8 Amendments Made to The Listing Obligations and Disclosure Requirements

Act, 2015

1. From the hostile takeover of NDTV and the Amazonian groups sagas rose the LODR
agreement to increase corporate responsibility,
2. enhance transparency,
3. strengthen compliance mechanisms, and
4. protect the interests of shareholders and investors

5. increasing demand for ensuring market symmetry to protect the rights of all investors.

a. Disclosures for certain types of agreements binding listed companies

Companies have to disclose all agreements that fall under the scope of 5A clause of Para A to the
List Schedule III of the LODR act which pertain to: AMENDMENT

1. IMPACT THE MANAGEMENT

2. IMPACTING CONTROL OF THE LISTED COMPANY
3. IMPOSES ANY RESTRICTION OR LIABILITY UPON THE LISTED COMPANY
4. NOT IN THE ORDINARY COURSE OF BUSINESS OF THE LISTED COMPANY,
REQUIRED TO BE DISCLOSED

b. Materiality threshold for disclosures under Para B of Part A of Schedule

III

LODR changes apply different standards for what can be determined as materiality. These events
are mentioned in Para B, Part A of Schedule III. The new amendment Regulation 30 (4) (i) (a)
(c) has been replaced with a new construct which provides specific materiality thresholds for
when such events need to be disclosed.

There will be a subjective test to determine materiality:

1. Whether the omission when disclosed changes public perception or opinion

 2. Whether the disclosing of such event would lea to a market reaction
3. If the above applies, whether the information has been deemed material by the board of
directors of the listed company.

MATERIALITY POLICIES ALTHOUGH MENTIONED DUE TO VAGUENESS ARE NOT

REQUIRED TO BE DISCLOSED. 2023 CHANGES THIS.

Amendment - There is now an objective test to determine materiality:

 two percent of the turnover, as per the last audited consolidated financial statements of
the listed company;

 two percent of net worth, as per the last audited consolidated financial statements of the
listed company, except in case the arithmetic value of the net worth is negative; or

 five percent of the average of absolute value of profit or profit or loss after tax, as per the
last three audited consolidated financial statement of the listed company.

REGULATION 30 (4) PROV. WAS ADDED TO ENSURE THAT COMPANY POLICY FOR
MATERIALTIY DETERMINACE WAS NOT DILUTING THE ABOVE OBJECTIVE
STANDARD. INFACT IT WILL FRAME THEM.

The new amendment of UPSI now includes disclosure of a material event.

c. Verification of market rumors by listed companies

Amendment - Companies must now make assess and verify whether the rumors are true of not.

Prior, if any information had already been leaked to the public through the media or if there were
market rumors, there were only two options:

‘(a) the listed company could voluntarily confirm or deny any reported event or information to
the stock exchange under Regulation 30 (11); or

(b) the stock exchanges would, based on the reports, ask the listed company for clarification or
information on the reported event or information.’
Additionally, any company listed in the top 100 – 250 shall be required to confirm, refute, or
clarify any reported incident or information in mainstream media concerning any of the subjects
covered by Regulation 30 of the LODR as per the new provision in clause 11.

The new amendments provide a definition for main stream media.

1. REGISTERED NEWSPAPERS
2. NEWS CHANNELS AS PER MOIB
3. CONTENT PUBLISHED BY THE PUBLISED OF NEWS AND AFFAIRS defined
under the Information Technology (Intermediary Guidelines and Digital Media Ethics
Code) Rules 2021;
4. Newspapers, news channels, or news and current affairs content registered, permitted, or
regulated in jurisdictions other than India.

d. Board permanency

LODR asserts that the directors of listed companies will require shareholder approval in a GM
once in 5 years from date of appointment/ reappointment.

Additionally, if a director on the board of a listed company has served on the board for five years
or more (without shareholder approval), such person's continuation on the board will be subject
to shareholder approval in the first general meeting after March 31, 2024.

Amendments States now: Regulation 17

1. Does not extend to

 whole time directors,
 managing directors,
 managers,
 independent directors or
 directors whose appointment or reappointment otherwise requires shareholders’
approval under the Companies Act 2013 or the LODR.
 2. Directors appointed pursuant to an order of a tribunal or court;

3. nominee director of the Indian government on the board of a listed company, other than a
public sector company.

4. nominee director of a financial sector regulator on the board of a listed company.

5. a director nominated by a financial institution registered with or regulated by the

Reserve Bank of India under a lending arrangement in its normal course of business.

6. director nominated by a SEBI registered debenture trustee Board under a subscription

agreement for the debentures issued by the listed company.

REASON FOR AMENDMENT: SEBI noted that multiple promoter groups within listed
entities were enjoying board permanency on the boards of their companies, even in cases where
substantial stake had been diluted. Given the Companies Act 2013 provides that not all directors
are liable to retirement by rotation SEBI adopted its proposal in this consultation paper by way of
the Amendment Regulations 2023.

Ensures that the shareholders of the listed company have the option to evaluate the performance
of all the members of the current board of directors of the listed company.

e. Approval of special rights to shareholders

Purpose of these amendments was to attract a large influx of investors.

Shareholders that are entitled to certain special rights available are now to sought approval form
the force of the amendment regulations.

Any future stakeholder of the company would have invested with full understanding of the
company's governance environment. However, no substantial investor can be assured of a rights
package beyond a 5-year period under the current framework, which may discourage significant
investments by patient capital in listed businesses.
 f. Timelines for disclosure

The new amendments now remodel the timelines for the disclosure of material events by the
boards of a listed company. Prior to the Amendment Regulations 2023, the timeline for
disclosure was as soon as reasonably possible but not later than twenty-four (24) hours from the
occurrence of the event or information.

The New amendments now segregate a more detailed for disclosure based on the nature and type
of event:

S.
Type of event or information Timeline
No

In case the event or information arises from a board meeting of the listed Thirty minutes from the closure of
1. company or a decision pertaining to the event or information is taken in a the meeting of the board of
board meeting of the listed company directors

Twelve hours from the occurrence

2. In case the event or information emanates from within the listed company
of the event or information

Twenty-four hours from the

In case the event or information does not emanates from within the listed
3. occurrence of the event or
company
information

g. Extension of timelines on the applicability of the Amendment Regulations

to high value listed debt entities (“HVDLEs”)

Prior to the amendment HVDLEs had time until March 31, 2023, to ensure compliance on a
‘comply or explain’ basis.

The Amendment however, Regulation 15(1A) has been changed to change the timescale for the
application of the responsibilities under Chapter IV of the LODR to a "comply or explain" basis
in respect of HVDLEs to March 31, 2024 (rather than March 31, 2023). Patient money is
invested in publicly traded enterprises.

h. Introduction of new disclosure obligations under Schedule III of LODR

Changes are made to schedule III in order to entails the new disclosure requirements and
amend others:

1. Disclosure in relation to resignation of any key managerial personnel, senior

management, compliance officer or director other than any independent director, along
with the letter of resignation and detailed reason for resignations within seven days from
such resignation coming into effect.

2. Disclosure in relation to any event where the managing director or chief executive officer
of a listed company was indisposed or unavailable to fulfill the requirements of the role
in a regular manner for more than forty-five days in any rolling period of ninety days.

3. Disclosure in relation to any announcement or communication through social media

intermediaries or mainstream media by directors, promoters, key managerial personnel or
senior management of a listed company, in relation to any event or information which is
material for the listed company and is not already made available in the public domain.

4. Disclosure in relation to any action that is initiated, or any order passed by any
regulatory, statutory, enforcement authority or judicial body against the listed company or
its directors, key managerial personnel, senior management, promoter or subsidiary in
relation to a listed. company. The orders or actions might be in relation to any of the
following:

(a) search or seizure;

(b) re-opening of accounts under Section 130 of the Companies Act, 2013;

(c) investigation under the provision of Chapter XIV of the Companies Act, 2013.