SEBI (LODR) (Amendment) Regulations, 2024: A Comprehensive Overview

Introduction

The Securities and Exchange Board of India (SEBI) has recently implemented significant amendments to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. These amendments, notified on 17th May 2024, are aimed at enhancing market integrity, investor confidence, and corporate governance. Let's delve into the key amendments introduced by the SEBI (LODR) (Amendment) Regulations, 2024:

1. SEBI Introduces Revised Market Capitalization Calculation Method; Adopts 6-Month Average Calculation

Objective: Improve accuracy in market capitalization calculations.

Summary: SEBI has introduced a revised methodology for calculating market capitalization, effective from 31st December 2024. Previously, a company's ranking was determined by its market cap as of 31st March or the fiscal year's close. Under the new norms, every recognized stock exchange is required to compile a list of entities that have listed their specified securities as of 31st December. These entities will be ranked based on the average market capitalization calculated from 1st July to 31st December.

Applicability and Continuation of Applicability Based on Market Capitalization:

• The amended provisions shall become applicable to a listed entity for the first time after three months from 31st December (i.e., 1st April) or from the beginning of the immediate next financial year, whichever is later.
• Provisions shall continue to apply to listed entities based on market capitalisation criteria unless their ranking changes in the list prepared by a recognized stock exchange, remaining outside the specified threshold for three consecutive years.

2. SEBI Aligns Rumor Verification with Material Price Movements (MPM)

Objective: Enhancing transparency and timeliness in rumour verification.

Summary:

• SEBI has linked the rumour verification by listed companies to “Material Price Movement (MPM)”.
• Companies are required to confirm, deny, or provide clarification within 24 hours from the trigger of the MPM.
• SEBI has issued a framework for top entities to consider unaffected prices in case of market rumours.
• An Industry Standards Forum comprising representatives from ASSOCHAM, CII, and FICCI, in consultation with SEBI, has been formulated to effectively implement the requirement to verify market rumours.

3. SEBI Mandates Prompt and Accurate Responses from Key Executives for Rumour Verification

Objective: Ensuring prompt responses and accountability from key executives.

Summary:

• A new Regulation 30(11A) has been inserted, requiring promoters, directors, key managerial personnel, or senior management of a listed company to promptly respond to any questions or explanations necessary for compliance with Regulation 30(11).
• Companies must immediately share these responses with the stock exchanges.

4. SEBI Extends Timeframe for Filling Key Executive Vacancies Requiring Regulatory Approval

Objective: Providing extended timelines for filling key executive vacancies.

Summary:

• Vacancies in key executive positions such as Chief Executive Officer, Chief Financial Officer, Managing Director, Whole Time Director, or Manager must be filled by the listed entity within six months from the date of such vacancy if regulatory, government, or statutory approvals are required.
• An additional three-month period is granted to fill the vacancy in such cases.

5. SEBI Mandates Uniform ‘Two-Day Notice’ for Stock Exchange Intimations

Objective: Standardizing notice periods for stock exchange intimations.

Summary:

• SEBI has specified a two-working-day notice period for all events prescribed under Regulation 29.
• Prior intimation given to the stock exchange under Regulation 29 must now mention the date of the board meeting when the proposals will be discussed.
• Fundraising through any money market instrument now requires prior intimation.

6. SEBI Expands Interval Between Two Risk Management Committee Meetings to 210 Days

Objective: Providing greater flexibility and time for comprehensive risk management strategies.

Summary:

• The maximum gap between two risk management committee meetings for top 1,000 listed entities and high-value debt-listed entities has been extended to 210 days.

• This extension allows entities more time to prepare comprehensive risk management strategies and reports.

7. Compliance Extension for High-Value Debt-Listed Entities by One More Year

Objective: Providing an additional year for compliance to high-value debt-listed entities.

Summary:

• The applicability of Chapter IV to high-value debt-listed entities has been extended until 31st March 2025, after which compliance will be mandatory.
• A high-value debt-listed entity is one that has listed its non-convertible debt securities with an outstanding value of Rs 500 crore and above.

Conclusion

The recent amendments introduced by SEBI to the Listing Obligations and Disclosure Requirements Regulations, 2015, represent a significant step towards enhancing market integrity, investor confidence, and corporate governance in the Indian securities market. By introducing measures such as the new market cap formula, strengthened rumour verification processes, and extended timelines for key compliance activities, SEBI aims to foster a more robust and investor-friendly regulatory framework conducive to sustainable market growth. These amendments are expected to have a profound impact on the Indian securities market, promoting transparency, accountability, and efficiency, and ultimately contributing to the overall development and stability of the market.

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Article Compiled by:-

Mayank Garg

+91 9582627751

(LegalMantra.net Team)

Disclaimer: Every effort has been made to avoid errors or omissions in this material in spite of this, errors may creep in. Any mistake, error or discrepancy noted may be brought to our notice which shall be taken care of in the next edition In no event the author shall be liable for any direct indirect, special or incidental damage resulting from or arising out of or in connection with the use of this information Many sources have been considered including Newspapers, Journals, Bare Acts, Case Materials , Charted Secretary, Research Papers etc.

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