MATERIAL STATUTORY UPDATES

SEBI (LODR) (SECOND AMENDMENT) REGULATIONS, 2023

Summary of major changes:

• Timelines for filling a casual vacancy in case of directors, compliance officer and Key Managerial Personnel (KMP) have been introduced
• Requirement for seeking approval of shareholders for permanent directors, special rights of shareholders has been introduced
• Provisions for regulating the sale of undertaking by listed entities and wholly owned subsidiaries (WOS) have been introduced
• Provisions with respect to disclosure of material events and Schedule II have undergone changes
• Provisions of BRSR Core Assurance report on listed entity and value chain partners has been introduced
• New Disclosures have been added to Annual Corporate Governance Report

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SEBI (LODR) (SECOND AMENDMENT) REGULATIONS, 2023 (CONTD)

Filling of Vacancy of Compliance Officer- Reg. 6(1A)

• Vacancy in the office of Compliance Officer shall be filled at the earliest but not later than 3 months from the date of such vacancy.
• Any appointment of Interim Compliance Officer shall be made in a manner similar to the appointment of a compliance officer.

Effective date- July 13, 2023

Applicability to the Company: Presently not applicable

SEBI (LODR) (SECOND AMENDMENT) REGULATIONS, 2023 (CONTD)

Permanent Board Seats- Reg. 17(1D)

• With effect from April 1, 2024; the continuation of a Director serving on the Board of directors shall be subject to the approval of the shareholders in a general meeting at least once in every 5 years from the date of their appointment or re-appointment.
• Any director serving on the board of directors as on March 31, 2024; without the approval of the shareholders for the last 5 years or more shall be subject to the approval of shareholders in the 1^st general meeting after March 31, 2024.

SEBI (LODR) (SECOND AMENDMENT) REGULATIONS, 2023 (CONTD)

Permanent Board Seats- Reg. 17(1D) (Contd.)

• The aforesaid requirements shall not apply to the following:
• Whole-Time Director, Managing Director, Manager, Independent Director or a Director retiring by rotation
• Director appointed pursuant to the order of a Court or a Tribunal or to a a nominee director of the Government on the board of a listed entity, other than a public sector company, or to a nominee director of a financial sector regulator on the board of a listed entity
• A director nominated by a financial institution registered with or regulated by the Reserve Bank of India under a lending agreement in its normal course of business or nominated by a Debenture Trustee registered with the Board under a under a subscription agreement for the debentures issued by the listed entity.

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SEBI (LODR) (SECOND AMENDMENT) REGULATIONS, 2023 (CONTD)

Vacancy in the office of Director- Reg. 17(1E)

• Any vacancy in the office of a director shall be filled by the listed entity at the earliest but not later than three months from the date such vacancy.
• Provided that where the vacancy resulted in non-compliance of Reg. 17(1), due to expiration of the term of office of any director, the resulting vacancy shall be filled not later than the date such office is vacated.

Effective date- July 13, 2023

Applicability to the Company: Presently not applicable

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SEBI (LODR) (SECOND AMENDMENT) REGULATIONS, 2023 (CONTD)

Vacancies in respect of certain Key Managerial Personnel (KMP)- Reg. 26A

• Any vacancy in the office of Chief Financial Officer, Chief Executive Officer, Managing Director, Whole Time Director or Manager shall be filled by the listed entity at the earliest and in any case not later than three months from the date of such vacancy.
• Any appointment in interim position shall be made in a manner similar to the original KMP.

Effective date- July 13, 2023

Applicability to the Company: Presently not applicable

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SEBI (LODR) (SECOND AMENDMENT) REGULATIONS, 2023 (CONTD)

Disclosure on Cyber Security Incidents or Breaches or Loss- Reg. 27(2)(ba)

• Details of cyber security incidents or breaches or loss of data or documents shall be disclosed along with the quarterly Corporate Governance report, as may be specified.

Effective date- July 13, 2023

Applicability to the Company: Presently not applicable

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SEBI (LODR) (SECOND AMENDMENT) REGULATIONS, 2023 (CONTD)

Disclosure of Material Events- Reg. 30

• In order to reduce the discretion of listed entities and bring uniformity w.r.t. disclosure of events/ information specified under Para B of Part A of Schedule III or otherwise, additional quantitative criteria prescribing minimum threshold for disclosure have been prescribed.
• Omission of an event or information, whose value or the expected impact in the terms of value, exceeds the lower of the following, will be deemed to be material:
• two percent of turnover, as per the last audited consolidated financial statements of the listed entity;
• two percent of net worth, as per the last audited consolidated financial statements of the listed entity, except in case the arithmetic value of the net worth is negative;
• five percent of the average of absolute value of profit or loss after tax, as per the last three audited consolidated financial statements of the listed entity;”

SEBI (LODR) (SECOND AMENDMENT) REGULATIONS, 2023 (CONTD)

Disclosure of Material Events- Reg. 30 (contd.)

• Additional clarification has also been inserted whereby the criteria specified in sub-clauses (a), (b) and (c) of Reg, 30(4)(i) is not applicable, an event or information may be treated as being material if in the opinion of the Board, the event or information is considered material.
• Any continuing event or information which becomes material pursuant to the notification of these amendment regulations shall be disclosed within 30 days from the date of coming into effect of the SEBI (LODR)(Second Amendment) Regulations, 2023 i.e. July 13, 2023.

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SEBI (LODR) (SECOND AMENDMENT) REGULATIONS, 2023 (CONTD)

Disclosure of Material Events- Reg. 30 (contd.)

• The policy for determination of materiality shall not dilute any requirement specified under the provisions of these regulations.
• Policy shall assist the relevant employees of the listed entity in identifying any potential material event or information and reporting the same to the authorized Key Managerial Personnel, in terms of sub-regulation (5), for determining the materiality of the said event or information and for making the necessary disclosures to the stock exchange(s).

SEBI (LODR) (SECOND AMENDMENT) REGULATIONS, 2023 (CONTD)

Disclosure of Material Events- Reg. 30 (contd.)

The timelines for making disclosures under Reg. 30 have undergone changes in the following manner:

1. thirty minutes from the closure of the meeting of the board of directors in which the decision pertaining to the event or information has been taken;
2. twelve hours from the occurrence of the event or information, in case the event or information is emanating from within the listed entity;
3. twenty four hours from the occurrence of the event or information, in case the event or information is not emanating from within the listed entity.
4. Certain items for which timelines for disclosure have been specified in part A of Schedule III shall continue to be governed by the same.

SEBI (LODR) (SECOND AMENDMENT) REGULATIONS, 2023 (CONTD)

Disclosure of Material Events- Reg. 30 (contd.)

• In case an event or information is required to be disclosed by the listed entity in terms of the provisions of this regulation, pursuant to the receipt of a communication from any regulatory, statutory, enforcement or judicial authority, the listed entity shall disclose such communication, along with the event or information, unless disclosure of such communication is prohibited by such authority.

Applicability to the Company: Applicable from the effective date i.e. July 13, 2023

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SEBI (LODR) (SECOND AMENDMENT) REGULATIONS, 2023 (CONTD)

Disclosure requirements for certain types of agreements binding listed entities- Reg. 30A and sub-pra 5A, Para A- Part A of Schedule III

• Agreements entered into by the shareholders, promoters, promoter group entities, related parties, directors, KMP, employees of the listed entity, subsidiary or associate company, either among themselves or with a third party, and entered with an intent to :
• Impact the management or control of the entity;
• Impose restrictions or create any liability on the Listed entity

are required to be informed to the listed entity who is not a party to such agreement within 2 working days from entering into such agreements.

Disclosure is required even in cases of any rescission, amendment or alteration of the agreements are required to be disclosed to the stock exchanges.

Effective date- July 13, 2023

Applicability to the Company: Presently not applicable

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SEBI (LODR) (SECOND AMENDMENT) REGULATIONS, 2023 (CONTD)

Grant of Special Rights to Shareholders- Reg. 31B

• Any special right granted to the shareholders of a listed entity shall be subject to the approval by the shareholders in a general meeting by way of a special resolution once in every five years starting from the date of grant of such special right.
• Any shareholder already possessing such special rights shall be required to comply with such stated guidelines within a period of 5 years from the date of coming into force of these regulations.

SEBI (LODR) (SECOND AMENDMENT) REGULATIONS, 2023 (CONTD)

Grant of Special Rights to Shareholders- Reg. 31B (Contd.)

Exceptions:

1. Any right granted to a Financial Institution regulated by the Reserve Bank of India and in a lending arrangement with such entity in the normal course of business.

A Debenture Trustee registered with the Board and under a subscription agreement for the issuance of debentures by the entity and �where such trustee is a shareholder as a consequence of such lending arrangement.

Effective date- July 13, 2023

Applicability to the Company: Presently not applicable

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SEBI (LODR) (SECOND AMENDMENT) REGULATIONS, 2023 (CONTD)

Business Responsibility and Sustainability Report (BRSR)- Reg. 34(2)(f)

• The assurance of BRSR Core shall be obtained in such manner as may be specified by SEBI.
• Necessary amendments for BRSR Core will be issued separately.
• Listed entities shall also make disclosures and obtain assurance as per BRSR Core for their value chain, with effect from and in the manner as may be specified by SEBI.
• The term ‘value chain’ will be defined by SEBI.

Effective Date: July 13, 2023

Applicability to the Company: Presently not applicable

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SEBI (LODR) (SECOND AMENDMENT) REGULATIONS, 2023 (CONTD)

Sale, lease or disposal of an undertaking outside Scheme of Arrangement- Reg 37A

(i) Any listed entity carrying out any sale/disposal of A listed entity carrying out sale, lease or otherwise disposal of the whole or substantially the whole of the undertaking of such entity or where it owns more than one undertaking, of the whole or substantially the whole of any of such undertakings, shall -

1. take prior approval of shareholders by way of special resolution;
2. disclose the object of and commercial rationale for undertaking such action, in the statement annexed to the notice to be sent to the shareholders.

(ii) The compliance requirements will not be applicable in case of sale of undertaking to a wholly owned subsidiary (WOS). Where such undertaking has been transferred to WOS, neither the WOS shall not sell or dispose of the undertaking nor the listed entity shall reduce its shareholding in the WOS, without complying with (i).

SEBI (LODR) (SECOND AMENDMENT) REGULATIONS, 2023 (CONTD)

Sale, lease or disposal of an undertaking outside Scheme of Arrangement- Reg 37A

Exceptions:

• Sale made pursuant to a covenant covered under an agreement made with a Financial Institution regulated by the Reserve Bank of India or
• Any debenture trustee registered with the Board

The term ‘undertaking’ shall have the meaning provided under Section 180 of the Companies Act, 2013.

Effective Date: June 14, 2023

Applicability to the Company: Presently not applicable

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SEBI (LODR) (SECOND AMENDMENT) REGULATIONS, 2023 (CONTD)

Website Disclosures- Reg. 46(2)(o)

• Schedule of analyst or institutional investor’s meet to be disclosed on the Stock Exchange shall be posted on the website at least 2 working days in advance excluding the date of the intimation and the date of the meeting.

Effective date- July 13, 2023

Applicability to the Company: Presently not applicable

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SEBI (LODR) (SECOND AMENDMENT) REGULATIONS, 2023 (CONTD)

Corporate Governance (CG) Report

• Particulars of senior management including the changes therein since the close of the previous financial year to be disclosed in the CG report.
• Information related to agreements disclosed under clause 5A of paragraph A of Part A of Schedule III.

Applicability to the Company: Applicable from the effective date i.e. July 13, 2023

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SEBI (LODR) (SECOND AMENDMENT) REGULATIONS, 2023 (CONTD)

Disclosure of delay in payment of fines- Sub-para 13, Para B- Part A of Schedule III

• Any delay or default in the payment of fines, penalties, etc. to any statutory or regulatory authority shall be required to be disclosed to the Stock Exchange.

Effective date- July 13, 2023

Applicability to the Company: Presently not applicable

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SEBI (LODR) (SECOND AMENDMENT) REGULATIONS, 2023 (CONTD)

Disclosures with respect to default/ fraud- Substitution of sub-para 6, Para A- Part A of Schedule III

• The disclosures w.r.t. fraud and default has been expanded to include directors, senior management personnel or subsidiary.
• Disclosure will only be required where default has or may have an impact on the listed entity.
• Disclosure in case of arrest has been extended to the arrest of senior management or director of the listed entity, whether occurred within India or abroad.
• Definition of Fraud and Default has also been provided.

Effective date- July 13, 2023

Applicability to the Company: Presently not applicable

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SEBI (LODR) (SECOND AMENDMENT) REGULATIONS, 2023 (CONTD)

Change in Directors, KMP, etc.- Sub-para and sub-para 7C and 7D, Para A- Part A of Schedule III

• Any change in senior management personnel to be disclosed to the Stock Exchange.
• In case of resignation by KMP, Senior management, Compliance officer or any other director (other than Independent Director), letter of resignation along with detailed reasons shall be disclosed on the Stock Exchanges within 7 days of resignation coming into effect.
• In case where the Managing Director or Chief Executive Officer are unable to fulfil the requirements of his role for more than 45 days (in a rolling period of 90 days) ,it shall be disclosed to the stock exchange along with reason for such unavailability or indisposition.�

Applicability to the Company: Applicable from the effective date i.e. July 13, 2023

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SEBI (LODR) (SECOND AMENDMENT) REGULATIONS, 2023 (CONTD)

Analyst/ Investor Meet- Sub-para 15, Para A- Part A of Schedule III

• Schedule of analyst or institutional investor’s meet to be disclosed on the Stock Exchange shall be posted on the website at least 2 working days in advance excluding the date of the intimation and the date of the meeting.

Effective date- July 13, 2023

Applicability to the Company: Presently not applicable

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SEBI (LODR) (SECOND AMENDMENT) REGULATIONS, 2023 (CONTD)

Material events otherwise communicated on social media/mainstream media- Sub-para 18, Para A- Part A of Schedule III

In relation to any material event or information- qualifying the materiality guideline of Reg. 30 and which is not publically available yet and announcement or communication of such information has been made through Social media intermediaries/ Mainstream media by the directors, KMP or senior management, then the same shall be disclosed to the Stock Exchange.�

Effective date- July 13, 2023

Applicability to the Company: Presently not applicable

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SEBI (LODR) (SECOND AMENDMENT) REGULATIONS, 2023 (CONTD)

Disclosure of voluntary revision- Sub-para 21, Para A- Part A of Schedule III

• Voluntary revision of financial statements or the report of Board of Directors of the listed entity under Section 131 of the Companies Act, 2013 needs to be disclosed to the stock exchanges.

Effective date- July 13, 2023

Applicability to the Company: Presently not applicable

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SEBI (LODR) (SECOND AMENDMENT) REGULATIONS, 2023 (CONTD)

Disclosure of Regulatory Actions- Sub-para 18 and 19, Para A- Part A of Schedule III

• Any action initiated or statutory orders passed by any regulatory or statutory body against the listed entity or its directors, KMP, senior management, promoter or subsidiary, in relation to the listed entity w.r.t. following matters needs to be disclosed:
• Search or seizure
• Re-opening of accounts under Section 130 of the Companies Act, 2013
• Investigation under Chapter XIV of the Companies Act, 2013- to be disclosed upon the stock exchange along with certain mandatory details to be stated.

SEBI (LODR) (SECOND AMENDMENT) REGULATIONS, 2023 (CONTD)

Disclosure of Regulatory Actions- Sub-para 18 and 19, Para A- Part A of Schedule III

• Any action taken on orders passed by the Statutory/Regulatory authorities in respect of the following against the listed entity or its directors, KMP, senior management, promoter or subsidiary, in relation to the listed entity needs to be disclosed:
• Suspension
• Imposition of fine or penalty
• Settlement of proceedings
• Debarment
• Disqualification
• Closure of operations
• Sanctions imposed
• Warning or caution
• any other similar action (s) by whatever name called

Effective date- July 13, 2023

Applicability to the Company: Presently not applicable

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SEBI (LODR) (SECOND AMENDMENT) REGULATIONS, 2023 (CONTD)

Disclosures with respect to Acquisitions, etc.- Sub-para 1, Para A- Part A of Schedule III

• Additional disclosures related to sale or disposal of subsidiary and sale of stake in associate company- have been introduced
• For determining the conditions of disclosure, apart from 5% voting rights or shares or change resulting in a change of 2% of voting rights or shares, new criteria of cost of acquisition or price meeting the quantitative criteria inserted in Regulation 30(4) has been provided.

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SEBI (LODR) (SECOND AMENDMENT) REGULATIONS, 2023 (CONTD)

Disclosures with respect to Acquisitions, etc.- Sub-para 1, Para A- Part A of Schedule III (contd.)

• Sale or disposal of subsidiary and sale of stake in associate company shall include:
• An agreement to sell or sale of shares or voting rights in a company such that the company ceases to be associate company of the listed entity.
• An agreement to sell or sale of shares or voting rights in a subsidiary or associate company such that the amount of the sale exceeds the threshold specified in Reg. 30(4).

Effective date- July 13, 2023

Applicability to the Company: Presently not applicable

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Thank you.