of work, roles and responsibilities, and periodic timelines for conducting internal audit.

• Rotation of auditors

All listed companies should have an individual auditor for one term of 5 successive years and audit firm as its auditor for two terms of 5 successive years.

• Small shareholder director

The listed company should compulsorily appoint small shareholder’s director at the time of obtaining notice from 1000 shareholders or 1/10^th of the total number of shareholders.

• Audit committee

Every listed company has to constitute an audit committee.

• Nomination and Remuneration Committee

All listed companies should constitute a nomination and remuneration committee with minimum 3 non-executive directors out of which there would be a majority of independent directors.

• Stakeholders Relationship Committee

Every listed company having more than 1000 shareholders should appoint the Stakeholders Relationship Committee, necessarily with non-executive directors and chairperson.

• Key Managerial Personnel

All listed companies and public company with a paid-up share capital of 10 crore rupees should mandatorily appoint whole time Key Managerial Personnel.

• Secretarial audit

Every listed company should get secretarial audit completed by a whole-time Company Secretary (CS) in practice. The report should be provided in form MR-3 and has to be annexed with the board report. 

Listed Company Compliances as per SEBI (LODR) Regulations

There are also certain monthly, half-yearly and annual compliances of a listed company as per SEBI (LODR) Regulations 2015^[1], such as appointment of new share transfer agent within 7 days of appointment, continual disclosure, statement of investor’s complaint within 21 days from the end of the quarter, annual report, listing fee, and other charges, etc.

Conclusion

There are numerous listed company compliances that should be followed in a timely manner. Staying compliant with the aforementioned compliances will help in improving the brand image of the company and gaining investor trust and plays a vital role in its expansion.

Read our article:All you need to know about Small Companies under the Companies Act, 2013