SEBI vide its notification dated November 16, 2018 notified sixth amendment of SEBI (Listing Obligations and Disclosure Requirements) Regulations. Gist of the major changes are as under:
Insertion of definition:
Fugitive Economic Offender has been defined as an individual who is declared as defaulter under section 12 of Fugitive Economic Offenders Act, 2018
Substitution of existing clause – Regulation 31A:
Conditions for Reclassification of promoter / promoter group –
- Promoter(s) making an application for re-classification shall not be a wilful defaulters or fugitive economic offender
- Listed entities shall be in compliance w.r.t. requirement of Minimum Public Shareholding as per regulation 38
- Trading in the securities of such listed entities are not suspended
- There is no outstanding dues to the regulators, stock exchanges or the depositories
2) Procedural Compliance for seeking re-classification:
- Promoter(s) to make an application to listed entities for re-classification
- BOD to analyse the request and place it before the members for their approval
- Minimum of three months gap between Board meeting and members meeting, time gap shall not exceed six months
- Ordinary resolution to be passed by members in their meeting, where promoter(s) seeking re-classification along with person related to promoter(s) shall not be entitled to vote for approving such transaction.
3) Post re-classification (Restrictive clause)
- Promoter(s) along with persons related to promoter(s) shall not hold more than 10% voting rights
- Shall not exercise the control over the affairs of such listed entities directly or indirectly
- Shall not have any special rights through formal / informal arrangements including shareholders agreements
4) Representation on Board:
- Promoter(s) shall not be allowed to have any representation on the board of such listed entities (including nominee director)
- Promoter(s) shall not act as KMP of such listed entities
5) Open Offer:
If any public shareholder seeks to reclassify itself as promoter, it shall be required to make an open offer as per SEBI (SAST) Regulations
Disclosure in Corporate Governance Report (Schedule V, clause C):
Disclosure w.r.t. Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 shall be provided in terms of no of complaints received, disposed off and pending cases during the year.
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