Listing – Indian Stock Exchanges – Corporate Funding and Listings in Stock Exchanges Important Questions

Question 1.
Comment on the following: “Corporate governance is looked upon as a distinctive brand and benchmark in the profile of corporate excellence”.
Answer:
→ Corporate excellence refers to a transformation from the status of a good company to the status of a great company. The essence of corporate excellence is to have a competitive advantage over other firms in the industry.

→ Corporate excellence is about developing and strengthening the management system and process of a company to improve performance and create value for stakeholders. Corporate governance is the one and only route to achieve corporate excellence.

→ Corporate Governance provides a structure through which the objectives of a company are set and how they are achieved and monitored.

→ Good governance practice enhances the efficiency of corporate sector and helps achieving excellence in all areas in the organization.

Question 2.
Write notes on: “Compliance Officer”.
Answer:
According to Regulation 6 of SEBI (LODR) Regulations, 2015 shall appoint a Qualified Company Secretary as the Compliance Officer who is responsible for:

  • Ensuring conformity with the regulatory provisions in letter and spirit.
  • Coordination with and reporting to SEBI, recognized stock exchange(s) and depositories.
  • Monitoring email address of grievance redressal division for the purpose of registering complaint by investors.
  • Ensuring correctness, authenticity and comprehensiveness of the information, statements and reports filed by listed entities.

Note. This regulation is not applicable to listing of units of mutual funds.

Question 3.
Write notes on: “Corporate Governance Compliance Certificate”.
Answer:
→ Part E of Schedule II of SEBI (LODR) Regulations, 2015 deals with Compliance Certificate on Corporate Governance.

→ Compliance Certificate from either the auditors or practicing company secretaries regarding compliance of conditions of corporate governance shall be annexed with the directors’ report.

→ The listed entity shall submit to stock exchange a comparative analysis of the corporate governance provisions that are applicable in its home country and in the other jurisdictions in which its equity shares are listed along with the compliance of the same vis-a-vis the corporate governance requirements applicable under Regulation 17 to Regulation 27 to other listed entities.

→ The disclosures of the compliance with corporate governance requirements specified in regulations 17 to 27 and clauses (b) to (i) of sub-regulation (2) of Regulation 46 shall be made in the section on corporate governance of the annual report.

Question 4.
Write notes on: “Whistle blower Policy.” ;
Answer:
“Whistle blower Policy” or “Vigil Mechanism”: As per Regulation 22 of SEBI (LODR) Regulations, 2015, following are the requirements for the “Whistle Blower Policy” in a listed entity:

  • The listed entity shall formulate a vigil mechanism for directors and employees to report genuine concerns.
  • The vigil mechanism shall provide for adequate safeguards against victimization of director(s) or employee(s) or any other person who avail the mechanism and also provide for direct access to the chair-person of the audit committee in appropriate or exceptional cases.
  • Details of establishment of Vigil Mechanism shall be disclosed by the listed entity on its website and in the Board’s Report.

Question 5.
Discuss briefly the composition, meetings, role & responsibilities of an Audit Committee under Regulation 18 of SEBI (LODR) Regulations, 2015.
Answer:
Composition of Audit Committee: Every listed entity shall constitute a qualified and independent audit committee in accordance with the terms of reference, subject to the following:
Minimum Number of Directors: The Audit Committee shall have minimum 3 directors as members.

Number of Independent Directors: 2 /3rd of the members of audit committee shall be independent directors.

Financially literate: All members of audit committee shall be fi-nancially literate and at least one member shall have accounting or related financial management expertise.

Secretary: The Company Secretary shall act as the Secretary to the audit committee.

Chairperson: The Chairperson of the audit committee shall be an independent director and he shall be present at AGM to answer shareholders queries.

Invitation: The audit committee at its discretion shall invite the finance director or head of the finance function, head of internal audit and a representative of the statutory auditor and any other such executives to be present at the meetings of the committee.

Meeting of Audit Committee: The listed entity shall conduct the meeting of audit committee in the following manner:
Minimum Number of Meeting: The audit committee shall meet at least 4 times in a year and not more than 120 days shall elapse between two meetings.

Quorum: The quorum for audit committee meeting shall either be:

  • two members or
  • one third of the members of the audit committee, whichever is greater, with at least two independent directors.

Role and Responsibilities of Audit Committee: Following are the role and responsibilities of audit committee as per Part C of Schedule II:

  • Oversight of the listed entity’s financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible.
  • Recommendation for appointment of auditors and remuneration and terms of appointment of auditors of the listed entity.
  • Approval of payment to statutory auditors for any other services rendered by the statutory auditor.

Reviewing, with the management, the annual financial statements before submission to the board for approval with particular reference to:

  • Matters required to be included in the Director’s Responsibility Statement to be included in the Board’s report in terms of Clause (c) of Section 134 of the Companies Act, 2013.
  • Changes, if any, in accounting policies and practices and reasons for the judgment by management.
  • Major accounting entries involving estimates based on the exercise of judgment by management.
  • Significant adjustment made in the financial statements arising out of audit findings.
  • Compliance with listing and other legal requirements relating to financial statements.
  • Disclosure of any related party transactions.
  • Qualifications in the draft audit report.

Reviewing, with the management:
Quarterly financial statements before submission to the board for approval.
Performance of statutory and internal auditors, and adequacy of the internal control systems.

  • Approval of any subsequent modifications of transactions of the company with related parties.
  • Scrutiny of inter-corporate loans and investment.
  • Valuation of undertaking or assets of the company, wherever it is necessary.
  • Evaluation of internal financial control and risk management systems.
  • Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern.
  • To review the functioning of the Whistle Blower mechanism in case the same is existing.
  • Carrying out any other function as is mentioned in the terms of reference of the Audit Committee.

Question 6.
MCS Ltd. is a listed company with Bombay Slock Exchange Ltd. The Company enters into related party transactions frequently with MAP Ltd. in which one of Director of MNC Ltd. holds 3% paid up capital of MAP Ltd. MCS Ltd. feels that getting the approval of Audit Committee for each transaction is time-consuming and delaying the operational plan. You, being a Company Secretary of MCS Ltd., advise the management with reference to SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 for approval of related party transactions from the Audit Committee for next one year. Will your answer be different if MAP Ltd. is wholly owned subsidiary of MCS Ltd.?
Answer:
According to Regulation 23(2) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, all related party trans-actions shall require prior approval of the Audit Committee.

The Audit Committee may grant omnibus approval for related party transactions proposed to be entered into by the listed entity subject to the following conditions:
→ The audit committee shall lay down the criteria for granting the omnibus approval in line with the policy on related party trans-actions of the listed entity and such approval shall be applicable in respect of transactions which are repetitive in nature.

→ The audit committee shall satisfy itself regarding the need for such omnibus approval and that such approval is in the interest of the listed entity.

→ The audit committee shall review, at least on a quarterly basis, the details of related party transactions entered into by the listed entity pursuant to each of the omnibus approval is given.

→ Such omnibus approval shall be valid for a period not exceeding one year and shall require fresh approvals after the expiry of one year.

→ The omnibus approval shall specify:
i. the name(s) of the related party, nature of transaction, period of transaction, maximum amount of transactions that shall be entered into;
ii. The indicated base price/current contracted price and the formula for variation in the price if any; and iii Such other conditions as the audit committee may deem fit.

Nevertheless where the need for related party transaction cannot be foreseen and aforesaid details are not available, audit committee may grant omnibus approval for such transactions subject to their value not exceeding rupees one crore per transaction.

→ The provisions related to the prior approval of audit committee shall not apply, in case the transactions are entered between a holding company and its wholly owned subsidiary whose accounts are consolidated with such holding company and placed before the shareholders at the general meeting for approval.

Therefore, in the case of MAP Ltd. which is a wholly owned subsidiary of MCS Ltd., the approval of audit committee is not required.

Question 7.
You are Company Secretary of All Season Travels Ltd., which being listed on the stock exchange after an IPO is made by the Company. Your Board of Directors desires to understand about the compliance requirements under Regulation 33 of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015. Write a Board note on Regulation 33.
Answer:
To,
The Board of Directors
All Season Travels Limited
Sub: Compliance requirements under Regulation 33 of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015.
I would like to draw attention of the Board of Directors that while preparing financial results, the listed entity shall comply with the following:
→ The financial results shall be prepared on the basis of accrual accounting policy and shall be in accordance with uniform accounting practices adopted for all the periods.

→ The quarterly and year to date results shall be prepared in accordance with the recognition and measurement principles laid down in Accounting Standard 25 or Indian Accounting Standard 31 (AS 25/Ind AS 34 – Interim Financial Reporting), as applicable, specified in Section 133 of the Companies Act, 2013 read with relevant rules framed thereunder or as specified by the Institute of Chartered Accountants of India, whichever is applicable.

→ The standalone financial results and consolidated financial results shall be prepared as per Generally Accepted Accounting Principles in India. However, in addition to the above, the listed entity may also submit the financial results as per the International Financial Reporting Standards notified by the International Accounting Standards Board.

→ The listed entity shall ensure that the limited review or audit reports submitted to the stock exchange(s) on a quarterly or annual basis are to be given only by an auditor who has subjected himself to the peer review process of Institute of Chartered Accountants of India and holds a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.

→ The listed entity shall make the disclosures specified in Part A of Schedule IV.

Approval and Authentication of the financial results:
In addition to the above, following are provisions regarding approval and authentication of the financial results:

  • The quarterly financial results submitted shall be approved by the board of directors.
  • The financial results submitted to the stock exchange shall be signed by the chairperson or managing director, or a whole time director or in the absence of all of them. It shall be signed by any other director of the listed entity who is duly authorized by the board of directors to sign the financial results.
  • The limited review report shall be placed before the board of directors, at its meeting which approves the financial results, before being submitted to the stock exchange(s).
  • The annual audited financial results shall be approved by the board of directors of the listed entity and shall be signed in the manner specified in sub-regulation (2 )(b).

Manner of Submission of Financial Results: Furthermore, the listed entity shall submit the financial results in the following manner:
→ The listed entity shall submit quarterly and year-to-date standalone financial results to the stock exchange within 45 days of end of each quarter, other than the last quarter.

→ In case the listed entity has subsidiaries, in addition to the requirement at clause (a) of sub-regulation (3), the listed entity shall also submit quarterly/ year-to date consolidated financial results.

→ The listed entity shall also submit as part of its standalone or consolidated financial results for the half year, by way of a note, a statement of assets and liabilities as at the end of the half-year.

→ The listed entity shall submit annual audited standalone financial results for the financial year, within sixty days from the end of the financial year along with the audit report and Statement on Impact of Audit Qualifications applicable only for audit report with modified opinion.

However, if the listed entity has subsidiaries, it shall, while submitting annual audited standalone financial results also submit annual audited consolidated financial results along with the audit report and Statement on Impact of Audit Qualifications applicable only for audit report with modified opinion.

However, in case of audit reports with unmodified opinion(s), the listed entity shall furnish a declaration to that effect to the Stock Exchange(s) while publishing the annual audited financial results.

Mr.___________
(Company Secretary)
All Season Travels Ltd.

Question 8.
What do you mean by SME Exchange? Discuss the role of Company Secretary in the model SEBI (LODR) Regulations, 2015 laid down by SEBI for SMEs for the purpose of listing. [(Dec 2013) (5 Marks)]
Answer:
“SME exchange” means a trading platform of a recognised stock exchange having nationwide trading terminals permitted by SEBI to list the specified securities issued in accordance with Chapter IX and includes a stock exchange granted recognition for this purpose but does not include the Main Board.

Explanation: ‘Main Board’ means a recognized stock exchange having nationwide trading terminals, other than SME exchange.

Example: BSE and NSE have started their SME listing platforms in India.

“Role of Company Secretary” in the model SEBI (LODR) Regulations, 2015 laid down by SEBI for SMEs for the purpose of listing:
Following are roles of Company Secretary:
→ All listed SMEs on SME platform are required to appoint the Company Secretary of the Issuer as Compliance Officer who will be responsible for monitoring the share transfer process and report to the Issuer board in each meeting.

→ ‘Compliance Officer’ will directly liaise with the authorities such as SEBI, Stock Exchange, ROC etc., and investors with respect to implementation of various clause, rules, regulations and other directives of such authorities and investors service and complaints related matter.

→ “Registrar and Transfer Agent” of a listed SMEs are required to produce a certificate from a practicing company secretary that all the transfers have been completed within the stipulated time and certification regarding compliance of conditions of Corporate Governance.

Question 9.
What are the policies required to be framed under SEBI (LODR) Regulations, 2015?
Answer:
Following policies required to be framed under SEBI (LODR) Regulations, 2015:

Regulation Description
1. Regulation 16(1)(c) Policy for determining ‘material’ subsidiary.
2. Regulation 9 Policy for Preservation of Documents
3. Regulation 43A Dividend Distribution Policy
4. Regulation 30(4) Policy for determination of materiality.
5. Regulation 23(1) Policy on materiality of Related Party Transactions.

Question 10.
Comment on the following statement: “Listing of securities with stock exchanges is a matter of great importance for companies and investors.”
Answer:
Listing of securities with stock exchange is a matter of great importance for companies and investors, because this provides the liquidity to the securities in the market. The following benefits are available when securities are listed by a company in the stock exchange:

  • Public Image: Enhancement of Public image of the company.
  • Liquidity: The liquidity of the security is ensured making it easy to buy and sell the securities in the stock exchange.
  • Tax Concessions: Tax concessions are made available both to the investors and the companies.
  • Attract more Investors through disclosure of important information for Investment: Listing procedure compels company management to disclose important information to the investors enabling them to make crucial decisions with regard to keeping or disposing of such securities.
  • Better Support Services from Banks and FIs: Listed companies command better support such as loans and investments from Banks and Financial Institutions.

Question 11.
For ensuring independence in the spirit of Independent Directors and their active participation in functioning of the company, SEBI has accepted many recommendations of committee setup under the Chairmanship of Shri Uday Kotak and made amendments in SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Explain any four amended provisions related to Independent Directors.
Answer:
Based on the recommendations of Kotak Committee, the amendments made in the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 with respect to Independent Directors are as follows:
Independent Women Director: The Board of Directors of the top 500 listed entities shall have at least one independent woman director by April 1, 2019 and the Board of Directors of the top 1000 listed entities shall have at least one independent woman Director By April 1, 2020.

Quorum for Board Meetings: The quorum for every meeting of the Board of Directors of the top 1000 listed entities with effect from April 1, 2019 and the top 2000 listed entities with effect from April 1, 2020 shall be one-third of its total strength or three Directors, whichever is higher, including at least one independent director.

Limit on Independent Directorship Holding: A person shall not serve as an independent director in more than seven listed entities. However, any person who is serving as a whole time director/managing director in any listed entity shall serve as an independent director in not more than three listed entities.

Evaluation of Independent Director: The evaluation of independent director shall be done by the entire Board of Directors which shall include:

  • Performance of the director.
  • Fulfillment of the Independence criteria as specified in SEBI Listing Regulations and their Independence from the management.

Nevertheless, in the above evaluation directors who are subject to evaluations shall not participate.

Quorum for NRC Meeting: The quorum for a meeting of the nomination and remuneration committee shall be either two members or one-third of the members of the committee whichever is greater, including at least one independent director in attendance.

One common independent director on Board of listed entity and its unlisted material subsidiary: At least one independent director on the Board of Directors of the listed entities shall be a director on the Board of Directors of an unlisted material subsidiary whether incorporated in India or not.

Reason for resignation of an independent director: Detailed reasons for the resignation of an independent director who resigns before the expiry of his tenure along with a confirmation by such director that there are no other material reasons other than those provided.

Question 12.
You are the Company Secretary of Sunglow Ltd., which being listed on the Stock Exchange after an IPO is made by the Company. The managing Director desires to know about quarterly compliance requirements under listing agreement. Prepare a list of quarterly compliances as per the listing regulations.
Answer:
The followings are the quarterly compliances required to be made under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015:
Listing – Indian Stock Exchanges – Corporate Funding and Listings in Stock Exchanges Important Questions 1
Listing – Indian Stock Exchanges – Corporate Funding and Listings in Stock Exchanges Important Questions 2

Question 13.
Explain the Regulation 39 of Issuance of Certificates or Receipts for securities and dealing with unclaimed securities under SEBI Listing Regulations, 2015.
Answer:
As per Regulation 39 of the SEBI (Listing Obligations and Disclosure I Requirements) Regulations, 2015 provides that:
→ The listed entity shall comply with Rule 19(3) of Securities Contract (Regulations) Rules, 1957 in respect of Letter/Advices of Allotment, Acceptance or Rights, transfers, subdivision, consolidation, renewal, exchanges, issuance of duplicates thereof or any other purpose.

→ The listed entity shall issue certificates or receipts or advices, as applicable, of subdivision, split, consolidation, renewal, exchanges, endorsements, issuance of duplicates thereof or issuance of new certificates or receipts or advices, as applicable, in cases of loss or old decrepit or worn out certificates or receipts or advices, as applicable within a period of thirty days from the date of such lodgement.

→ The listed entity shall submit information regarding loss of share certificates and issue of the duplicate certificates, to the stock exchange within two days of its getting information.

→ The listed entity shall comply with the procedural requirements specified in Schedule VI to these regulations while dealing with securities issued pursuant to the public issue or any other issue, physical or otherwise which remain unclaimed and/or are lying in the escrow account as applicable.

Question 14.
List out the half yearly Compliance calendar for listed entity for SME (Small and Medium Enterprise) as per SEBI Listing Regulations, 2015.
Answer:
Half Yearly Compliance Calendar for listed entity for SME (Small and | Medium Enterprise) as per SEBI Listing Regulations, 2015:

Regulation Period Covered Date by which to be filed
1. Regulation 31(1) – Shareholding Pattern. April
September
October
21st October and 21st April.
2. Regulation 32(8) – Statement of deviation or variation. April
September
October
3. Regulation 33(5) – Financial Results. April
September
October
14th November and 30th May.
4. Regulation 7(3) – Compliance Cer­tificate to the exchange. April
September
October
31st October and 30th April.
5. Regulation 40(10) – Compliance Certificate w.r.t Transfer or trans­mission or transposition of securi­ties within 30 days. April
September
October
March
31st October and 30th April.

Question 15.
The provisions of SEBI Listing Regulations, 2015, shall not be applicable to “perpetual debt instrument” and “perpetual non-cumulative preference shares” listed by Banks. Comment.
Answer:
Chapter V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 provides for obligations of listed entity which has listed its non-convertible debt securities or non-convertible redeemable preference shares or both. The provisions of this chapter shall also be applicable to “perpetual debt instrument” and “Perpetual non-cumulative preference share” listed by banks.

Chapter V of these regulations deals with the provisions which are applicable to “perpetual debt instrument” and “perpetual non-cumulative preference share” listed by banks relating to the following:

  • Intimation to stock exchange(s).
  • Disclosure of information having bearing on performance/operation of listed entity and/or price sensitive information.
  • Financial Results.
  • Annual Report.
  • Asset Cover.
  • Documents and Intimation to Debenture Trustees.
  • Other submissions to stock exchange(s).
  • Documents and information to holders of non-convertible debt securities and non-convertible preference shares.
  • Structure of non-convertible debt securities and non-convertible redeemable preference shares.
  • Record Date.
  • Terms of non-convertible debt securities and non-convertible redeemable preference shares.
  • Website etc.

Thus, the given statement is wrong.

Question 16.
Enumerate the principles governing disclosures for the listed companies.
Answer:
As per Regulation 4(1) of SEBI Listing Regulations, 2015, the listed entity shall abide by the following principles, while making disclosures to the stock exchanges or its website or through any other medium:
→ Information shall be prepared and disclosed in accordance with applicable standards of accounting and financial disclosure.

→ The Listed Entity shall:

  • implement the prescribed accounting standards in letter and spirit in the preparation of financial statements taking into consideration the interest of all stakeholders and shall also ensure that the annual audit is conducted by an independent, competent and qualified auditor.
  • refrain from misrepresentation and ensure that the information provided to recognised stock exchange and investors is not mis-leading.
  • provide adequate and timely information to recognised stock exchange and investors.
  • ensure that disseminations made under provisions of these regulations and circulars made thereunder, are adequate, accurate, explicit, timely and presented in a simple language.
  • make the specified disclosures and follow its obligations in letter and spirit taking into consideration the interest of all stakeholders.

→ Channels for disseminating information shall provide for .equal, timely and cost efficient access to relevant information by investors.

→ Filings, reports, statements, documents and information which are event based or are filed periodically shall contain relevant information.

→ Periodic filings, reports, statements, documents and information reports shall contain information that shall enable investors to track the performance of a listed entity over regular intervals of time and shall provide sufficient information to enable investors to assess the current status of a listed entity.

Question 17.
Explain the relevant SEBI Regulation regarding prior intimations to stock exchanges, which are required for Board Meetings, where certain proposals, e.g. financial results and fund raising, are to be considered.
Answer:
The Prior intimation of Board Meeting is required where any of the following proposals is to be considered as per Regulation 29 of SEBI (LODR) Regulations, 2015 are as follows:

At least 5 clear Days (excluding the date of the intimation and date of the meeting):

  • Financial results viz. quarterly, half yearly, or annual, (Intimation with Date of BM).

At least 2 clear Working Days (excluding the date of the intimation and date of the meeting):

  • Proposal for buyback of securities.
  • Proposal for voluntary delisting.
  • Fund raising by way of further public offer, Rights Issue, American Depository Receipts, Global Depository Receipts, Foreign Currency Convertible Bonds, Qualified Institutions Placement, Debt issue, Preferential issue and determination of issue price.
  • Any AGM or EGM or Postal Ballot proposed to be held for ob-taining shareholder approval for further fund raising indicating type of issuance.
  • Declaration/recommendation of dividend, issue of convertible securities including convertible debentures or of debentures carrying a right to subscribe to equity shares or the passing over of dividend.
  • The proposal for declaration of bonus securities, if part of Agenda papers.

At least 11 working days before any of the following proposal is placed before the board of directors:

  • Any alteration in the form or nature of any of its securities that are listed on the stock exchange or in the rights or privileges of the holders thereof.
  • Any alteration in the date on which, the interest on debentures or bonds, or the redemption amount of redeemable shares or of debentures or bonds shall be payable.

Question 18.
Explain the manner in which a listed entity, before issuing securities, shall obtain an ‘in principle’ approval from recognized stock ex-change(s).
Answer:
According to the provisions of Regulation 28 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 issued by Securities and Exchange Board of India, the listed entity before issuing securities shall obtain an ‘in-principle’ approval from recognised stock exchange(s) in the following manner:

→ Where the securities are listed only on recognized Stock Exchange having nationwide trading terminals from all such stock exchanges.

→ Where the securities are not listed on any recognised stock exchange having nationwide trading terminals from all the stock exchange(s) in which the securities of the issuer are proposed to be listed.

→ Where the securities are listed on recognised stock exchange(s) having nationwide trading terminals as well as on the recognised stock ex-change(s) not having nationwide trading terminals from all recognised stock exchange(s) having nationwide trading terminals.

→ The requirement of obtaining in-principle approval from recognised stock exchange(s) shall not be applicable for securities issued pursuant to the scheme of arrangement for which the listed entity has already obtained No-Objection Letter from recognised stock exchange(s) in accordance with Regulation 37 of the SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 issued by Securities and Exchange Board of India.

Question 19.
Give the list of documents and information required to be submitted to holders of Non-Convertible Preference Shares.
Answer:
As per the provisions of Regulation 58 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, following are the list of documents and information required to be submitted to holders of Non-Convertible Preference Shares:
→ Hard copy of statement containing the salient features of all the documents, as specified in Section 136 of the Companies Act, 2013 and rules made thereunder to those holders of Non-Convertible Preference Shares who have not so registered.

→ Hard copies of full annual reports to those holders of Non-Convertible Debt Securities and Non-Convertible Preference Shares, who request for the same.

→ Soft copies of full annual reports to all the holders of Non-Convertible Preference Shares who have registered their email address(es) for the purpose.

→ Half yearly communication to holders of Non-Convertible Debt Securities and Non-Convertible Preference Shares.

  • To send the notice of all meetings of holders of Non-Convertible Debt Securities and Non-Convertible Preference Shares specifically stating that the provisions for appointment of proxy as mentioned in Section 105 of the Companies Act, 2013, shall be applicable for such meeting.
  • To send proxy forms to holders of Non-Convertible Debt Securities and Non-Convertible Preference Shares which shall be worded in such a manner that holders of these securities may vote either for or against each resolution.

Question 20.
Nikhil Lid., a listed company is confused about the composition of Board of Directors, seek your advice regarding the composition of Board of Directors as per Regulation 17(1) of the SEBI (LODR) Regulations, 2015. As a Company Secretary of Nikhil Ltd., offer your suggestions by highlighting the regulation.
Answer:
As Company Secretary of Nikhil Ltd., my advice regarding the composition of Board of Directors of the listed entity in line with Regulation 17(1) of the SEBI (LODR) Regulations, 2015 are as follows:
Executive/Non Executive: Board of directors shall have an optimum combination of executive and non-executive directors with at least one woman director and not less than fifty percent of the board of directors shall comprise of non-executive directors.

One Independent Women Director: The Board of directors of the top 500 listed entities shall have at least one independent woman director by April 1, 2019 and the Board of directors of the top 1000 listed entities shall have at least one independent woman director by April 1, 2020.

Chairperson of the Board of Directors is a non-executive director: The chairperson of the board of directors is a non-executive director at least one-third of the board of directors shall comprise of independent directors and where the listed entity does not have a regular non-executive chairperson, at least half of the board of directors shall comprise of independent directors.

However, where the regular non-executive chairperson is a promoter of the listed entity or is related to any promoter or person occupying management positions at the level of board of director or at one level below the board of directors, at least half of the board of directors of the listed entity shall consist of independent directors.

Minimum No. of Directors: The board of directors of the top 1000 listed entities (with effect from April 1, 2019) and the top 2000 listed entities ( with effect from April 1, 2020) shall comprise of not less than six directors.
(Note: The Top 500/1000/2000 listed entities shall be determined on the basis of market capitalisation, as at the end of the immediate previous financial year).

Question 21.
Start-ups companies have now come up with an initial Public offer with relaxation of many conditions applicable for Initial Public Offer. In this context, briefly, explain about the “Innovators Growth Platform (IGP)” and eligibility for listing.
Answer:
As per SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, “Innovators Growth Platform” (“IGP”) means the growth platform for listing and trading of specified securities of issuer that comply with the eligibility criteria specified in regulation

SEBI has come up with a Chapter X of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 with a new set of regulations laying down the terms and conditions for entities desirous of listing on IGP.

SEBI has notified new norms for listing of Small and Medium Enterprises (SMEs) including the start-up companies in Innovators Growth Platform (IGP) on stock exchanges without an initial public offering.

Eligibility: The following entities shall be eligible for listing on the IGP:
an issuer which is intensive in the use of technology, information technology, intellectual property, data Analytics, biotechnology or nanotechnology to provide products, services or business platforms with substantial value addition and at least 25% of its pre-issue capital is held by qualified institutional buyer(s) as on the date of filing of draft information document or draft offer document with the SEBI, as the case may be; or

Any other issuer in which at least 50% of the pre-issue capital is held by qualified institutional buyers as on the date of filing of draft information document or draft offer document with the SEBI, as the case may be.

Note: No person individually or collectively with persons acting in concert, shall hold 25% or more of the post-issue share capital in an entity.

Question 22.
Write Short Note on: “Applicability of SEBI (LODR) Regulations, 2015”.
Answer:
SEBI (LODR) Regulations, 2015 shall apply to the listed entity who has listed any of the following designated securities on recognised stock exchange(s):

  • Specified securities listed on main board or SME Exchange or institutional trading platform.
  • Non-Convertible Debentures, Non-Convertible Redeemable Preference Shares, Perpetual Debt, Perpetual Non-

Convertible Redeemable Preference Shares.

  • Indian Depository Receipts (IDRs).
  • Securitised debt instruments.
  • Security receipts
  • Units issued by Mutual Funds.
  • Any other securities as may be specified by SEBI.

Question 23.
“The Listing regulations has specified the generic obligations or common obligations of listed entity with respect to filing of information, responsibilities of compliance officer, fees etc. and these requirements are applicable to all types of listed securities.” Comment.
Answer:
The given statement is correct. The Listing regulations has specified the generic obligations or common obligations of listed entity with respect to filing of information, responsibilities of compliance officer, fees etc. and these requirements are applicable to all types of listed securities.

The Common Obligations includes:

  • Regulation 5: General obligation of compliance.
  • Regulation 6: Appointment & obligations of Compliance Officer.
  • Regulation 7: Appointment of Share Transfer Agent.
  • Regulation 8: Co-operation with intermediaries registered with SEBI.
  • Regulation 9: Preservation of documents.
  • Regulation 10: E-Filing of information.
  • Regulation 11: Scheme of Arrangement.
  • Regulation 12: Payment of dividend or interest or redemption or repayment.
  • Regulation 13: Grievance Redressal Mechanism.
  • Regulation 14: Fees and other charges to be paid to the recognized stock exchangers).

Question 24.
Write Short Note on: “Record Date or Date of closure of transfer books under Regulation 42 of SEBI (LODR) Regulations, 2015”.
Answer:
As per the Regulation 42 of SEBI (LODR) Regulations, 2015, advance intimation of the Record Date for the following purposes:

At least 7 working days’ notice for record date or date of closure of transfer books for the purpose of (excluding the date of intimation and the record date/book closure start date):

  • declaration of dividend
  • issue of right or bonus shares;
  • issue of shares for conversion of debentures
  • shares arising out of rights attached to debentures
  • corporate actions like mergers, de-mergers, splits and bonus shares.
  • such other purposes as may be specified.

Recommend or declare all dividend and/or cash bonuses at least five working days (excluding the date of intimation and the record date) before the record date fixed for the purpose.
Ensure the time gap of at least 30 days between two record dates/ book closures.

For securities held in physical form may announce dates of closure of its transfer books in place of record date.

Question 25.
Write Short Note on: “Dividend under Regulation 43 of SEBI (LODR) Regulations, 2015”.
Ans.
As per Regulation 43 of SEBI (LODR) Regulations, 2015:

  • Dividend declared and disclosed on per share basis only.
  • Dividend shall not forfeited unclaimed dividends before the claim be-comes barred by law and such forfeiture, if effected shall be annulled in appropriate cases.

Question 26.
Discuss applicability, disclosure requirements and parameters to be included regarding Dividend Distribution Policy (DDP) under SEBI (LODR) Regulations, 2015?
Answer:
As per regulation 43A of SEBI (LODR) Regulations, 2015:

Applicability: Top 500 Listed entities based on market capitalization shall formulate a dividend distribution policy.
Note: Listed entities other than Top 500 may disclose their dividend distribution policies on a voluntary basis in their annual reports and on their websites.

Disclosure requirements: Dividend Distribution Policy shall be disclosed in their annual reports and on their websites.

Parameters to be included regarding Dividend Distribution Policy (DDP):
The dividend distribution policy shall include the following parameters:

  • the circumstances under which the shareholders of the listed entities may or may not expect dividend;
  • the financial parameters that shall be considered while declaring dividend;
  • internal and external factors that shall be considered for declaration of dividend;
  • policy as to how the retained earnings shall be utilized and
  • parameters that shall be adopted with regard to various classes of shares.
  • If the listed entity proposes to declare dividend on the basis of parameters in addition to above parameters or proposes to change such additional parameters or the dividend distribution policy contained in any of the parameters, it shall disclose such changes along with the rationale for the same in its annual report and on its website.

Question 27.
Discuss provisions regarding meetings of shareholders and voting under Regulation 44 of SEBI (LODR) Regulations, 2015.
Answer:
As per Regulation 44 of SEBI (LODR) Regulations, 2015, following are provisions regarding meetings of shareholders and voting:

  • The top 100 listed entities by market capitalization determined as on March 31st of every financial year shall hold their annual general meetings within a period of five months from the date of closing of the financial year.
  • The top 100 listed entities shall provide one-way live webcast of the proceedings of the annual general meetings.
  • The facility of remote e-voting facility to shareholders in respect of all shareholders resolutions shall be provided.
  • Compliance with the conditions specified under the Companies (Management and Administration) Rules, 2014.
  • Submit to the stock exchange within 48 hours of conclusion of its General Meeting the details regarding the voting results in the format specified.
  • Send proxy forms to holders of securities in all cases mentioning that a holder may vote either for or against each resolution.

Question 28.
Discuss the provisions regarding change in name of the Listed Entity?
Answer:
As per Regulation 45 of SEBI (LODR) Regulations, 2015:
→ Listed Entity is allowed to change its Name, subject to compliance with the following conditions:

  • at least one year has elapsed from the last Name change;
  • at least 50% of the Total Revenue in the preceding 01 year period has been accounted for by the new activity suggested by the new name; or
  • amount invested in the new activity/project is at least 50% of the assets of the listed entity.

→ If any listed entity has changed its activities which are not reflected in its name it shall change its name in line with its activities within a period of six months from the change of activities in compliance of provisions as applicable to change of name prescribed under Companies Act, 2013.

→ On receipt of availability confirmation and before filing the request for change with the Registrar of Companies.

  • Approval from Stock Exchange: Seeking approval from Stock Exchange before making final application to Registrar of Companies for name change.
  • Certificate from CA: Submission of certificate from Chartered Accountant stating compliance with conditions as mentioned above.

Question 29.
Write Note On: “Provisions regarding maintenance of Website under Regulation 46 of SEBI (LODR) Regulations, 2015”.
Answer:
As per Regulation 46 of SEBI (LODR) Regulations, 2015:

  • The listed entity maintains a functional website containing the basic information about the listed entity.
  • The listed entity ensures the contents of the website are correct.
  • The listed entity updates any change in the content of its website within two working days from the date of such change in content.

The listed entity disseminate the following information under a separate section in its website:

  • details of its business;
  • terms and conditions of appointment of independent directors;
  • composition of various committees of board of directors;
  • code of conduct of board of directors and senior management personnel;
  • details of establishment of vigil mechanism / Whistle Blower policy;
  • criteria of making payments to non-executive directors, if the same has not been disclosed in annual report;
  • policy on dealing with related party transactions;
  • policy for determining ‘material’ subsidiaries;
  • the email address for grievance redressal and other relevant details;
  • contact information of the designated officials of the listed entity who are responsible for assisting and handling investor grievances;
  • shareholding pattern;
  • details of agreements entered into with the media companies and/or their associates, etc;
  • schedule of analyst or institutional investor meet and presentations made by the listed entity to analysts or institutional investors simultaneously with submission to stock exchange; new name and the old name of the listed entity for a continuous period of one year, from the date of the last name change.

Question 30.
List the information which is required to be published in the News-papers under Regulation 47 of SEBI (LODR) Regulations, 2015.
Answer:
As per Regulation 47 of SEBI (LODR) Regulations, 2015:

  • Reference to be given in the newspaper publication to link of the website of listed entity and stock exchange(s) where further details are available.
  • Publication of the information in the newspaper simultaneously with the submission of the same to the stock exchange(s).
  • Publication of Financial results within 48 hours of conclusion of the meeting of board of directors at which the financial results were approved.
  • Information shall be published in at least one English language national daily newspaper circulating in the whole or substantially the whole of India and in one daily newspaper published in the language of the region where the registered office of the listed entity is situated.

Following information is required to be published in the newspaper:

  • Notice of meeting of the board of directors where financial results shall be discussed.
  • Financial results, along-with the modified opinion(s) or reservation(s), if any expressed by the auditor.
  • Statements of deviation(s) or variation(s) on quarterly basis, after review by audit committee and its explanation in directors report in annual report.
  • Notices given to shareholders by advertisement.

If the listed entity has submitted both standalone and consolidated financial results publish consolidated financial results along-with:

  • Turnover,
  • Profit before tax and
  • Profit after tax on a standalone basis, as a foot note and a reference to the places such as the website of listed entity and stock exchange(s) where the standalone results are available.

Question 31.
Prepare list of event based compliances in case Equity Listed on Stock Exchange(s) under SEBI (LODR) Regulations, 2016.
Answer:
List of event based compliances under SEBI (LODR) Regulations, 2016 for listed entities whose equity shares are listed on Stock Exchange(s):

Regulation Reference Timeline
1. Regulation 7(5) – Intimation of ap­pointment of Share Transfer Agent. Within 7 days of Agreement with RTA
2. Regulation 28(1) – In-principle approv­al of recognized stock exchange(s) Before issuing securities.
3. Regulation 29(2)(b) to (f) – Prior intimation of Board meeting for Buyback, Dividend, Raising of Funds, Voluntary Delisting etc. At least two working days in advance excluding the date of the intimation and date of the meeting.
4. Regulation 29(2)(a) – Prior intima­tion of Board meeting for Financial Results At least five days in advance (exclud­ing the date of the intimation and date of the meeting).
5. Regulation 29(3) – Prior intimation of Board Meeting for alteration in nature of securities etc. Atleast eleven working days in ad­vance.
6. Regulation 31(l)(a) – Shareholding Pattern prior to listing of securities One day prior to listing of securities.
7. Regulation 39(3) – Loss of share cer­tificates and issue of the duplicate certificates. Within two days of getting infor­mation.
8. Regulation 44(3) – Voting Results Within 48 hours of conclusion of General Meeting.
9. Regulation 45(3) – Change in name Prior approval from Stock Exchange before filing application with Regis­trar of Companies.
10. Regulation 46 – Website Listed entity shall maintain a func­tional website containing the basic information about the listed entity.

Question 32.
Prepare list of Quarterly Compliance for Listed Entities for SMEs.
Answer:

Regulation Period Covered Date by which to be field
Regulation 13(3)- State­ment Grievance Redressal Mechanism April-June, July- September, October-December, January-March 21st July, 21st October, 21st January, and 21st April.
Regulation 76 of SEBI (Depositories and Parti­cipants) Regulations, 2018 April-June, July- September, October-December, January-March 30th July, 30th October, 30th January, and 30th April.

Question 33.
Prepare List of Annual Compliance for Listed Entities for SMEs.
Answer:
List of Annual Compliance for Listed Entities for SMEs:

Regulation Period Covered Date by which to be field
Regulation 14 of SEBI (LODR) Regulations, 2015 Listing Fees April – March 30th April
Regulation 34(1) of SEBI (LO’DR) Regulations, 2015 Annual Report April – March On the day of com­mencement of dispatch to its shareholders.

Question 34.
Discuss four event-based compliances for Listed Entities for SMEs?
Answer:
Following are four event-based compliances for Listed Entities for SMEs:

Regulation Date by which to be filed
Regulation 7(5) – Intimation of appoint­ment of Share Transfer Agent Within 7 days of Agreement with RTA
Regulation 29(1 )(a) – Prior Intimations of Board Meeting for financial Result At least 5 clear days in advance (exclud­ing the date of the intimation and date of the meeting).
Regulation 3l(l)(a) – Shareholding Pat­tern prior to listing of Securities One day prior to listing of securities.
Regulation 42(2) – Record date or Date of closure of transfer books At least 7 clear working days in advance (excluding the date of intimation and the record date).

Question 35.
What disclosures are included in Annual Report in case non-con-vertible debentures are listed on Stock Exchanges?
Answer:
As per Regulation 53 of SEBI (LODR) Regulations, 2015, following disclosures are included in Annual Report in case non-convertible debentures are listed on Stock Exchanges:

  • Audited Financial Statements.
  • Auditors and Directors Report.
  • Related Party Disclosures.
  • Name of the debenture trustees with full contact details.
  • Cash Flow statement presented under the Indirect Method as prescribed in Accounting Standard-3/Indian Accounting Standard 7 mandated under Section 133 of the Companies Act, 2013 read with relevant rules framed thereunder or by the Institute of Chartered Accountants of India whichever is applicable.

Question 36.
What documents and intimations are required to be forwarded to debenture trustee under Regulation 56 of SEBI (LODR) Regulations, 2015.
Answer:
As per Regulation 56 of SEBI (LODR) Regulations, 2015, following documents and intimations are forwarded to the debenture trustee promptly:

A copy of the annual report at the same time as it is issued along with a copy of certificate from the listed entity’s auditors in respect of utilisation of funds during the implementation period of the project for which the funds have been raised.

A copy of all notices, resolutions and circulars relating to

  • New issue of NCDs at the same time as they are sent to share-holders/holders of NCDs.
  • Meetings of holders of NCDs at the same time as they are sent to the holders of NCDs or advertised in the media including those relating to proceedings of the meetings.

Intimations regarding:

  • Any revision in the rating.
  • Any default in timely payment of interest or redemption or both in respect of the NCDs.
  • Failure to create charge on the assets.

A half-yearly certificate regarding maintenance of 100% asset cover in respect of listed NCDs by either a practicing company secretary or a practicing chartered accountant, along with the half yearly financial results.

In the case of debentures or preference shares issued for financing working capital or general corporate purposes or for capital raising purposes: The copy of the auditor’s certificate may be submitted at the end of each financial year till the funds have been fully utilised or the purpose for which these funds were intended has been achieved.

Question 37.
What documents and information are required to be forwarded to holders of non-convertible debt securities and non-convertible preference shares?
Answer:
As per Regulation 58 of SEBI (LODR) Regulations, 2015, following documents and information are required to be forwarded to holders of non-convertible debt securities and non-convertible preference shares:
→ Soft copies of full annual reports to all the holders of NCRPs who have registered their email address(es) for the purpose.

→ Hard copies of full annual reports to those holders of NCDs and NCRPs who request for the same.

→ Half yearly communication, to holders of NCDs and NCRPs.

→ Hard copy of statement containing the salient features of all the documents, as specified in Section 136 of Companies Act, 2013 and rules made thereunder to those holders of NCRPs who have not so registered.

→ The notice of all meetings of holders of NCDs and NCRPs specifically stating that the provisions for appointment of proxy as mentioned in Section 105 of the Companies Act, 2013 shall be applicable for such meeting.

→ Proxy forms to holders of NCDs and NCRPs which shall be worded in such a manner that holders of these securities may vote either for or against each resolution.

Question 38.
What information is required to be included on functional website of Listed Entities when NCDs are listed on Stock Exchange(s)?
Answer:
As per Regulation 62 of SEBI (LODR) Regulations, 2015, following information is required to be included on functional website of Listed Entities when NCDs are listed on Stock Exchange(s):

  • Details of its business.
  • Financial information including complete copy of the annual report including balance sheet, profit and loss account, directors report etc.
  • Contact information of the designated officials of the listed entity who are responsible for assisting and handling investor grievances.
  • E-mail address for grievance redressal and other relevant details.
  • Name of the debenture trustees with full contact details.
  • Information, report, notices, call letters, circulars, proceedings, etc. concerning NCRPs or NCDs.
  • All information and reports including compliance reports filed by the listed entity.

Information with respect to the following events:

  • Default by issuer to pay interest on or redemption amount.
  • Failure to create a charge on the assets.
  • Revision of rating assigned to the NCDs.

Question 39.
Write Short Note on: “Recognition to Company Secretary under SEBI Listing Regulations, 2015”.
Answer:
“Recognition to Company Secretary under SEBI Listing Regulations, 2015”

SEBI has recognized the significant role played by a Company Secretary as a Governance Professional under the SEBI Listing Regulations as under:
Compliance Officer:
As per Regulation 6 of SEBI Listing Regulations, 2015 provides that a listed entity shall appoint a qualified company secretary as the “compliance officer”.

Furthermore, as per Regulation 7(3) of SEBI Listing Regulations, 2015 requires that the listed entity shall submit a compliance certificate to the exchange, duly signed by both the compliance officer of the listed entity and the authorised representative of the share transfer agent, wherever applicable.

Senior Management:
As per Regulation 16( 1 )(d) of SEBI Listing Regulations, 2015 provides that “Senior Management” shall mean Officers/Personnel of the listed entity who are members of its core management team excluding Board of directors and shall comprise all members of management one level below Chief Executive Officer/Managing Director /Whole Time Director/Manager (including Chief Executive Officer/Manager, in case they are not part of the board) specifically include Company Secretary and Chief Financial Officer.

Secretarial Audit Report:
As per Regulation 24A of SEBI Listing Regulations, 2015 mandates that every listed entity and its material unlisted subsidiaries incorporated in India shall undertake Secretarial Audit and shall annex with its Annual Report, a Secretarial Audit Report given by a Company Secretary in Practice, in such form as may be specified with effect from the year ended March 31, 2019.

Certification in case of Share Transfer Facility:
As per Regulation 40(9) of SEBI Listing Regulations, 2015 requires that the share transfer agent and/or the in-house share transfer facility as the case may be produces a certificate from a practising Company Secretary.

Certification that none of the directors on the board of the company have been debarred or disqualified from being appointed or continuing as Directors of Companies:
As per Schedule V, Part C, Clause 10(f) of SEBI Listing Regulations, 2015, a certificate from a Company Secretary in practice that none of the directors on the board of the company have been debarred or disqualified from being appointed or continuing as Directors of Companies by SEBI/Ministry of Corporate Affairs or any such Statutory Authority.

Certification on compliance of conditions of corporate governance:
Schedule V, Clause E of SEBI Listing Regulations, 2015 requires compliance certificate from either the auditors or practising Company Secretaries regarding compliance of conditions of corporate governance to be annexed with the directors’ report.

Certification regarding maintenance of 100% asset cover in respect of listed non-convertible debt securities:
As per Regulation 56(l)(d) of SEBI Listing Regulations, 2015 provides that a half-yearly certificate regarding maintenance of hundred percent asset cover in respect of listed non-convertible debt securities by either a practising Company Secretary or a practicing Chartered Accountant along with the half yearly financial results.

Corporate Funding and Listings in Stock Exchanges Notes