On 24 July, 2018, SEBI released a Consultative paper on revision of provisions relating to re-classification of shareholder under Regulation 31A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The revisions were proposed on the basis of discussions with stakeholders and recommendations of the Kotak Committee on Corporate Governance with a view to simplify and bring more clarity to this regulation. Based on feedback to the Consultative Paper, SEBI notified the SEBI (Listing Obligations and Disclosure Requirements) (Sixth Amendment) Regulations, 2018 on 16 November 2018. The said Regulations, inter alia substituted Regulation 31A.
The revised regulation 31A of the Listing Regulations has streamlined the re-classification process by providing for an express framework and a uniform procedure for re-classification of promoters/ members of promoter group. Overall, the revised regulation are well appreciated and they also shed clarity on necessary aspects such as the bar on the promoter/ promoter group seeking re-classification to vote to approve such a reclassification.
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