SEBI

SEBI (LODR) (Fifth Amendment) Regulations 2021

The Securities and Exchange Board of India recently issued the SEBI (LODR) (Fifth Amendment) Regulations to amend the SEBI (LODR) Regulations of 2015. Among the amendments, SEBI made it mandatory for all high value debt listed entities to have directors and officers insurance policy for their independent directors.

SEBI (LODR) (Fifth Amendment) Regulations 2021: Amendments made

SEBI notified of the various amendments where various sub-regulations, provisos were inserted and substituted as well.

• In regulation 3, sub-regulation (3) was inserted, namely:

The provisions of these regulations which was applicable to listed entities on the basis of criterion of value of the outstanding listed debt securities will continue to apply to such entities even if they fall below thresholds as specified in sub-regulation (1A) of regulation 15.

• In regulation 15, Sub-regulation 1A was inserted, namely:

The provisions of this regulation & regulation 16 to 27 of this chapter will apply to listed entity having listed its Non-convertible debt securities and having an outstanding value of listed Non-convertible debt securities of 500 crore rupees and above-

Provided that if an entity has listed its Non-convertible debt securities triggers the specified threshold of 500 crore rupees during the year, it will have to ensure compliance with these provisions within 6 months from the date of such trigger-

Provided further that the provisions will apply to the high value debt listed entity on a comply/explain basis until 31 March 2023 and mandatorily thereafter.

• In Regulation 21, sub-regulation (5) has been substituted:

The provisions of this regulation will apply to:

1. Top 1000 listed entities and;
2. High value debt listed entity.

• In regulation 23, in sub-regulation (9), the following has been inserted:

“Provided that a high value debt listed entity would submit such disclosures with its standalone financial results for the half year”.

• In Regulation 25, sub-regulation 12 has been inserted namely:

A high value debt listed entity would undertake DO insurance for all its independent directors for such sum assured and for risks as determined by the board of directors^[1]. DO insurance or Directors and Officers Insurance is essential in safeguarding directors and officers from any damage from wrongful activities. It is useful when there is an establishment of new board of directors.

Other Amendments in Brief

• In regulation 49, sub-regulation (1) is substituted;
• In regulation 49, sub-regulation (2) is omitted;
• In regulation 50, sub-regulation (1) and (2) has been substituted;
• In regulation 50, sub-regulation (3) is omitted;
• In regulation 51, sub-regulation (3) has been inserted;
• In regulation 52, sub-regulation (1) has been substituted;
• In regulation 52, sub-regulation (7) has been substituted;
• In regulation 52, sub-regulation (7A) has been inserted;
• In regulation 56, sub-regulation (1A) has been substituted;
• In regulation 57, sub-regulation (1) has been substituted;
• In regulation 57, sub-regulation (4 and 5) has been inserted;
• In regulation 61, sub-regulation (2) has been omitted;
• Regulation 61A specifying,” Dealing with unclaimed non-convertible securities and benefits accrued thereon, is inserted;
• Regulation 62 specifying website, sub-regulation 1A is inserted;
• Regulation 62 specifying website, sub-regulation (4) is inserted;
• In Schedule III, Part B specifying Disclosure of information having bearing on performance/operation of listed entity and or price sensitive operations and Non-convertible debt security and non-convertible redeemable preference share has been amended.

Conclusion

You can refer the document (SEBI (LODR) (Fifth Amendment)) attached with this article for more accurate interpretation.

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