In its board meeting of 25 March, 2021, SEBI took several important decisions, among others, to modify the framework for Innovators Growth Platform ; introduce new requirements for sustainability reporting by top 1000 listed entities; review of framework for reclassification of promoter / promoter group entities; and amendments to the Alternative Investment Funds Regulations, 2012, Listing Obligations and Disclosure Requirements Regulations, 2015, Portfolio Managers Regulations, 2020 and Delisting of Equity Shares Regulations, 2009.

Specifically, the following decisions were taken:

• Amendments to Alternative Investment Funds Regulations, 2012 to (i) remove restrictions on investments for venture capital funds registered as Category I AIFs by removing the list of restricted activities or sectors from the definition of Venture Capital Undertaking (ii) allow AIFs to simultaneously invest in units of other AIFs and directly in securities of investee companies (iii) definition of ‘start-up’ as provided by the Government to facilitate investments by Angel funds and (iv) a Code of Conduct for the functioning of AIFs.

• Amendments to the Listing Obligations and Disclosure Requirements Regulations, 2015 : (i) Requirement for formulation of dividend distribution policy extended to the top 1000 listed entities on the basis of market capitalisation (ii) In case of board meetings held for more than one day, financial results to be disclosed within 30 minutes of end of the board meeting for the day on which the financial results are considered. (iii) Applicability of LODR Regulations to listed entities based on – (1) market capitalisation criteria will continue to apply even if such entities subsequently fall below the specified thresholds and (2) paid-up capital and net-worth, will continue to apply unless the paid-up capital or net-worth falls and continues to remain below the threshold for a period of three consecutive financial years. (iv) requirement to seek stock exchange approval for change of name of a listed entity is dispensed with. (v) timelines for submission of periodic reports viz. statement of investor complaints, corporate governance report and shareholding pattern to be harmonized to 21 days from the end of each quarter. (v) Frequency of submission of compliance certificates relating to share transfer facility and issuance of share certificates within 30 days of lodgement for transfer, sub-division, etc. is revised from half-year to annual. (vi) The requirement to publish newspaper advertisements for the notice to board meetings where financial results are to be discussed and for quarterly statement on deviation or variation in use of funds, is dispensed with

Risk Management Committees : requirement to constitute the RMC has been extended to the top 1000 listed entities by market capitalization instead of existing top 500 listed entities; the RMC shall have minimum three members with majority of them being members of the board of directors, including at least one independent director; the quorum for a meeting of the RMC shall be either two members or one third of the members of the committee, whichever is higher, including at least one member of the board of directors in attendance. The role of the RMC includes formulation of a detailed risk management policy and monitoring its implementation; periodic review of such policy; review of the appointment, removal and terms of remuneration of the Chief Risk Officer (if any), etc.

• Amendments to Delisting of Equity Shares Regulations, 2009 : Promoter / acquirer must disclose the intention to delist through an initial public announcement, along with reasoned recommendations of the Committee of Independent Directors. Timelines for completion of various activities revised to make the process more efficient ; Promoter / acquirer permitted to specify an indicative price for delisting which shall not be less than the floor price; Promoter bound to accept the price discovered through reverse book building if the same is equal to the floor price / indicative price ; Role of merchant banker involved in the delisting process elaborated.

• The framework for Innovators Growth Platform under the ICDR Regulations is modified to make it more accessible in view of the evolving ecosystem of start-ups.

• New requirements for business sustainability reporting (BSR) by listed entities introduced by substituting it with a new Business Responsibility and Sustainability Report (BSRR). for reporting on a voluntary basis for FY 2021 – 22 and on a mandatory basis from FY 2022 – 23. Disclosures on climate and social (employees, consumers and communities) related issues of the entity have been significantly enhanced and made more granular.

• The existing framework for reclassification of promoter / promoter group entities is rationalised. The time gap between the date of board meeting and shareholders meeting, for consideration of reclassification request, is reduced to a minimum of one month and a maximum of three months instead of existing requirement of minimum period of three months and maximum six months.

• With respect to the requirement of a listed entity to disclose the schedule of analyst / institutional investors meet and presentations made in such meetings to the stock exchanges and on its website, it is decided that (i) audio/video recordings of such meetings shall be posted on the website of the listed entity and exchanges, promptly, before the next trading day or within 24 hours, whichever is earlier; and (ii) written transcripts of such meetings to be disclosed within five working days.

To refer to the SEBI press release dated 25 March, 2021, click here.