FAQs LODR 2nd Amendment Updated Final 2

Vinod Kothari & Company
FAQs on LODR (Second Amendment) Regulations, 2023

Team Corplaw | [email protected]
June 27, 2023
Brief Background
SEBI had issued various Consultation Papers (‘CPs’)1 in November 2022 and February 2023 for amending the
SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘LODR Regulations’). The CPs
proposed amendments in the disclosure requirements for material events under Reg. 30, disclosure requirements
relating to shareholders’ agreements, approval for special rights and enduring board positions, sale of
undertakings, filling of casual vacancies of directors and KMPs, etc. The proposed amendments were approved
by SEBI in its board meeting dated March 29, 2023. Vide notification dated June 14, 2023 (‘present
notification’), SEBI has amended the Listing Regulations incorporating the proposed amendments.
Our articles and snippets on the present notification can be viewed here:
1. Getting material on “material” events and informations
2. Stricter framework for sale, lease or disposal of undertaking by a listed entity
3. SEBI prescribes thresholds for determining material events, stringent approval for sale of undertaking and
more
4. Presentation on present notification.
We have analyzed and collated questions on various nuances and impact of the present notifications for better
understanding.
1
CP on Review of disclosure requirements for material events or information under reg. 30
CP on Strengthening corporate governance and empowering shareholders
CP on filling up vacancy of directors and KMPs
Contents
Brief Background ............................................................................................................................................... 1
Applicability........................................................................................................................................................ 9
1. What are the various provisions amended vide the present notification? .............................. 9
2. What is the effective date of the present notification? ........................................................... 9
High Value Debt Listed Entities (HVDLEs) [Reg 15(1A] ................................................................................ 10
3. What is the timeline available with HVDLEs to comply with the CG requirements under
the LODR Regulations? ....................................................................................................... 10
Filling up vacancy in the office of Compliance Officer/ Directors / KMPs ................................................. 10
4. What is the timeline to fill any vacancy in the office of the Compliance Officer as per Reg
6(1A)? .................................................................................................................................. 10
5. Can the vacancy be filled by appointment of a person in interim capacity? ........................ 10
6. What does ‘interim capacity’ mean? .................................................................................... 10
7. What is the timeline to fill any vacancy in the office of a director as per Reg 17(1E)?...... 10
8. Which all events may result in vacancy in the office of a director?..................................... 10
9. Will the timeline remain the same in case the vacancy is caused by expiry of tenure of a
director? [Reg 17(1E)] ......................................................................................................... 10
10. What is the timeline to fill any vacancy in the office of the KMP as per Reg. 26A? .......... 11
11. Can the vacancy be filled by appointment of a person in interim capacity? ........................ 11
12. What will be the timeline in case of vacancy in the office of a Company Secretary (‘CS’)?11
13. Is the timeline aligned with that under the Companies Act, 2013 (‘CA, 2013’)? ................ 11
14. In case of vacancy existing as on the date of notification, what will be the timeline available
with the listed entity? ........................................................................................................... 11
Approval requirement for continuation of permanent or non-rotational directors [Reg 17 (1D)] .......... 12
15. Whether approval of shareholders is required for continuation of every director? .............. 12
16. Whether the requirement remains the same in case of a WTD, MD, Manager, Independent
Director or a director retiring by rotation? ........................................................................... 12
17. What are the examples of permanent directors? .................................................................. 12
18. Whether the requirement remains the same in case of nominee directors? ......................... 12
Disclosure of material events/ information under Reg. 30 ........................................................................... 12
Thresholds/ criteria for disclosure [Reg 30 (4)] ................................................................................... 12
19. What are the qualitative and quantitative criteria governing the disclosure of material
events/ information? ............................................................................................................. 12
20. In the qualitative criteria, how to determine ‘significant market reaction’? ........................ 13
21. What is included in ‘turnover’? ............................................................................................ 13
22. Whether it is enterprise based or entity based? .................................................................... 13

23. What is meant by value/ expected impact in terms of value referred in Reg 30(4)?............ 13
24. What is the meaning of ‘absolute value of profit or loss after tax’? .................................... 14
25. Whether the events/information identified as material on the basis of the thresholds should
be regarded as UPSI? ........................................................................................................... 14
26. If the event/information is a UPSI, what are the actionables for a listed entity? ................. 14
Determination of expected impact on value ................................................................................................... 15
27. How to ascertain the expected impact on value? [Reg 30(4)] .............................................. 15
28. The expected impact is to be assessed for 1 year or would it be spread over years? ........... 15
29. Whether the impact should be positive or negative? ............................................................ 15
30. What if the expected impact is not quantifiable? ................................................................. 15
31. In case of fire, how will the listed entity determine the impact? .......................................... 15
Policy for determination of materiality under Reg 30(4) ............................................................................. 15
32. What is the nature of amendment required to be made in the policy for determination of
materiality?........................................................................................................................... 15
33. Whether the policy is required to be amended before the amendment comes into effect? .. 15
34. Whether the policy alone should capture all the requirements? ........................................... 16
35. Who are required to be regarded as relevant employees of the listed entity identifying
potential material events/ information? ................................................................................ 16
36. How are the responsibility centers to be fixed for identification/ escalation of material
events? .................................................................................................................................. 16
Timeline for disclosure .................................................................................................................................... 16
37. What is the timeline available for disclosure of continuing events/ information determined
as material pursuant to present amendment?........................................................................ 16
38. What is the extent of traveling back required to identify and disclose events under the above
query? ................................................................................................................................... 16
39. There are many events which may not be specifically covered in the financial statements.
E.g., product launches, litigation, tax orders etc. In such a case, how will one identity and
disclose the continuing events? ............................................................................................ 17
40. What are the new line items required to be disclosed under Part A of Schedule III? .......... 17
41. What are the amendments made to existing disclosure requirements under Part A of
Schedule III? ........................................................................................................................ 17
42. What is the revised timeline for disclosure of material events/information? ....................... 17
43. The requirement to disclose within 30 minutes of closure of board meeting is applicable
only for specific items specified in sub-para 4 of Para A of Part A of Schedule III? .......... 18
44. Which events are required to be disclosed within 30 minutes of board meeting or within 12
hours? [Reg 30(6)] ............................................................................................................... 18
45. Will a strike in a factory be considered as an event emanating within the listed entity and
needs to be disclosed within 12 hours? ................................................................................ 18
46. In case of appointment of directors/ KMPs/ SMPs, when will the disclosure requirement
trigger? At the time of board approval or date of joining? ................................................... 18
47. In case of resignation of directors, KMPs, SMPs, when will the disclosure requirement
trigger? From the date of resignation or the last working day?............................................ 19
48. What if the event occurs on a non-working day/ trading holidays? ..................................... 19
Acquisition and disposal related [Para A (1) of Part A of Schedule III] ..................................................... 20
49. In case of acquisition, what are the revised thresholds for disclosure? ................................ 20
50. In case of acquisition, whether disclosure is required to be made in an existing company or
even in case of proposed to be incorporated one? ................................................................ 20
51. Whether disposal of every undertaking is required to be disclosed? ................................... 20
52. In case of sale of stake in a subsidiary or associate company, when is the disclosure required
to be made? .......................................................................................................................... 20
53. Whether the aforesaid disclosure is linked to any quantum or amount involved? ............... 20
54. In case of listed banks, will the branch office be considered as ‘unit’ requiring disclosures?
.............................................................................................................................................. 21
Ratings related [Para A (3) of Part A of Schedule III] ................................................................................. 21
55. Whether new ratings are also required to be disclosed? ...................................................... 21
56. In case of re-affirmation of ratings, whether a disclosure is required? ................................ 21
Disclosure of Agreements impacting listed entities - Para A (5A) of Part A of Schedule III read with
Reg 30A ............................................................................................................................................... 21
57. Who all are under an obligation to disclose about agreements impacting the LE? .............. 21
58. What kind of agreements are required to be disclosed? ....................................................... 21
59. Which type of restrictions and liability are required to be considered for the purpose of the
clause? .................................................................................................................................. 23
60. Whether the disclosures under the clause are first time, event-based or continuing? .......... 23
61. In case of existing agreements, what is the disclosure requirement? ................................... 24
62. In case, the agreement is executed after the notification of amendment, will it require
disclosure in the Annual Report? ......................................................................................... 24
63. In case of existing agreements to which the listed entity is not a party, how can this be
ensured? ............................................................................................................................... 24
64. Whether the entire agreement is required to be disclosed? .................................................. 24
Fraud or Default [Para A (6) of Part A of Schedule III] .............................................................................. 24
65. Fraud or Default is required to be disclosed in relation to whom? ...................................... 24

66. What is the meaning of Fraud? ............................................................................................ 25
67. What is the meaning of Default? .......................................................................................... 25
68. How is Default to be ascertained in case of revolving facilities?......................................... 25
69. Whether every instance of Default by a promoter, director, KMP, SMP or subsidiary is
required to be disclosed? ...................................................................................................... 25
70. In case of Fraud/ Default by an employee of the listed entity, when is the disclosure required
to be made? .......................................................................................................................... 25
71. How is the impact on the listed company to be ascertained? ............................................... 25
72. If the value of Default exceeds the thresholds specified in Reg. 30 (4), whether the
disclosure is required to be made? ....................................................................................... 26
73. In case of fraud by promoter, director, KMP, SMP or subsidiary, is it required to be in
relation to only the listed entity or any entity? ..................................................................... 26
74. If the default by the promoter or director is in personal capacity and causes reputation loss
to the listed entity, will it require disclosure? ...................................................................... 26
75. Whether general custody of the director by the police officer, unless guilt/ fraud is proved
is required to be disclosed? .................................................................................................. 26
Resignation, unavailability of KMPs etc. [Para A (7C, 7D) of Part A of Schedule III] ............................. 27
76. What are the disclosure requirements in case of resignation of KMP, SMP, Compliance
Officer or director other than an independent director? ....................................................... 27
77. In case of unavailability of MD/CEO what are the disclosure requirements? ..................... 27
78. How is the indisposition or unavailability to be ascertained? .............................................. 27
Senior Management Personnel (‘SMP’) ......................................................................................................... 27
79. What are the new disclosure requirements in relation to the SMP? ..................................... 27
80. Whether any annual disclosure is required to be made? ...................................................... 27
81. Whether the annual disclosure is required to be made in the CG report for FY 2022-23? .. 28
Regulatory actions/ orders [Para A (19), (20) of Part A of Schedule III].................................................... 28
82. Action taken by which all bodies need to be disclosed? ...................................................... 28
83. What kind of actions/ orders are required to be disclosed? .................................................. 28
84. In case of an action/ order, what needs to be disclosed and when? ..................................... 28
85. Whether show cause notice needs to be considered as action taken by the regulatory
authority requiring disclosure? ............................................................................................. 29
86. Whether assessment order from Income Tax authority which is appealable or not final
needs to be disclosed? .......................................................................................................... 29
87. Whether levying of fine/ penalty by stock exchanges for non-compliance of LODR (below
material threshold) needs to be disclosed? ........................................................................... 29
88. In case of action against a subsidiary, only if material is to be disclosed? .......................... 29

Other disclosure requirements ........................................................................................................................ 29
89. What is the timeline to intimate the schedule of the analysts’ meet? ................................... 29
90. If the analyst meet is canceled, will it require disclosure? ................................................... 29
91. Whether prior intimation is required even for one-to-one investor meet/ call? ................... 29
92. Whether press release, social media announcements are also required to be disclosed? ..... 30
93. Whether every communication received from the regulatory, statutory, enforcement, or
judicial authorities is required to be disclosed? ................................................................... 30
Events determined as Material under Para B ............................................................................................... 30
94. Whether disclosure for tie-up arrangements, new line of business, closure of operations is
required only where there is a change in the general character or nature of business? ........ 30
95. In case of loan agreements, whether disclosure is required to be made only where the listed
entity is a borrower? ............................................................................................................. 30
96. In case of litigations/ disputes, when is the disclosure required to be made? ...................... 30
97. In case of pending litigation/ outcome, how will the listed entity determine the impact? ... 30
98. Whether every instance of delay or default in the payment of fines, penalties, dues etc. is
required to be disclosed? ...................................................................................................... 30
99. In case of giving of guarantee or indemnity or becoming a surety, when is the disclosure
required to be made? ............................................................................................................ 30
100. Whether giving guarantees/ indemnity/ becoming surety in the ordinary course of business
will be covered? ................................................................................................................... 31
Responding to market rumors [Reg 30(11)] .................................................................................................. 31
101. Whether the requirement to confirm or deny any reported event or information in the
mainstream media to stock exchanges is mandatory? .......................................................... 31
102. What is the disclosure requirement for such listed entities covered above? ........................ 31
103. What is the timeline available for responding to the same? ................................................. 31
104. What is the meaning of mainstream media? ........................................................................ 31
105. What kind of rumours are required to be considered by the listed entity? ........................... 31
106. What is the approach to be followed by the listed entity in order to meet this requirement?32
107. If the requirement becomes applicable once on account of market capitalization, will it
continue to apply at all times thereafter? ............................................................................. 32
108. Is it mandatory to confirm/ deny/ clarify any rumor in mainstream media? ........................ 32
109. What if someone plants a fake rumour in the mainstream media? Whether the listed entity
is required to respond to such rumour? ................................................................................ 32
110. Whether market rumors related to the events specified in Schedule III which are not of
general nature and indicate rumours on impending material events should be responded to?
.............................................................................................................................................. 32
111. Whether the listed entity is required to intimate the response to the stock exchange or the
individual person who sought clarification? ........................................................................ 32
112. Whether the rumours at an industry level are required to be responded to? ........................ 33
Shareholder special rights related [Reg 31B(1)]............................................................................................ 33
113. What are the special rights typically granted by a listed entity to its shareholders? ............ 33
114. What is the intent behind periodic review by shareholders? ................................................ 33
115. What is the approval requirement for granting of such special rights? ................................ 33
116. Is there an exemption from the approval requirement? ........................................................ 33
Business Responsibility and Sustainability Reporting (BRSR) [Reg 34(2)]................................................ 34
117. Whether assurance is required for all parts of BRSR? ......................................................... 34
118. What is the meaning of BRSR Core? ................................................................................... 34
119. Is it applicable to every equity listed entity? ........................................................................ 34
120. What is the meaning of the value chain?.............................................................................. 34
121. What is the format of reporting? .......................................................................................... 34
Sale, lease or disposal of undertaking outside Scheme of Arrangement [Reg 37A] ................................... 35
122. What is the scope and applicability of Regulation 37A? ..................................................... 35
123. What is the approval regime required to be followed in case of sale, lease or disposal of an
undertaking? ......................................................................................................................... 35
124. What are the disclosure requirements while seeking shareholders’ approval? .................... 35
125. How is it different from that required under other provisions of the Listing Regulations? . 35
126. In case the sale, lease or disposal is being done to a related party such that it becomes a
material RPT, whether a single approval is recommended? ................................................ 35
127. Is there an exemption from the approval mechanism? ......................................................... 36
128. Whether the aforesaid exemption is absolute or conditional? .............................................. 36
129. Whether the exemption will be available in following situations? ...................................... 36
130. What are the immediate actionable for listed entities in relation to Regulation 37A? ......... 38
131. Will creation of charge on assets be considered as disposal of undertaking? ...................... 38
Others ................................................................................................................................................................ 38
132. What is the reporting requirement in case of cyber security incidents under Reg. 27 (2)
(ba)? ..................................................................................................................................... 38
133. Whether any format of reporting has been prescribed? ....................................................... 38
134. What is the timeline available for filing financial results in case of new listed entities under
Reg. 33 (3) (j)? ..................................................................................................................... 38
135. What is the revised disclosure requirement in case of debt listed entities under Reg. 57? .. 39
136. Whether disclosure in terms of Regulation 57 (2) & (3) is required to be made for the
quarter ending June 30, 2023? ............................................................................................. 39
137. What is the format of disclosure for Regulation 57?............................................................ 39
Annexure A ....................................................................................................................................................... 40
Annexure B ....................................................................................................................................................... 45
Annexure C ....................................................................................................................................................... 50
Applicability
1. What are the various provisions amended vide the present notification?
Major amendments introduced vide the present notification are as follows:
● Filling of vacancy in the office of directors and KMPs [reg. 6(1A), reg. 17(IE), 26A respectively];
● Approval of shareholders once in 5 years for non-rotational directors, or those with a fixed term of more
than 5 years (inserted) [reg. 17(1D)];
● Disclosure of details of cyber security incidents or breach/ loss of data/ documents in the quarterly CG report
[reg. 27(2)(ba)];
● Disclosure requirements for certain types of agreements binding listed entities [reg. 30A];
● Approval requirements for special rights given to shareholders [reg. 31B];
● Disclosure of financial results by newly listed entities [reg. 33(3)(j)];
● Requirement of obtaining assurance of BRSR core [reg. 34(2)(f)];
● Approval requirements in case of sale, lease or disposal of an undertaking outside Scheme of Arrangement
[reg. 37A];
Some existing provisions amended with some of them having a significant implications (in bold) vide the present
notification:
● Extension of time period for mandatory applicability of Corporate Governance (‘CG’) provisions on High
Value Debt Listed Entities (‘HVDLEs’) [reg. 15(1A)];
● Disclosure of material events;
● Quantitative criteria for determining material events under para B of part A of Schedule III have
been inserted [reg. 30(4)];
● Timelines for disclosure of material events [reg. 30(6)];
● Confirmation or denial of events reported in mainstream media (defined under reg. 2(1)(ra)) [reg.
30(11)];
● Disclosures under Reg 30 pursuant to a communication received from any regulatory or enforcement
or judicial authority to be backed by such communication as well [reg. 30(13)];
● Timeline for disclosure of schedule of analysts meet [reg. 46(2)(o)];
● Intimations regarding payment of interest/ principal of non-convertible securities [reg. 57];
● Insertion/ amendments in para A and B of part A of Schedule III.
2. What is the effective date of the present notification?

The present notification shall become effective on the 30th day of publication in the official gazette i.e. July 14,
2023 except for following provisions which are immediately effective i.e. June 14, 2023;
● Extension for mandatory applicability of CG provisions on HVDLEs;
● Requirement of obtaining assurance of BRSR core;
● Approval requirements in case of sale, lease or disposal of an undertaking outside Scheme of Arrangement;
● Intimation of payment of interest/principle to the stock exchange by a debt listed entity.
High Value Debt Listed Entities (HVDLEs) [Reg 15(1A]

3. What is the timeline available with HVDLEs to comply with the CG requirements under the LODR
Regulations?
Earlier, HVDLEs were required to comply with CG requirements on ‘comply or explain basis’ till March 31,
2023 and mandatorily thereafter. Now, the same is extended till March 31, 2024. Thus, HVDLEs will be
mandatorily required to comply with corporate governance requirements from April 01, 2024 as per Reg 15(1A).
Filling up vacancy in the office of Compliance Officer/ Directors / KMPs

4. What is the timeline to fill any vacancy in the office of the Compliance Officer as per Reg 6(1A)?
The vacancy in the office of Compliance Officer is required to be filled at the earliest. Maximum time available
is 3 months from the date of vacancy.
5. Can the vacancy be filled by appointment of a person in interim capacity?

Yes, the vacancy that arises in the office needs to be filled up by appointment of a person in the interim period so
as to ensure that the position and its responsibilities are adequately taken care of till such time the management
finds a suitable candidate to hold the said position for the regular official period. However, the amended
regulation requires that the interim placeholder shall also be duly qualified to be a compliance officer, that is,
must be a qualified company secretary [Reg 6 (1)]. Further, all the obligations under the such laws will be
applicable to such a person appointed for the interim period.
6. What does ‘interim capacity’ mean?
Interim capacity would mean appointing a KMP for filling up the vacancy for a temporary period until a new
eligible candidate is appointed for the regular official period. The provisions require that the in interim capacity
should be in compliance with the applicable laws and the appointee should be aware of the obligations cast under
the applicable laws.
7. What is the timeline to fill any vacancy in the office of a director as per Reg 17(1E)?
In case of vacancy in the office of a director, the same has to be filled at the earliest and in any case not later than
3 months from the date of such vacancy as per Reg 17(1E). However, for cases where the cessation is on account
of completion of the pre-fixed period, see Q 9 below.
8. Which all events may result in vacancy in the office of a director?
Vacancy in the office of a director may be caused, inclusively, on account of completion of tenure, resignation,
death, removal, disqualification or debarment.
9. Will the timeline remain the same in case the vacancy is caused by expiry of tenure of a director? [Reg
17(1E)]
No. If the vacancy is pursuant to expiry of the term of office of director, which leads to non-compliance with the
board composition related requirements under reg. 17(1), then such vacancy is required to be filled by the date on
which such office is vacated. Hence, the need/timeline for filling the vacancy may be interpreted as follows:
● Sec 161 (4) of CA, 2013 relates to a casual vacancy only of a director appointed by the
shareholders. If the director was, for example, an additional director who has not been regularized
by the shareholders, the provisions relating to casual vacancy does not apply at all.
● The LE’s board may be sufficiently thick - that is, it has more members than needed. In such
cases, if the articles or regulations framed in pursuance thereof permit the LE not to fill the
vacancy at all, and it has been decided not to fill the vacancy, the LE may not fill the vacancy.
● If the vacancy is not one which is not to be filled at all, it should be filled within 3 months.
● If the vacancy is one which causes a deviation from the requirements as to board composition -
for example, number of directors falling below 6, number of independent directors falling below
the requirement, a single women director’s office falling vacant, etc., and the vacancy was
imminent or pre-known (for example, not caused by death, resignation, etc), in that case, the
vacancy should be filled immediately as on the date of the vacancy.
For e.g. the tenure of a director is about to expire on September 30, 2023. In that case, as the date of vacation is
known to the listed entity in advance, the vacancy which will be created post expiry of his/her tenure will be
required to be filled on or before September 30, 2023.
10. What is the timeline to fill any vacancy in the office of the KMP as per Reg. 26A?
The vacancy in the office of KMP i.e. CEO, MD, WTD, Manager & CFO is required to be filled at the earliest.
Maximum time available is 3 months from the date of vacancy.
11. Can the vacancy be filled by appointment of a person in interim capacity?
Yes, the vacancy may be filled by appointing a person in interim capacity so as to ensure that the position and its
responsibilities are adequately taken care of till such time the management finds a suitable candidate to hold the
said position for the regular official period. However, the person appointed in interim capacity should also be
fulfilling the prescribed conditions. Further, all the obligations under the law will be applicable to such a person
appointed in the interim capacity.
12. What will be the timeline in case of vacancy in the office of a Company Secretary (‘CS’)?
Reg. 26A (1) does not make a reference to the CS of the listed entity. However, Reg. 6 (1A) provides a timeline
of 3 months to fill the vacancy in the office of the compliance officer or the listed entity. Typically, the CS of the
listed entity appointed in terms of Section 203 of CA, 2013 is the compliance officer and therefore, the timeline
of 3 months should also be available in case of CS too.
13. Is the timeline aligned with that under the Companies Act, 2013 (‘CA, 2013’)?
Section 203(5) of CA, 2013 provides a time of 6 months from the date of vacancy in the office of KMPs Hence,
the provisions of LODR Regulations are stricter and the listed entity will be required to adhere to such a stricter
timeline.
14. In case of vacancy existing as on the date of notification, what will be the timeline available with the
listed entity?
The timeline cannot apply retrospectively and therefore, for a vacancy existing as on the date of notification, a
timeline of 3 months from the date of the provision coming into effect should apply. For e.g. if there was a vacancy
in the office of KMP w.e.f. April 15, 2023 the period of 3 months cannot be said to expire on July 14, 2023 (the
date on which the amendment comes into effect). Instead, a timeline till October 14, 2023 should be available to
the company.
Approval requirement for continuation of permanent or non-rotational directors

[Reg 17 (1D)]
15. Whether approval of shareholders is required for continuation of every director?
The approval is required for a director who is serving continuously on the board without having obtained
shareholders’ approval in the last 5 years (‘permanent director’). The said requirement is effective from April 1,
2024. Therefore, if any director is serving on the board, for whom shareholders’ approval for continuing as
director has not been obtained since April 2019, the listed entity will be required to obtain the approval of
shareholders for his continuation as a director in the general meeting held after April 1, 2024 as per Reg 17(1D).
16. Whether the requirement remains the same in case of a WTD, MD, Manager, Independent Director or
a director retiring by rotation?
The requirement of obtaining shareholder approval once in every five years is not applicable in case of WTD,
MD, Manager, Independent Director as they already have a defined term of upto 5 years and approval is required
for re-appointment. Further, in case of a director whose office is liable to determination by retirement by rotation,
the approval of shareholders is obtained in compliance with section 152(6) of CA, 2013 which is usually once in
3 years.
17. What are the examples of permanent directors?
Founder directors, Non-executive directors, etc. whether appointed pursuant to rights conferred in the Articles of
Association or not, whose office is not liable to determination by retirement by rotation.
18. Whether the requirement remains the same in case of nominee directors?
No, the requirement of obtaining shareholders’ approval once in every 5 years is not applicable in case of a
director appointed pursuant to the order of the court/ tribunal or the director nominated by the government (except
in case of PSUs) or financial sector regulator or financial institution or debenture trustees. However, other
nominees, for example, nominees of a strategic investor or JV partner will require shareholders’ vote as per this
provision.
Disclosure of material events/ information under Reg. 30
Thresholds/ criteria for disclosure [Reg 30 (4)]

19. What are the qualitative and quantitative criteria governing the disclosure of material events/
information?
The qualitative criteria governing disclosure of material events/information as per Reg 30(4) is where the
omission in disclosure of such event/ information is likely to result in:
● discontinuity or alteration of an event or information already available publicly; or
● significant market reaction if the said omission came to light at a later date.
The quantitative criteria has been inserted vide the present amendment.
The quantitative criteria governing disclosure of material events/information as per Reg 30(4) is that the
omission of an event or information, whose value or the expected impact in terms of value, exceeds any of the
following threshold:
● 2% of turnover, as per the last audited consolidated financial statements;
● 2% of net worth, as per the last audited consolidated financial statements of the listed entity, except in case
the arithmetic value of the net worth is negative;
● 5% of the average of absolute value of profit or loss after tax, as per the last three audited consolidated
financial statements of the listed entity.
The thresholds are based on the last audited consolidated financial statements of the listed entity. Considering
that the present financial year is the first year of applicability, the thresholds will be determined based on the
consolidated financial statements as on 31st March, 2023. In case of profit related parameter, an average of the
last 3 FYs i.e. FY 22-23, 21-22 and 20-21 will be required to be taken into account.
20. In the qualitative criteria, how to determine ‘significant market reaction’?

The determination of significant market reaction in case of items under Para A of Part A of Schedule III, is
irrelevant since those are deemed material events. In case of Para B items, the fact that if it crosses the numerical
threshold, there will be a significant market reaction. Apart from the same, in case of other matters, the policy
will have to provide guidance on the manner of identifying events causing significant market reaction. The limit
or parameter may be aligned to Reg. 30 (4) or may slightly vary. However, it should not be way higher than the
thresholds in the regulation. The idea is to have a threshold which is indicative of the potential impact in the prices
of the listed securities.
21. What is included in ‘turnover’?

Turnover is as defined under the CA, 2013 i.e. the gross amount of revenue recognised in the profit and loss
account from the sale, supply, or distribution of goods or on account of services rendered, or both, by a company
during a financial year.
22. Whether it is enterprise based or entity based?

The thresholds specified under Reg 30(4) are not entity based as it relates to consolidated figures and is therefore,
enterprise based.
23. What is meant by value/ expected impact in terms of value referred in Reg 30(4)?
The quantitative criteria for determining the materiality is to be tested for value and expected impact in terms of
value. While “value” would generally be certain and known at the time of the event or information requiring
disclosure, “expected impact in terms of value” is to be determined on the basis of the likelihood of triggering the
threshold.
For instance, the materiality of a capacity is to be tested both on the basis of the “value” of the capital expenditure
being incurred by the listed entity as well as the “expected impact” on the turnover of the listed entity resulting
from such capacity addition.
24. What is the meaning of ‘absolute value of profit or loss after tax’?
‘Absolute value of profit or loss after tax’ means to take absolute figures of profit/loss. The threshold w.r.t. profit/
loss is to be computed by taking the absolute values of profit or loss after tax, for the immediately preceding 3
FYs. The averaging does not mean netting-off, in this case, where profits of a company in one year gets reduced
due to the losses in other financial years, or vice versa; rather, the values are required to be taken on an absolute
basis.
For e.g., suppose a listed company reported a profit of Rs. 5 crores in FY 20-21, profit of Rs. 3 crores in FY 21-
22 and loss of Rs. 1 crore in FY 22-23. The limit of materiality in the instant case will be derived as [5% of
{(5+3+1)/3}], i.e., Rs. 15 lacs and not [5% of {(5+3-1)/3}].
Identification as Unpublished Price Sensitive Information (UPSI)
25. Whether the events/information identified as material on the basis of the thresholds should be
regarded as UPSI?
Yes. SEBI (PIT) Regulations, 2015 defines UPSI as any information, relating to a company or its securities,
directly or indirectly, that is not generally available and which upon becoming generally available, is likely to
materially affect the price of the securities. Events/ information that are determined as material by applying the
thresholds given in Reg. 30 (4), especially those covered under Para B of Part A of Schedule III to the Listing
Regulations should be regarded as UPSI till the same has been made generally available.
In case of certain deemed material events covered in Para A of Schedule III requiring disclosure where the cost
of acquisition or amount of sale in a subsidiary or associate exceeds the threshold prescribed under Reg. 30 (4),
it should also be regarded as UPSI.
The rationale is that as SEBI has indicated the quantitative thresholds for determining material events/
information, it has to be considered synonymous with identification as UPSI.
26. If the event/information is a UPSI, what are the actionables for a listed entity?
Once the listed entity identifies that a particular information is a UPSI, it will be required to ensure the following
in line with the SEBI (PIT) Regulations, 2015:
a. Identify the DPs who have access to the UPSI and close the trading window for them and their immediate
relatives;
b. Send the notice of confidentiality to the persons other than DPs with whom UPSI has been shared;
c. Make entry in the Structured Digital Database for the DPs and the connected persons with whom UPSI is
shared;
d. Maintain the confidentiality of UPSI till its disclosure to the stock exchange;
e. Ensure disclosure of UPSI on a uniform basis in accordance with the Code of Fair Disclosure of the listed
entity.
.
Determination of expected impact on value

27. How to ascertain the expected impact on value? [Reg 30(4)]
Expected value will be based on the expected impact of the proposed corporate action, for example installation
of a plant, addition of capacity, obtention of an order, etc.
28. The expected impact is to be assessed for 1 year or would it be spread over years?
Expected impact under Reg 30(4)(i)(c) does not necessarily mean immediate impact; it may be spread over a
period of time, on reaching the full effect of the corporate action. For e.g. the installation of machinery will not
have an immediate impact on the turnover, however, it will have an impact on the future turnover. If the same is
ascertainable at the time of initiation of the project, it should be intimated to the stock exchange.
29. Whether the impact should be positive or negative?

Both positive as well as negative impact in terms of Reg 30(4) on the turnover, networth or profit of the listed
entity should be considered.
30. What if the expected impact is not quantifiable?
For any event, there should be some way of ascertaining the impact in terms of value. The KMPs will be required
to determine and the discussion should be minuted covering the basis of the rationale.
31. In case of fire, how will the listed entity determine the impact?
In case of fire, the impact caused on account of the disruption of properties in terms of value needs to be
considered along with the potential impact on the production capacity.
Policy for determination of materiality under Reg 30(4)

32. What is the nature of amendment required to be made in the policy for determination of materiality?
The Amendment Regulations require the materiality policy to be framed in a manner so as to assist the relevant
employees in identifying potential material event or information and reporting the same to the authorised KMPs.
Further, the materiality policy may also contain tests for determining materiality in addition to the proposed
thresholds specified above, but the same shall not have an effect of diluting any requirements of the Regulations.
The listed entity will have to ensure that the policy does not dilute the requirements specified in the Listing
Regulations.
33. Whether the policy is required to be amended before the amendment comes into effect?
The Amended Regulations will be effective from July 14, 2023. The listed entity will be guided by the amended
provisions and the materiality policy for determination and disclosure of material events. However, considering
the fact that the amendment in the materiality policy will be more of a qualitative amendment and not merely
reproducing the amended provisions of law, it will require discussion and some time before the same is placed
before the Board for approval, for e.g. guidance on events emanating within or outside the listed entity, guidance
on ascertaining the impact on the listed entity on account of fraud, circumstances indicating indisposition or
unavailability of MD/ CEO.
Therefore, it may not be feasible to have it approved before July 14, 2023 and accordingly, the listed entity should
endeavor to take it up in the first Board meeting after the provisions are notified.
34. Whether the policy alone should capture all the requirements?
No. The Company may have the broad parameters incorporated in the Policy and can consider having an operating
manual or an SOP capturing the minute details on flow of information, responsibility of relevant employees etc.
35. Who are required to be regarded as relevant employees of the listed entity identifying potential material
events/ information?
Depending on the organizational hierarchy, “relevant employees” in terms of Reg 30(4) may generally mean to
include the heads of departments/ functions, project heads, factory managers, etc. The list of employees
designated as Designated Persons under the PIT Regulations may also be used to identify the relevant employees.
The intent is to identify and sensitize the employees who will have access to or may be instrumental in origination
of material events/ information.
36. How are the responsibility centers to be fixed for identification/ escalation of material events?
Sources for origination of material events/ information emanating within the listed entity to be identified, for e.g.
the M&A team, business teams, legal team and sensitized with the requirement and the underlying threshold under
Reg. 30 (4) as applicable to the listed entity during the financial year. Further, departments or functional heads
who interact with external entities/agencies and are likely to have the information on material events emanating
from outside the listed entities, for e.g. compliance team/ legal team coordinating with the regulatory authorities
or enforcement agencies will also be required to be sensitized on the obligations. The time available for disclosure
of material events/ information is quite narrow and therefore, effective flow of information will be required to be
ensured.
Timeline for disclosure

37. What is the timeline available for disclosure of continuing events/ information determined as material
pursuant to present amendment?
Continuing events/information which become material pursuant to present amendment i.e. insertion of
quantitative criteria for determining materiality under Reg. 30 (4), will be required to be disclosed within 30 days
from the date of the amendment coming into effect, i.e. by August 13, 2023.
38. What is the extent of traveling back required to identify and disclose events under the above query?
Considering that the same is to be determined on the basis of thresholds as per last audited financial statements,
one may travel backwards upto the approval of the last audited financial statements to track undisclosed material
event or information, i.e., from 1st April, 2023 till effective date of the Amendment Regulations.
39. There are many events which may not be specifically covered in the financial statements. E.g., product
launches, litigation, tax orders etc. In such a case, how will one identity and disclose the continuing
events?
In that case, the listed entity will be required to internally obtain such information and ascertain if those have
reached the stage that warrant disclosure. If yes, then the value of the same to be ascertained in
40. What are the new line items required to be disclosed under Part A of Schedule III?
As provided in Annexure A below.
41. What are the amendments made to existing disclosure requirements under Part A of Schedule III?
As provided in Annexure B below
42. What is the revised timeline for disclosure of material events/information?
The timeline for disclosure of material events/information is as follows;
Nature of information Timelines for disclosure
Developments happening or information originating Within 12 hours

within a listed entity
Information originating outside a listed entity that is Within 24 hours

informed to the same by a third party
Outcome of board meeting for matters specified in Within 30 minutes from the conclusion of the
Schedule III Board Meeting
Schedule of analysts or institutional investors meet At least 2 clear working days in advance
Detailed reasons and other disclosures pertaining to Within 7 days from date of resignation
resignation of KMP, SMP, compliance officer,
directors including independent directors.
Nature of information Timelines for disclosure
Presentation and audio/ video recording of analyst/ before the next trading day or within 24 hours
investor meet from the conclusion of such calls, whichever is
earlier
Transcripts of analyst/ investor meet Within 5 working days of conclusion of such

call
43. The requirement to disclose within 30 minutes of closure of board meeting is applicable only for specific
items specified in sub-para 4 of Para A of Part A of Schedule III?
No, the requirement to disclose within 30 minutes of the closure of the board meeting is extended to all material
events/ information under Part A of Schedule III for which decision was taken in the board meeting.
44. Which events are required to be disclosed within 30 minutes of board meeting or within 12 hours? [Reg
30(6)]
The listed entity will be required to ascertain the timeline in the following manner:
● Event/ information emanating from outside the organization - within 24 hours of occurrence of event;
● Event/ information emanating from within the organization:
○ Event emanating from a decision taking in the board meeting - within 30 minutes from the closure of
such meeting.
○ Others - within 12 hours of occurrence of event
The CP provided the list of events along with the timeline for disclosure in Annex II. While the same has not been
incorporated in the present notification, it may be used as a guidance by the listed entity. (refer Annexure C
below).
45. Will a strike in a factory be considered as an event emanating within the listed entity and needs to be
disclosed within 12 hours?
The strike in a factory will be undertaken by the workers of the listed entity and therefore, cannot be considered
as emanating within the listed entity. The listed entity will have to receive the information relating to the same.
Therefore, it will be required to be disclosed within 24 hrs.
46. In case of appointment of directors/ KMPs/ SMPs, when will the disclosure requirement trigger? At
the time of board approval or date of joining?
The appointment of directors and KMPs are required to be approved by the board of directors. The effective date
of appointment may be at a later date. Since, the approval is decided at the board meeting, it should be disclosed
within 30 minutes of the conclusion of the board meeting as per Reg 30(6). In case of SMPs, the Board takes note
of the appointment. The appointment is approved by NRC. Accordingly, the disclosure should be made within 12
hours of meeting of NRC.
47. In case of resignation of directors, KMPs, SMPs, when will the disclosure requirement trigger? From
the date of resignation or the last working day?
The process of resignation differs in case of a non-executive director, executive directors and employees of the
Company. It may initiate with a notice of resignation from an employee, which may be followed by a series of
discussions and negotiations and concluding with the acceptance of resignation by the employer and ultimately
relieving the employee from his office. A notice of resignation may not lead to cessation of employment unless
the same is accepted.
Where the law provides for a time-bound disclosure requirement (as soon as reasonably possible and not later
than 12 hours from the occurrence of event or information), it becomes important to identify the point in time
when the disclosure requirement gets triggered. There may be several dates that may be considered during the
resignation process -
a. Date of receipt of notice of resignation that may provide for the resignation to be effective
immediately or from a future date;
b. Date of relieving;
c. Date of acceptance of resignation by the employer.
LODR does not provide any guidance on the resignation date to be considered. Guidance may therefore be taken
from section 168 of the CA, 2013 dealing with resignation of directors which specifies that the resignation of a
director shall take effect from the date on which the notice is received by the company or the date, if any, specified
by the director in the notice whichever is later. Therefore, in case of Non-Executive Directors (‘NEDs’), the
intimation will get triggered upon receipt of resignation letter from the director.
In case of Executive Directors, including Managing Director and KMP, the resignation shall be governed by the
terms of the employment contract. If a notice period has been specified in the employment contract, the
resignation will be effective from the end of such period. However, where the notice of resignation is received by
the Company in accordance with the employment contract, the information should not be withheld till completion
of the notice period. Accordingly, the intimation will be required to be made upon receipt of the resignation letter,
unless the employment contract provides for mandatory acceptance of resignation in order to be effective.
Further details such as the letter of resignation along with the detailed reasons for resignation should be disclosed
within 7 days of receipt of resignation letter.
48. What if the event occurs on a non-working day/ trading holidays?

The provisions do not refer to ‘working hours’ or ‘working day’. Accordingly, the endeavor should be to inform
within the prescribed time of 12 hrs or 24 hrs even if it is a non-working day/ trading holiday. In case of a delayed
disclosure, the reason for delay will have to be stated in terms of Reg. 30 (6).
Acquisition and disposal related [Para A (1) of Part A of Schedule III]

49. In case of acquisition, what are the revised thresholds for disclosure?
The revised thresholds for disclosure of acquisition as per Para A (1) of Part A of Schedule III are as follows:
● the listed entity holds shares or voting rights aggregating to 5% or more of the shares or voting rights in the
acquiring company;
● there has been a change of more than 2% of total shareholding / voting rights in the holding from the date of
last disclosure;
● the cost of acquisition or the price at which the shares are acquired exceeds any of the following:
○ 2% of turnover, as per the last audited consolidated financial statements;
○ 2% of net worth, as per the last audited consolidated financial statements of the listed entity, except in
case the arithmetic value of the net worth is negative;
○ 5% of the average of absolute value of profit or loss after tax, as per the last three audited consolidated
50. In case of acquisition, whether disclosure is required to be made in an existing company or even in case
of proposed to be incorporated one?
Disclosure is required to be made for acquisition of the existing company as well as in the company proposed to
be incorporated as per Para A of Part A of Schedule III, if it meets the requirements covered above.
51. Whether disposal of every undertaking is required to be disclosed?

The disclosure is required to be made for sale or disposal of ‘whole or substantially the whole’ of the ‘undertaking’
as per Para A of Part A of Schedule III. Further, as per section 180(1)(a) of CA, 2013, the term ‘undertaking’
means an undertaking in which the investment of the company exceeds 20% of its net worth as per the audited
balance sheet of the preceding FY or an undertaking which generates 20% of the total income of the company
during the previous FY. Further, the expression ‘substantially the whole of the undertaking’ in any FY means
20% or more of the value of the undertaking as per the audited balance sheet of the preceding FY. Accordingly,
every disposal is not required to be disclosed.
52. In case of sale of stake in a subsidiary or associate company, when is the disclosure required to be
made?
The disclosure in respect of sale of stake in a subsidiary or associate company will be required to be upon
execution of an agreement to sell or undertaking actual sale of shares or voting rights, in case no agreement is
executed.
53. Whether the aforesaid disclosure is linked to any quantum or amount involved?
The disclosure is needed if the sale or agreement to sell has the effect of the entity ceasing to be a wholly owned
subsidiary or a subsidiary or an associate of the listed entity.
Additionally, if the amount involved in sale of subsidiary or associate company meets any of the following
thresholds as per Reg 30(4), disclosure will be required to be made:
● 2% of turnover, as per the last audited consolidated financial statements;
● 2% of net worth, as per the last audited consolidated financial statements of the listed entity, except in case
the arithmetic value of the net worth is negative;
● 5% of the average of absolute value of profit or loss after tax, as per the last three audited consolidated
54. In case of listed banks, will the branch office be considered as ‘unit’ requiring disclosures?
No. Shifting of branches or opening of new branches is typically not considered as a unit. Here, the intent is to
refer to a business vertical or division or silo.
Ratings related [Para A (3) of Part A of Schedule III]

55. Whether new ratings are also required to be disclosed?
Yes, new ratings are also required to be disclosed as per para A of Part A of Schedule III
56. In case of re-affirmation of ratings, whether a disclosure is required?
While there is not an explicit requirement stated in the provisions, it is suggested to disclose the same to indicate
that the same ratings continue to remain valid.
Disclosure of Agreements impacting listed entities - Para A (5A) of Part A of Schedule

III read with Reg 30A
57. Who all are under an obligation to disclose about agreements impacting the LE?
All the shareholders, promoters, promoter group entities, related parties, directors, KMPs and employees of a
listed entity or of its holding, subsidiary and associate company are under the obligation to make disclosure about
agreements that are covered within the scope of item 5A.
58. What kind of agreements are required to be disclosed?

The scope of clause 5A of Para A of Part A of Schedule III seems to be very wide at the first reading, but an
itemisation or fragmentation of the clause may result in better understanding.
● Scope of the agreement:

○ Impacting the management or control of the LE
○ Imposing any restriction on the LE, except in normal course of business
○ Imposing a liability on the LE, except in normal course of business
● Nexus: The above things in the scope may be arising

○ Directly from the agreement, or
○ Indirectly
○ Potentially
○ Or if the purpose and effect of the agreement is to result into what is listed in the scope
● At what stage:
○ Entering into the agreement, rescission, alteration or amendment of the agreement
● Parties to the agreement:
○ Shareholders
○ Promoters and promoter group entites
○ Related parties
○ Directors
○ KMPs
○ Employees
● Of which entity:
○ LE
○ Holding entity
○ Subsidiary
○ Associate
● With who:
○ Inter-se
○ With the LE
○ With a third party
-
There are numerous agreements that are entered into by shareholders - for example, SHAs, SPAs, buy-back
agreements, performance-related agreements, liquidity preferences, etc. These may be entered into between JV
partners, family members, strategic investors, etc. These agreements may or may not be having the LE as a party
or even a confirming party. However, these agreements pertain to management or control of the LE and therefore,
may require disclosure in terms of Clause 5A.
If promoters or holding entity have made a pledge of substantial shares of the LE, such that there is a potential
risk of change of management or control, that may also require disclosure.
58A. What if there is an understanding, MOU or any other informal arrangement, not amounting to an
agreement?
The language used in the clause is “agreement”. An MOU is not an agreement, but in order to distinguish between
an MOU and an agreement, it is not the caption but the content of the document that matters. If the so-called
MOU is intended as enforceable, it is indeed an agreement. The fact that the understanding, MOU or arrangement
is not stamped does not matter.
58B. In case of subsisting agreements as on the date of notification, when are the same required to be
disclosed?
We will await the notification/timeline to be provided by SEBI on the same, in terms of Reg 30A.
58C. If, before the timeline provided by SEBI, the parties rescind the agreement, does it require disclosure
given the fact that it was subsisting as on the date of notification?
If the agreement ceases to exist because it is rescinded, in our view, disclosure is not warranted nor does it serve
the purpose of investor information.
58D. The clause makes reference to shareholders - thereby including even minority shareholders. If
minority shareholders have entered into an agreement among themselves, how is the LE expected to know
or notify?
First of all, if the agreement is to impact the management or control of the LE, it is not conceivable as to how an
agreement between numerous small shareholders will at all be covered by the scope of the clause.
In any case, the provisions of the clause are supplemented by Reg 30A, which requires such shareholders to report
the agreement, if coming within the scope of the clause. The shareholders report it to the LE, and the LE reports
it forward.
58E. If an agreement where the LE is not a party is not disclosed by such party to the Company, who faces
the consequences - the LE or such party?
The obligation is on the party to the agreement, if LE is not a party, to disclose the agreement to the LE within 2
days. The LE will be required to disclose to the exchange only when intimated by the party to the agreement.
Hence, if there is a party to the agreement, who, despite being covered by the scope of the clause, does not disclose
the same to the LE, the implications of the same are on such party.
59. Which type of restrictions and liability are required to be considered for the purpose of the clause?
First of all, any restriction or liability which is created by an agreement in the normal course of business is carved
out.
As for agreements other than in the normal course of business, area allocation agreements, non-compete
agreements, cartelisations, agreements to reward some KMPs with ESOPs or bonuses not forming part of the
terms of employment, etc. may be examples. .
60. Whether the disclosures under the clause are first time, event-based or continuing?
The clause, read with Reg 30A and Para G of Schedule V, requires disclosure at three stages.
A one-time disclosure will be required for all subsisting agreements coming within the scope of the clause by
virtue of Reg 30A.
As and when, after notification, agreements are entered into, disclosure will be required within 12 hours or 24
hours as the case may be, in case where the LE is a party, or not a party.
Further, by virtue of para F of schedule V, there will be an annual report disclosure. Reading this requirement
with Reg 30A (2), we are of the view that the disclosures will be made, in case of first time disclosure in the
Annual report of FY 22-23 or FY 23-24, and in case of all subsequent disclosures, in the AR forthcoming. The
disclosure, in our understanding, is not cumulative in nature. .
61. In case of existing agreements, what is the disclosure requirement?
In terms of Reg. 30 A (2), the listed entity is required to disclose the number of agreements that subsist as on the
date of notification of clause 5A to para A of part A of schedule III i.e as on June 14, 2023 their salient features,
including the link to the webpage where the complete details of such agreements are available, in the Annual
Report for the financial year 2022-23 or for the financial year 2023-24.
62. In case, the agreement is executed after the notification of amendment, will it require disclosure in the
Annual Report?
In terms of part G of Schedule V, it appears that all information reported by the LE in terms of Clause 5A during
the reporting period requires to be succinctly put into the Annual Report as well.
63. In case of existing agreements to which the listed entity is not a party, how can this be ensured?
In terms of Reg. 30 (A) of Listing Regulations, all the shareholders, promoters, promoter group entities, related
parties, directors, key managerial personnel and employees of a listed entity or of its holding, subsidiary and
associate company, who are parties to the agreements specified in clause 5A of para A of part A of schedule III
to these regulations, are required to inform the listed entity about such agreements within two working days of
entering into such agreements or signing an agreement to enter into such agreements. The requirement is
applicable for subsisting agreements as well and therefore, these should be informed at the earliest as no express
timeline has been specified by SEBI.
64. Whether the entire agreement is required to be disclosed?
As per the language of the provision, the entire agreement needs to be disclosed, However, an agreement may
contain diverse matters. For example, a typical family settlement of the promoter family may have content dealing
with other family matters in addition to the LE.
In our view, the relevance of the disclosure of the agreement is delineated by its impact on the management,
control, restrictions or liability. Hence, such parts of the agreement, as relates to the same, may be extracted and
disclosed.
We would be expecting further guidance from SEBI in this regard.
Fraud or Default [Para A (6) of Part A of Schedule III]
65. Fraud or Default is required to be disclosed in relation to whom?

Fraud or defaults in relation to the listed entity, its promoter, director, KMP, senior management or subsidiary or
arrest of KMP, senior management, promoter or director of the listed entity, whether occurred within India or
abroad, is required to be disclosed Para A (6) of Part A of Schedule III.
66. What is the meaning of Fraud?

Fraud shall include fraud as defined under Reg. 2(1)(c) of SEBI (Prohibition of Fraudulent and Unfair Trade
Practices relating to Securities Market) Regulations, 2003, which provides as follows :
It includes any act, expression, omission or concealment committed whether in a deceitful manner or not by a
person or by any other person with his connivance or by his agent while dealing in securities in order to induce
another person or his agent to deal in securities, whether or not there is any wrongful gain or avoidance of any
loss, and shall also include :
1. a knowing misrepresentation of the truth or concealment of material fact in order that another person may act
to his detriment;
2. a suggestion as to a fact which is not true by one who does not believe it to be true;
3. an active concealment of a fact by a person having knowledge or belief of the fact;
4. a promise made without any intention of performing it;
5. a representation made in a reckless and careless manner whether it be true or false;
6. any such act or omission as any other law specifically declares to be fraudulent;
7. deceptive behaviour by a person depriving another of informed consent or full participation;
8. a false statement made without reasonable ground for believing it to be true;
9. the act of an issuer of securities giving out misinformation that affects the market price of the security,
resulting in investors being effectively misled even though they did not rely on the statement itself or anything
derived from it other than the market price.
67. What is the meaning of Default?

Default shall mean non-payment of the interest or principal amount in full on the date when the debt has become
due and payable.
68. How is Default to be ascertained in case of revolving facilities?

In case of revolving facilities like cash credit, an entity would be considered to be in default if the outstanding
balance remains continuously in excess of the sanctioned limit or drawing power (whichever is lower) for more
than 30 days.
69. Whether every instance of Default by a promoter, director, KMP, SMP or subsidiary is required to be
disclosed?
Only those instances of default which have or may have an impact on the listed entity will be required to be
disclosed.
70. In case of Fraud/ Default by an employee of the listed entity, when is the disclosure required to be
made?
Frauds/ defaults by employees that have or may have an impact on the listed entity is required to be disclosed.
71. How is the impact on the listed company to be ascertained?

The impact may be ascertained on the basis of the likely outcome of the default, for e.g. if as a result of default
or fraud the aforementioned persons are debarred from accessing securities market or holding position in the listed
entity or the listed entity itself is also debarred from accessing securities market, if the shareholding is freezed
etc. Guidance in relation to the same should also be provided in the materiality policy framed by the listed entity.
72. If the value of Default exceeds the thresholds specified in Reg. 30 (4), whether the disclosure is required
to be made?
In case of fraud/default by a promoter, director, KMP, SMP or subsidiary the disclosure will be required to be
made irrespective of the threshold if it has an impact on the listed entity.
In case of fraud/ default by employees of a listed company, the disclosure will be required to be made if such
fraud/default has an impact on the listed entity and exceeds the thresholds of materiality specified under
Regulation 30 (4), given that the clause is covered under Para B and is required to be evaluated in terms of
thresholds given under Reg. 30 (4).
73. In case of fraud by promoter, director, KMP, SMP or subsidiary, is it required to be in relation to only
the listed entity or any entity?
It is to be noted that the provision specifically states that the default by promoter, director, KMP, SMP or
subsidiary is to be disclosed only if it impacts the listed entity. However, there is no such guidance in case of
fraud by them. In our view, since the said clause falls under deemed material event, therefore, any instance of
fraud (not merely alleged) by the promoters, directors, KMP or SMP or the subsidiary whether in relation to the
listed entity or not will require disclosure.
73A. In case the KMPs, SMPS, directors taken into custody by the police would also require intimation?
One needs to understand that taking someone in custody for the purpose of interrogation for an allegation on some
third person should be taken as a case of arrest. An arrest is the act of depriving people of their liberty, usually in
relation to an investigation or prevention of a crime, and thus detaining the arrested person in a procedure as part
of the criminal justice system2. Therefore, where it is a former case, the same should not require any intimation.
74. If the default by the promoter or director is in personal capacity and causes reputation loss to the listed
entity, will it require disclosure?
If it causes a reputational risk on the listed entity which can potentially reflect upon its prices, it will require
disclosure.
75. Whether general custody of the director by the police officer, unless guilt/ fraud is proved is required
to be disclosed?
In terms of Para A (6) of Part A of Schedule III, arrest of directors is required to be disclosed on the happening
of the event/information. Further details may be disclosed as an update to the original intimation.
2
https://ijcrt.org/papers/IJCRT1801306.pdf
Resignation, unavailability of KMPs etc. [Para A (7C, 7D) of Part A of Schedule III]
76. What are the disclosure requirements in case of resignation of KMP, SMP, Compliance Officer or
director other than an independent director?
In case of resignation of KMP, SMP, Compliance Officer or director other than an independent director; the letter
of resignation along with detailed reasons for the resignation is required to be disclosed within 7 days from the
date that such resignation comes into effect.
77. In case of unavailability of MD/CEO what are the disclosure requirements?

In case, the MD/CEO of the listed entity is indisposed or unavailable in a regular manner for more than 45 days
in any rolling period of 90 days, the fact of their non-availability along with the reasons for such indisposition or
unavailability, is to be disclosed.
78. How is the indisposition or unavailability to be ascertained?

This is subjective and necessary guidance will be required to be provided in the materiality policy. It could be as
a result of prolonged absence due to arrest, serious illness etc.
Senior Management Personnel (‘SMP’)

79. What are the new disclosure requirements in relation to the SMP?
The following disclosures are required to be made in relation to the SMP in terms of Para A of Part A of
Schedule III :
● Instances of fraud, defaults or arrest of the SMP, whether occurred within India or abroad, which has or may
have an impact on the listed entity
● Changes in SMP including resignation along with reasons for resignation and letter of resignation;
● Details of announcement or communication through social media intermediaries or mainstream media by
SMP in relation to any event or information which is material for the listed entity in terms of regulation 30
and is not already made available in the public domain by the listed entity;
○ 'social media intermediary' means an intermediary which primarily or solely enables online interaction
between two or more users and allows them to create, upload, share, disseminate, modify or access
information using its services.
● Regulatory, statutory, enforcement, judicial actions against SMP in relation to listed entity, in the nature of
search, seizure, re-opening of accounts, investigations, suspensions, sanctions, imposition of fine/ penalty,
settlement, debarment, disqualifications, warning/ caution;
80. Whether any annual disclosure is required to be made?

Yes, particulars of senior management including the changes therein since the close of the previous FY is required
to be reported in the CG Report. Accordingly, the list of SMP with basic details as the name and designation
along with details of changes indicated as a footnote, will have to be disclosed as per Para C (5B) of Schedule V
81. Whether the annual disclosure is required to be made in the CG report for FY 2022-23?
The Amendment Regulations are effective from July 14, 2023. Therefore, the disclosure in the CG report should
be effective prospectively i.e. for the annual report prepared for the FY ended 2023-24.
Regulatory actions/ orders [Para A (19), (20) of Part A of Schedule III]

82. Action taken by which all bodies need to be disclosed?
Actions taken by all regulatory, statutory, enforcement authority or judicial bodies against the listed entity or its
directors, KMP, SMP, promoter or subsidiary, in relation to the listed entity shall be required to be disclosed.
83. What kind of actions/ orders are required to be disclosed?

Actions initiated or orders passed in relation to the following is required to be disclosed:
● search or seizure; or
● re-opening of accounts under section 130 of the Companies Act, 2013; or
● investigation under the provisions of Chapter XIV of the Companies Act, 2013;
Actions taken or orders passed in relation to the following is required to be disclosed:

● suspension;
● imposition of fine or penalty;
● settlement of proceedings;
● debarment;
● disqualification;
● closure of operations;
● sanctions imposed;
● warning or caution; or
● any other similar action(s), by whatever name called.
84. In case of an action/ order, what needs to be disclosed and when?

In case of action/order, the following details pertaining to the actions initiated, taken or orders passed will be
required to be disclosed within 24 hours:
● name of the authority;
● nature and details of the action(s) taken, initiated or order(s) passed;
● date of receipt of direction or order, including any ad-interim or interim orders, or any other communication
from the authority;
● details of the violation(s)/contravention(s) committed or alleged to be committed;
● impact on financial, operation or other activities of the listed entity, quantifiable in monetary terms to the
extent possible.
85. Whether show cause notice needs to be considered as action taken by the regulatory authority requiring
disclosure?
Issue of show cause notice is not an instance of action taken, it is a first step of initiation of inquiry as explained
under rule 4 of SEBI Securities and Exchange Board of India (Procedure for Holding Inquiry and Imposing
Penalties) Rules, 1995, hence no disclosure in required to be made.
86. Whether assessment order from Income Tax authority which is appealable or not final needs to be
disclosed?
The disclosure is to be made only if the order passed is in respect of suspension, imposition of fine or penalty,
settlement of proceedings, debarment, disqualification, closure of operations, sanctions imposed, warning or
caution, etc. The assessment order from the Income Tax authority is not covered above. Hence, it will not require
disclosure.
87. Whether levying of fine/ penalty by stock exchanges for non-compliance of LODR (below material
threshold) needs to be disclosed?
Stock exchanges may be considered as statutory bodies given the fact that it acts under the aegis of SEBI and
have several powers being delegated by SEBI to ensure implementation of rules, regulations guidelines, circulars,
etc. rolled out by SEBI. Hence, levying of fines/ penalties by stock exchanges should require disclosure.
88. In case of action against a subsidiary, only if material is to be disclosed?

Action taken or orders passed by any regulatory, statutory, enforcement authority or judicial body against the
subsidiary of a listed entity is required to be disclosed irrespective of the materiality of the event [Clause 19 and
20 of Para A of Part A of Schedule III].
Other disclosure requirements

89. What is the timeline to intimate the schedule of the analysts’ meet?
Schedule of analysts or institutional investors’ meet is to be intimated at least 2 working days in advance
excluding the date of the intimation and the date of the meet in terms of Para A (15) of Part A of Schedule III
90. If the analyst meet is canceled, will it require disclosure?

Since, the schedule of analyst meet is intimated, any update on the same, including cancellation will be required
to be disclosed.
91. Whether prior intimation is required even for one-to-one investor meet/ call?
Definition of “meet” refers to group meetings or group conference calls. Therefore, prior intimation in relation to
one-to-one meet is not required under law. However, in our view, the same should be disclosed for the purpose
of information of stakeholders.
92. Whether press release, social media announcements are also required to be disclosed?
Yes, the announcement or communication through social media or mainstream media by directors, promoters,
KMP or SMP of listed entity, in relation to any event which is material in terms of reg. 30 and is not already made
available in public domain by the listed entity is required to be disclosed in terms of Para A (18) of Part A of
Schedule III.
93. Whether every communication received from the regulatory, statutory, enforcement, or judicial
authorities is required to be disclosed?
No, in terms of Reg. 30 (13) of LODR the disclosure would be required only if the event/ information is covered
under Part A of Schedule III.
Events determined as Material under Para B

94. Whether disclosure for tie-up arrangements, new line of business, closure of operations is required only
where there is a change in the general character or nature of business?
The disclosure for tie-up arrangements, new line of business, closure of operations is required if it is material in
terms of the thresholds given under reg. 30 (4), irrespective of whether there is a change in the general character
or nature of business.
95. In case of loan agreements, whether disclosure is required to be made only where the listed entity is a
borrower?
Entering into loan agreements which are binding and not in the normal course of business, including revision(s)
or amendment(s) or termination(s) thereof, are required to be disclosed even if the listed entity is not a borrower
in terms of Para B (5) of Part A of Schedule III .
96. In case of litigations/ disputes, when is the disclosure required to be made?

The disclosure about the litigations or disputes is to be made at the time of initiation or outcome which may have
an impact on the listed entity in terms of Para B (8) of Part A of Schedule III .
97. In case of pending litigation/ outcome, how will the listed entity determine the impact?
The actual value of the amount involved in the litigation/ outcome or the expected impact in terms of value will
have to be determined and considered.
98. Whether every instance of delay or default in the payment of fines, penalties, dues etc. is required to
be disclosed?
The delay or default in the payment of fines, penalties, dues, etc. only to the regulatory, statutory, enforcement or
judicial authority is required to be disclosed in terms of Para B (13) of Part A of Schedule III if it exceeds the
threshold prescribed under Reg. 30 (4).
99. In case of giving of guarantee or indemnity or becoming a surety, when is the disclosure required to be
made?
The disclosure is to be made at the time of giving of guarantee or indemnity or becoming a surety.
100. Whether giving guarantees/ indemnity/ becoming surety in the ordinary course of business will be
covered?
The listed entities engaged in the business of giving guarantees/ indemntiy/ becoming surety, such as banks and
financial institutions, will not be required to give the disclosures.
Responding to market rumors [Reg 30(11)]

101. Whether the requirement to confirm or deny any reported event or information in the mainstream
media to stock exchanges is mandatory?
The requirement to confirm, deny or clarify any reported event or information in the mainstream media to the
stock exchange as per Reg 30(11) is mandatory for top 100 listed entities with effect from October 1, 2023 and
thereafter for top 250 listed entities with effect from April 1, 2024.
102. What is the disclosure requirement for such listed entities covered above?
If any information or event is reported in the mainstream media which is not general in nature and which indicates
rumours of an impending specific material event or information then the same will be required to be confirmed,
denied or clarified by the listed entity.
103. What is the timeline available for responding to the same?

The market rumors are required to be responded as soon as possible, in any case within 24 hours from reporting
of such event/information in the mainstream media as per Reg 30(11)
104. What is the meaning of mainstream media?

Mainstream media means print or electronic copy of
● Newspapers registered with the Registrar of Newspapers for India (the listed entity can check here if the
newspaper is registered);
● News channels permitted by Ministry of Information and Broadcasting under Government of India;
○ List of news and non-news channels may be accessed here.
● Content published by the publisher of news and current affairs content as defined under the Information
Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021; and
○ includes newly received or noteworthy content, including analysis, especially about recent events
primarily of socio-political, economic or cultural nature, made available over the internet or computer
networks, and any digital media shall be news and current affairs content where the context, substance,
purpose, import and meaning of such information is in the nature of news and current affairs content.
● Newspapers or news channels or news and current affairs content similarly registered or permitted or
regulated, as the case may be, in jurisdictions outside India.
105. What kind of rumours are required to be considered by the listed entity?
The rumour should relate to certain events in the listed entity. Rumour relating to general economic reforms,
policy reforms, promoters, KMP etc will not be required to be considered by the listed entity.
106. What is the approach to be followed by the listed entity in order to meet this requirement?
The listed entity will have to check for any significant price movement in the prices of the securities where there
is any material event/ information within the listed entity which is yet to be made generally available, for e.g.
some potential acquisition, expansion plans etc. The idea is not to scan through the entire mainstream media and
check every information being stated about the listed entity.
Suggestive approach for responding to market rumours:

● Rumours that are specific to the listed entity;
● They relate to something which is internal to the company, or in case of external event, the company has more
knowledge than the public in general;
● The company becomes aware, or reasonably, is deemed to be aware of the rumour;
● There is a significant impact on the company’s securities.
107. If the requirement becomes applicable once on account of market capitalization, will it continue to
apply at all times thereafter?
Yes, if the requirement becomes applicable once on account of market capitalization it will continue to apply at
all times thereafter in view of Reg. 3 (2) of the Listing Regulations.
108. Is it mandatory to confirm/ deny/ clarify any rumor in mainstream media?

No. Rumours reported in mainstream media which are not general in nature and relates to impending specific
material event/information of the listed entity is required to be clarified as per Reg 30(11)
109. What if someone plants a fake rumour in the mainstream media? Whether the listed entity is
required to respond to such rumour?
Any rumour circulating in the mainstream media need not be responded. It should relate to impending specific
material event/information of the listed entity.
110. Whether market rumors related to the events specified in Schedule III which are not of general
nature and indicate rumours on impending material events should be responded to?
Regarding the rumour relating to the events specified in Schedule III which are not in general nature and indicate
rumors on impending material events, the listed entity needs to determine whether the current stage of the material
event is sensible enough to make disclosure of the same to the general public. Also, the listed entity has to consider
whether the rumour is regarding internal event or external event.
111. Whether the listed entity is required to intimate the response to the stock exchange or the individual
person who sought clarification?
Where the verification request has been received over email, it may be responded likewise. Otherwise, responding
to the rumor on the stock exchange platform will suffice as it will be a generally available information.
112. Whether the rumours at an industry level are required to be responded to?
Rumours relating to the industry level are not required to be addressed/verified as it does not relate specifically
to the listed entity and hence shall not be having any direct impact on the proces of the listed entity.
Shareholder special rights related [Reg 31B(1)]

113. What are the special rights typically granted by a listed entity to its shareholders?
Some of the common types of special rights granted to the shareholders are Nomination Rights, Veto Rights /
Affirmative voting, Information Rights, Anti-Dilution Rights, Right of First Refusal, Tag Along Rights,
Divestment Rights, etc. These rights are generally given to attract investments in a company prior to listing and
are included in the SHAs executed between the company and the pre-IPO investors / promoters.
114. What is the intent behind periodic review by shareholders?

As per the principles specified in Reg. 4 of the Listing Regulations, every listed entity shall ensure equitable
treatment of all shareholders, including minority and foreign shareholders. However, if any shareholder enjoys
special rights and privileges, the same should have been agreed upon by all the other shareholders of a company.
Further, such rights and privileges must be in proportion to one's holding in the company.
Once a public company gets listed, the special rights available to shareholders are put up for approval of the
shareholders in the first general meeting, post-listing. On a review of the voting pattern of public shareholders
and the commentaries available in public domain around such special rights seen in certain recently listed
companies, especially the new-age tech companies, SEBI observed that public institutional shareholders are
increasingly voicing their concerns against special rights being conferred upon the promoters / founders / certain
body corporates of those companies.
SEBI also observed that the SHAs are drafted in such a way that those special rights (nomination rights) would
continue to be available even after significant dilution of their holding in those entities. This permits the
shareholders to enjoy such special rights perpetually, which is against the principle of rights being proportional
to one's holding in a company.
Therefore, in order to address the issue of certain shareholders enjoying special rights perpetually, the Amendment
Regulations require that any special right (existing / proposed) granted to a shareholder of a listed entity shall be
subject to shareholder approval once in every 5 years from the date of grant of such special rights.
115. What is the approval requirement for granting of such special rights?
Any special right given to any shareholder is required to be approved by the shareholders by way of special
resolution once in 5 years starting from the date of grant of such special right as per Reg 31B(1) .
116. Is there an exemption from the approval requirement?

The shareholders’ approval is not required if the special rights are given to a financial institution under a lending
arrangement in the normal course of business or to a debenture trustee under a subscription agreement for the
debentures issued by the listed entity, if such financial institution or the debenture trustee becomes a shareholder
of the listed entity as a consequence of such lending arrangement or subscription agreement for the debentures as
per Reg 31B(1).
Business Responsibility and Sustainability Reporting (BRSR) [Reg 34(2)]

117. Whether assurance is required for all parts of BRSR?
No. Assurance reporting is only required for BRSR Core.
118. What is the meaning of BRSR Core?

In order to achieve the twin objectives of improving credibility and limiting the cost of compliance, SEBI vide
consultation paper on ESG Disclosures, Ratings and Investing dated February 20, 2023, proposed reporting of
BRSR core framework consisting of Key Performance Indicators (KPIs) under each of the E, S and G attributes/
areas, that are quantitative and outcome oriented metrics that needs to be reasonably assured. The BRSR Core
framework also specifies the methodology to facilitate reporting by corporates and verification of the reported
data by an assurance provider. The attributes provided in the COnsultation paper were as follows:
1. Change in GHG footprint
2. Change in water footprint
3. Investing in reducing its environmental footprints
4. Embracing circularity - details related to waste management by the entity
5. Enhancing employee wellbeing and safety
6. Enabling gender diversity in business
7. Enabling inclusive development
8. Fairness in engaging with customers and suppliers
9. Openness of business.
119. Is it applicable to every equity listed entity?

It is applicable to top 1000 equity listed entities based on the market capitalization as on 31st March of every FY
as per Reg 34(2).
120. What is the meaning of the value chain?

Value chain is yet to be defined by SEBI. GRI Standards Glossary 2020 defines value chain as
“An organization’s value chain encompasses the activities that convert input into output by adding value. It
includes entities with which the organization has a direct or indirect business relationship and which either (a)
supply products or services that contribute to the organization’s own products or services, or (b) receive products
or services from the organization.
Note 1: This definition is based on United Nations (UN), The Corporate Responsibility to Respect Human Rights:
An Interpretive Guide, 2012.
Note 2: The value chain covers the full range of an organization’s upstream and downstream activities, which
encompass the full life cycle of a product or service, from its conception to its end use.”
121. What is the format of reporting?

The format of reporting is to be prescribed by SEBI.
Sale, lease or disposal of undertaking outside Scheme of Arrangement [Reg 37A]

122. What is the scope and applicability of Regulation 37A?
Sale, lease and disposal of undertaking, other than by way of Scheme of Arrangement (‘SoA’) is presently covered
under section 180(1)(a) of CA, 2013. Reg. 37A now requires listed entities to follow a stricter regime for disposal
of undertaking inter alia mandating approval from majority of the public shareholders who are not interested in
the transaction, disclosure of the object, commercial rationale and use of proceeds arising from such transaction.
The regulation will be effective from July 14, 2023.
While the exemption has been provided in case of transactions with WOS, the approval regime will apply in case
of disposal of undertaking by such WOS or any reduction in shareholding in the WOS subsequent to transfer of
the undertaking.
123. What is the approval regime required to be followed in case of sale, lease or disposal of an
undertaking?
The shareholders approval is to be obtained in the following manner:
● Prior approval by way of special resolution; and
● Approval from the majority of the eligible public shareholders.
Eligible public shareholders who are not interested, directly or indirectly, in the transaction.
124. What are the disclosure requirements while seeking shareholders’ approval?
The listed will be required to disclose the object of and commercial rationale for carrying out such sale, lease or
disposal of the undertaking, and the use of proceeds arising therefrom.
125. How is it different from that required under other provisions of the Listing Regulations?
The approval requirement for sale/ disposal of undertaking is different from the one required for appointment of
IDs under reg. 25(2A) or in case of scheme of arrangement under reg. 37A.
Approval under reg 37A Approval under reg 25(2A) Approval under reg 37
[sale of undertaking) [appointment of IDs] [Scheme of Arrangement]
Special resolution; and Special resolution; or Majority of members

representing 3/4th in value [as
per section 230]
Approval from majority of the Ordinary resolution and approval Approval from majority of the
eligible public shareholders from majority of the public public shareholders
shareholders
126. In case the sale, lease or disposal is being done to a related party such that it becomes a material
RPT, whether a single approval is recommended?
Where the transaction of sale or disposal of undertaking is a material RPT, then the following should be noted:
● Approval from shareholders for an RPT is required only in case where such RPT is material either as per CA,
2013 or Listing Regulations;
● If material, the approval requirement under RPT framework will be applicable which is a lot different from
the approval framework for disposal of undertaking under section 180(1)(a) or reg. 37A.
Points of difference Approval under reg 37A Approval under reg 23
Resolution type (i) Special resolution; and (ii) Approval Ordinary resolution
from majority of the eligible public
shareholders
Who cannot vote For the purpose of the second criteria of All related parties of the
approval, public shareholders who have a company cannot vote
direct or indirect interest in the irrespective of whether such
transaction, cannot vote. entity is a related party to the
particular transaction or not.
● Accordingly, two separate resolutions ought to be taken to the shareholders for approval (i) for sale, lease or
disposal of undertaking; and (ii) for approval of a Material RPT.
127. Is there an exemption from the approval mechanism?

The approval of shareholders is not required as per Reg 37A in case of the following:
● Sale, lease or disposal of undertaking to a WOS whose accounts are consolidated with the listed entity;
● Sale, lease or disposal of undertaking by virtue of a covenant covered under an agreement with a financial
institution or with a debenture trustee.
128. Whether the aforesaid exemption is absolute or conditional?

The exemption from approval requirements for sale/ disposal of undertaking to a WOS is subject to the following
conditions:
● Such WOS should not further sell, lease or dispose the whole or substantially the whole of the undertaking,
whether in whole or in part, to any other entity;
● The listed entity should not dilute its shareholding below 100% in such WOS.
In case, any of the above conditions are breached, the listed entity will be required to take shareholders’ approval
in the manner specified in FAQ No. 90 above.
129. Whether the exemption will be available in following situations?
Sr. Scenarios Applicability of reg. 37A of the listed entity

No. (‘LE’)
1. LE transfers an undertaking to WOS Not applicable

Sr. Scenarios Applicability of reg. 37A of the listed entity

No. (‘LE’)
2. LE transfers an undertaking to a 90% subsidiary Applicable
3. LE transfers an undertaking to WOS which Applicable

further transfers the same undertaking to
another entity
4. LE transfers an undertaking to WOS. The WOS Not applicable

transfers some other undertaking to another
entity
5. LE has not transferred any undertaking to WOS. Not applicable

WOS intends to transfer its undertaking to
another entity.
6. The WOS is itself a result of hive off (outside Applicable. Considering the WOS itself in toto
scheme) of an undertaking from the LE. It now is a result of transfer of an undertaking by the
intends to transfer its undertaking to another LE, any further transfer by it ought to be
entity covered by reg 37A.
7. LE has transferred an undertaking to the WOS Not applicable

pursuant to SoA. Now the WOS intends to
transfer that undertaking to another entity
8. LE has transferred its undertaking to WOS. Applicable

Now LE intends to dilute its shareholding in the
WOS: by transferring its shareholding in the
WOS; by allowing the WOS to issue convertible
securities to any other entity
9. LE intends to dilute its shareholding in any other Not applicable. However, applicability of clause
WOS (5) and (6) of reg. 24 of Listing Regulations is
to be checked individually for each case.
10. LE has transferred the undertaking to its WOS Applicable. Keeping in mind the intent of the
prior to the amendment, the WOS is further provision, if the WOS, to which an undertaking
transferring such undertaking post this was transferred prior to the notification of the
amendment Amendment Regulations, intends to transfer
such undertaking to any entity, the provisions of
reg 37A should be made applicable and
requisite approval from the shareholders of the
LE is required to be obtained.
Source: Article by Ms. Nitu Poddar - Stricter framework for sale, lease or disposal of undertaking by a listed
entity.
130. What are the immediate actionable for listed entities in relation to Regulation 37A?
Extension of the provision to WOS will require some background work to be done by the listed entity which has
WOS. The listed entity needs to travel back to check if there has been any transfer of undertaking to the WOS or
if the WOS is actually an outcome of spin off from the listed entity.
Having done so, the listed entity and its WOS needs to be adequately sensitised with the amendments so that the
listed entity can be alerted in case (i) the undertaking from the listed entity is proposed to be transferred to another
entity; or (ii) the listed entity intends to dilute its shareholding in the WOS (even by 1%) where an undertaking
has been transferred.
131. Will creation of charge on assets be considered as disposal of undertaking?

Creation of charge should be covered under the disposal of undertaking, unless such charge is created under a
financial agreement with a financial institution regulated by RBI or with Debenture trustee registered with
Board.
Others
132. What is the reporting requirement in case of cyber security incidents under Reg. 27 (2) (ba)?
The details of cyber security incidents or breaches or loss of data or documents will be required to be disclosed
in the quarterly CG report under reg. 27(2)(a).
133. Whether any format of reporting has been prescribed?

The format of reporting is yet to be prescribed by SEBI. However, the CP provided the draft format as follows:
S. Nature of the event Date of Brief of Impact on Correcti Compliance with

No. (cyber security the the the operation ve the guidelines of
incident/ event event of the listed action CERT-In or
cyber security breach/ entity taken other concerned
loss of data or authority
documents)
134. What is the timeline available for filing financial results in case of new listed entities under Reg. 33
(3) (j)?
The newly listed entities will be required to disclose the financial results for the quarter or the financial year
immediately succeeding the period for which the financial statements have been disclosed in the offer document
within 45 days (in case of June, September or December quarter)/ 60 days (in case of March quarter) or within
21 days from the date of listing whichever is later.
For e.g. The listing date is January 31. The financial results for the December quarter will be disclosed within:
(a) within 45 days from the end of quarter (February 14); or (b) within 21 days from the date of listing (February
21), whichever is later, i.e., February 21.
135. What is the revised disclosure requirement in case of debt listed entities under Reg. 57?
The listed entity is required to submit a certificate regarding the status of payment of interest or dividend or
repayment or redemption of principal of non-convertible securities, within one working day of it becoming due,
in the manner and format specified by SEBI.
There is no change in the timeline of disclosure. The requirement of quarterly disclosures under reg. 57(2) and
(3) has been done away with.
136. Whether disclosure in terms of Regulation 57 (2) & (3) is required to be made for the quarter
ending June 30, 2023?
The amendment in relation to Reg. 57 has been made effective from the date of publication in Offiical Gazette
i.e. June 14, 2023. Therefore, the aforesaid sub-regulations stand omitted from that date and accordingly, there is
no requirement to furnish the disclosure for quarter ending June 30, 2023.
137. What is the format of disclosure for Regulation 57?

The format of disclosure under reg. 57 is given under Para 2.2 of Chapter XI of the SEBI Operational Circular
dated July 29, 2022.
Annexure A
New line items required to be disclosed under Part A of Schedule III
Newly inserted clauses pursuant to the Impact of the amendments

amendment
Deemed material events under Para A of Part A of Schedule III
Clause 5A - Agreements entered into by the ● All agreements entered into by a stakeholder of
shareholders, promoters, promoter group entities, the listed entity or of its holding, subsidiary or
related parties, directors, key managerial associate company having an impact on the
personnel, employees of the listed entity or of its management or control of the listed entity, or
holding, subsidiary or associate company, among imposing any restriction or liability on the
themselves or with the listed entity or with a third listed entity shall require disclosure, if the
party, solely or jointly, which, either directly or same is not in the normal course of business.
indirectly or potentially or whose purpose and ● An agreement that is entered into the normal
effect is to, impact the management or control of course of business is also required to be
the listed entity or impose any restriction or create disclosed if it has an impact on the
any liability upon the listed entity, shall be management or control of the listed entity.
disclosed to the Stock Exchanges, including ● These may generally include the Shareholders’
disclosure of any rescission, amendment or Agreements wherein the shareholders may put
alteration of such agreements thereto, whether or certain conditions or restrictions with respect
not the listed entity is a party to such agreements: to the management of the affairs of the listed
entity.
Provided that such agreements entered into by a ● For example, agreements creating security
listed entity in the normal course of business shall interest on one or more assets of the listed
not be required to be disclosed unless they, either entity against the financing facilities provided
directly or indirectly or potentially or whose to the same will be excluded from reporting
purpose and effect is to, impact the management or under this clause.
control of the listed entity or they are required to be
disclosed in terms of any other provisions of these
regulations.
Explanation: For the purpose of this clause, the

term “directly or indirectly” includes agreements
creating obligation on the parties to such
agreements to ensure that listed entity shall or shall
not act in a particular manner.

amendment
Clause 7C - In case of resignation of key As against the existing regulations that require
managerial personnel, senior management, disclosure of detailed reasons of resignation only in
Compliance Officer or director other than an case of an auditor or an independent director, the
independent director; the letter of resignation along Amendment Regulations require such disclosure
with detailed reasons for the resignation as given for all classes of persons whose change requires
by the key managerial personnel, senior intimation to the stock exchanges, along with the
management, Compliance Officer or director shall letter of resignation
be disclosed to the stock exchanges by the listed
entities within seven days from the date that such
resignation comes into effect.
Clause 7D - In case the Managing Director or ● This requires intimation to the SEs where the
Chief Executive Officer of the listed entity was MD/ CEO is unavailable to fulfil his roles in a
indisposed or unavailable to fulfil the requirements regular manner for more than 45 days in a
of the role in a regular manner for more than forty continuous period of 90 days, with reasons
five days in any rolling period of ninety days, the thereof.
same along with the reasons for such indisposition ● This may ideally include instances where the
or unavailability, shall be disclosed to the stock MD/ CEO is not available to look after the
exchange(s) affairs of the listed entity as a result of
prolonged illness, serious ailments, etc.
Clause 18 - Announcement or communication ● This requires intimation of mass

through social media intermediaries or mainstream announcements made by the specified
media by directors, promoters, key managerial stakeholders of listed entity that the entity itself
personnel or senior management of a listed entity, has not directly made available in the public
in relation to any event or information which is domain to be intimated to the stock exchanges.
material for the listed entity in terms of regulation ● Only such communications that are material to
30 of these regulations and is not already made the listed entity in terms of Reg 30 and are
available in the public domain by the listed entity. undisclosed is required to be intimated.
● For example, information about a charitable
Explanation – “social media intermediaries” shall program or some employee welfare
have the same meaning as defined under the programme announced in the media, would not
Information Technology (Intermediary Guidelines generally be "material" to the listed entity, and
and Digital Media Ethics Code) Rules, 2021 therefore, does not require disclosure.

amendment
Clause 19 - Action(s) initiated or orders passed by ● Actions right from the stage of their initiation
any regulatory, statutory, enforcement authority or are required to be reported
judicial body against the listed entity or its ○ by any regulatory, statutory, enforcement
directors, key managerial personnel, senior authority or judicial body
management, promoter or subsidiary, in relation to ○ against the listed entity or its directors, key
the listed entity, in respect of the following: managerial personnel, senior management,
(a) search or seizure; or promoter or subsidiary, in relation to the
(b) re-opening of accounts under section 130 of the listed entity,
Companies Act, 2013; or ○ in the nature of search/ seizure, re-opening of
(c) investigation under the provisions of Chapter accounts, or investigation under the Act
XIV of the Companies Act, 2013; ● Specific details that are required to be reported
along with the following details pertaining to the have been specified
actions(s) initiated, taken or orders passed:
i. name of the authority;
ii. nature and details of the action(s) taken, initiated
or order(s) passed;
iii. date of receipt of direction or order, including
any ad-interim or interim orders, or any other
communication from the authority;
iv. details of the violation(s)/contravention(s)
committed or alleged to be committed;
v. impact on financial, operation or other activities
of the listed entity, quantifiable in monetary terms
to the extent possible.

amendment
Clause 20 - Action(s) taken or orders passed by any This is a further expansion of the aforesaid clause
regulatory, statutory, enforcement authority or wherein other types of actions are covered.
judicial body against the listed entity or its
directors, key managerial personnel, senior
management, promoter or subsidiary, in relation to
the listed entity, in respect of the following:
(a) suspension;
(b) imposition of fine or penalty;
(c) settlement of proceedings;
(d) debarment;
(e) disqualification;
(f) closure of operations;
(g) sanctions imposed;
(h) warning or caution; or
(i) any other similar action(s) by whatever name
called;
along with the following details pertaining to the
actions(s) initiated, taken or orders passed:
i. name of the authority;
ii. nature and details of the action(s) taken, initiated
or order(s) passed;
iii. date of receipt of direction or order, including
any ad-interim or interim orders, or any other
communication from the authority;
iv. details of the violation(s)/contravention(s)
committed or alleged to be committed;
v. impact on financial, operation or other activities
of the listed entity, quantifiable in monetary terms
to the extent possible.
Clause 21 - Voluntary revision of financial If a listed entity applies for voluntary revision of its
statements or the report of the board of directors of financial statements, the same needs to be
the listed entity under section 131 of the intimated to the stock exchanges.
Companies Act, 2013
Events under Para B of Part A of Schedule III that are to be tested on materiality as per Reg
30(4)

amendment
Clause 13 - Delay or default in the payment of In absence of any specific clarification provided,
fines, penalties, dues, etc. to any regulatory, delay of even one day in making such payments
statutory, enforcement or judicial authority. will be covered under the present clause. Having
said that, it is important to note that the insertion
has been made under Para B, and therefore,
materiality has to be determined under Reg 30(4)
Annexure B
Amendments in the existing disclosure requirements under Part A of Schedule III
Existing clause Amended clause Impact of the amendment
Deemed material events [Para A of Part A of Schedule III]
Clause 1 - Acquisition(s) Acquisition(s) (including ● The scope of disclosures on

(including agreement to agreement to acquire), Scheme of sale/ disposal has been
acquire), Scheme of Arrangement (amalgamation, modified to also include -
Arrangement (amalgamation/ merger, demerger or ○ Whole or substantially the
merger/ demerger/ restructuring), sale or disposal of whole of undertaking
restructuring), or sale or any unit(s), division(s), whole or ○ Sale of stake in the associate
disposal of any unit(s), substantially the whole of the company of the listed entity.
division(s) or subsidiary of the undertaking(s) or subsidiary of ● It is clarified that acquisition
listed entity or any other the listed entity, sale of stake in of shares or voting rights in a
restructuring. associate company of the listed company proposed to be
entity or any other restructuring incorporated will also be
Explanation.- For the purpose of included within the meaning
this sub-para, the word Explanation (1) - For the purpose of “acquisition” for this
'acquisition' shall mean,- of this sub-paragraph, the word clause.
(i) acquiring control, whether 'acquisition' shall mean- ● In addition to the existing
directly or indirectly; or, (i) acquiring control, whether events in relation to
(ii)acquiring or agreeing to directly or indirectly; or “acquisition” as were
acquire shares or voting rights in, (ii) acquiring or agreement to considered material for
a company, whether directly or acquire shares or voting rights in disclosure, the same has also
indirectly, such that - a company, whether existing or been linked with the
(a) the listed entity holds shares to be incorporated, whether materiality thresholds
or voting rights aggregating to directly or indirectly, such that - incorporated under Reg 30.
five per cent or more of the shares (a) the listed entity holds shares ● Materiality for the sale/
or voting rights in the said or voting rights aggregating to disposal of the “subsidiary”
company, or; five per cent or more of the shares or “associate” has been
(b) there has been a change in or voting rights in the said linked with the materiality
holding from the last disclosure company; or thresholds under Reg 30.
made under sub-clause (a) of (b) there has been a change in ● Sale or disposal of stake in a
clause (ii) of the Explanation to holding from the last disclosure subsidiary/ associate that
this sub-para and such change made under sub-clause (a) of results in the cessation of the
exceeds two per cent of the total clause (ii) of the Explanation to existing relation of the entity
shareholding or voting rights in this sub-paragraph and such as a wholly-owned
the said company. change exceeds two per cent of subsidiary, subsidiary or an
the total shareholding or voting associate of the listed entity
rights in the said company; or shall require disclosure,
(c) the cost of acquisition or the
price at which the shares are irrespective of the quantum

acquired exceeds the threshold or amount involved.
specified in sub-clause (c) of
clause (i) of sub-regulation (4)
of regulation 30.
Explanation (2) - For the

purpose of this sub-paragraph,
“sale or disposal of subsidiary”
and “sale of stake in associate
company” shall include-
(i) an agreement to sell or sale
of shares or voting rights in a
company such that the
company ceases to be a wholly
owned subsidiary, a subsidiary
or an associate company of the
listed entity; or
(ii) an agreement to sell or sale
of shares or voting rights in a
subsidiary or associate
company such that the amount
of the sale exceeds the
threshold specified in sub-
clause (c) of clause (i) of sub-
regulation (4) of regulation 30.
Explanation (3)- For the
purpose of this sub-paragraph,
“undertaking” and
“substantially the whole of the
undertaking” shall have the
same meaning as given under
section 180 of the Companies
Act, 2013.”
Clause 3 - Revision in Rating(s) New Rating(s) or Revision in Clarificatory change - requires

Rating(s) disclosure of all ratings, whether
newly obtained or revised.
A question that remains

unanswered is as to whether the
re-affirmation of existing ratings

will also require intimation?
While there may not be an

explicit requirement, it is still
suggested to disclose the same.
Clause 6 - Fraud/defaults by Fraud or defaults by a listed ● The scope of frauds/ defaults

promoter or key managerial entity, its promoter, director, that require disclosure has
personnel or by listed entity or key managerial personnel, senior been expanded to include the
arrest of key managerial management or subsidiary or same conducted by -
personnel or promoter arrest of key managerial ○ Director (was earlier
personnel, senior management, covered under Para B)
promoter or director of the listed ○ Senior management
entity, whether occurred within ○ Subsidiary
India or abroad: ● Similarly, the scope of arrest
stands modified.
For the purpose of this sub-
● It is clarified that such
paragraph:
instances are required to be
(i) ‘Fraud’ shall include fraud
reported irrespective of
as defined under Regulation
whether the same occurred in
2(1)(c) of Securities and
India or abroad.
Exchange Board of India
● The meaning of “fraud” and
(Prohibition of Fraudulent and
“default” has been clarified,
Unfair Trade Practices relating
including in the case of
to Securities Market)
revolving facilities.
Regulations, 2003.
● It is clarified that for defaults
(ii)‘Default’ shall mean non-
other than of the listed entity
payment of the interest or
itself, the same is required to
principal amount in full on the
be reported only when the
date when the debt has become
same has an impact on the
due and payable.
listed entity.
Explanation 1- In case of ● Therefore, personal defaults
revolving facilities like cash of individuals having no
credit, an entity would be impact on the listed entity
considered to be in ‘default’ if need not be reported.
the outstanding balance
remains continuously in excess
of the sanctioned limit or
drawing power, whichever is
lower, for more than thirty
days.
Explanation 2- Default by a
promoter, director, key
managerial personnel, senior
management, subsidiary shall
mean default which has or
may have an impact on the
listed entity.”
Clause 7 - Change in directors, Change in directors, key The same has been extended to
key managerial personnel managerial personnel (Managing the senior management as well
(Managing Director, Chief Director, Chief Executive
Executive Officer, Chief Officer, Chief Financial Officer,
Financial Officer, Company Company Secretary, senior
Secretary etc.), Auditor and management etc.), Auditor and
Compliance Officer Compliance Officer
Clause 11 - Reference to BIFR Reference to BIFR and winding- Clarificatory change - reference
and winding-up petition filed by up petition filed by any party / to BIFR has been removed since
any party / creditors creditors the same is non-existent
Events that are to be tested on materiality guidelines [Para B of Part A of Schedule III]
Change in the general character Change in the general character The struck part has been omitted,
or nature of business brought or nature of business brought so as to require disclosure on the
about by arrangements for about by occurrence of such events,
strategic, technical, irrespective of whether there is a
manufacturing, or marketing tie- Any of the following events change in the nature of business
up, adoption of new lines of pertaining to the listed entity: pursuant to that.
business or closure of operations (a) arrangements for strategic,
of any unit/division (entirety or technical, manufacturing, or
piecemeal). marketing tie-up; or
(b) adoption of new line(s) of
business; or
(c) closure of operation of any
unit, division or subsidiary (in
entirety or in piecemeal).
Agreements (viz. loan Agreements (viz. loan The reference of “as a borrower”
agreement(s) (as a borrower) or agreement(s) (as a borrower) or has been removed to include such
any other agreement(s) which are any other agreement(s) which are material loan agreements as well,
binding and not in normal course binding and not in normal course where the listed entity is a party
of business) and revision(s) or of business) and revision(s) or
amendment(s) or termination(s) amendment(s) or termination(s) in the capacity of a lender.

thereof. thereof.
This does not include loan
agreements entered into by
financing companies in the
normal course of its business.
Litigation(s) / dispute(s) / Pendency of any litigation(s) / ● The substitution of

regulatory action(s) with impact dispute(s) / regulatory action(s) “regulatory actions” is
or the outcome thereof which followed by the insertion of
may have an impact on the listed two new clauses under Para
entity. A of Part A (see table below)
● It is clarified that the
pendency of any litigation or
dispute or its outcome is also
required to be reported.
Fraud/defaults etc. by directors Fraud/ defaults etc. by directors ● Instances of fraud/ defaults
(other than key managerial (other than key managerial by directors have been
personnel) or employees of listed personnel) or employees of listed included within the deemed
entity entity which may have an material events.
impact on the listed entity. ● Only such instances of
frauds/ defaults by
employees that may have an
impact on the listed entity
and the impact is likely to be
material require disclosures.
Giving of guarantees or Giving of guarantees or To ensure compliance in spirit, a

indemnity or becoming a surety indemnity or becoming a surety, phrase has been added such that
for any third party. by whatever name called, for nomenclature does not matter, if
any third party. the effect remains that of giving
guarantee/ indemnity/ surety.
Annexure C
Timeline for disclosure of events specified under Part A of Schedule III of LODR Regulations (Proposed
in CP)
Events/information to be disclosed within 12 hours:
Sr. No. Events/Information
1. Acquisition (including agreement to acquire), Scheme of Arrangement (amalgamation/

merger/ demerger/restructuring), or sale or disposal of any unit(s), division(s), the whole or
substantially the whole of the undertaking, or subsidiary, or sale of the stake in associate
company of the listed entity or any other restructuring
2. Issuance or forfeiture of securities, split or consolidation of shares, buyback of securities, any

restriction on ransferability of securities or alteration in terms or structure of existing securities
including forfeiture, reissue of forfeited securities, alteration of calls, redemption of securities
etc
3. Agreements impacting listed entity where listed entity is a party
4. Change in directors, key managerial personnel (Managing Director, Chief Executive Officer,
Chief Financial Officer , Company Secretary etc.), senior management,Auditor and
Compliance Officer (except for resignation)
5. Managing Director or the Chief Executive Officer of the listed entity is indisposed or
unavailable to fulfil requirements of his/her role in a regular and consistent manner
6. Appointment or discontinuation of share transfer agent.
7. Issuance of Notices, call letters, resolutions and circulars sent to shareholders, debenture
holders or creditors or any class of them or advertised inthe media by the listed entity.
8. Amendments to memorandum and articles of association of listed entity, in brief
9. Initiation of Forensic audit
Events/ information to be disclosed within 24 hours
1. New Ratings(s) or Revision in Rating(s
2. Agreements impacting listed entity where listed entity is not a party
3. Fraud/defaults by promoter or director or key managerial personnel or senior management or

subsidiary or by listed entity or arrest of key managerial personnel or senior management or
promoter or director.
4. Change in directors, key managerial personnel (Managing Director, Chief Executive Officer,
Chief Financial Officer , Company Secretary etc.), senior management,Auditor and
Compliance Officer due to resignation
5. Resolution plan/ Restructuring in relation to loans/borrowings from banks/financial

institutions
6. One time settlement with a bank
7. Winding-up petition filed by any party / creditors
8. Proceedings of Annual and extraordinary general meetings of the listed entity
9. CIRP related events

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Vinod Kothari & Company

FAQs on LODR (Second Amendment) Regulations, 2023

June 27, 2023

22. Whether it is enterprise based or entity based? .................................................................... 13

65. Fraud or Default is required to be disclosed in relation to whom? ...................................... 24

88. In case of action against a subsidiary, only if material is to be disclosed? .......................... 29

2. What is the effective date of the present notification?

High Value Debt Listed Entities (HVDLEs) [Reg 15(1A]

Filling up vacancy in the office of Compliance Officer/ Directors / KMPs

5. Can the vacancy be filled by appointment of a person in interim capacity?

Approval requirement for continuation of permanent or non-rotational directors

Disclosure of material events/ information under Reg. 30

Thresholds/ criteria for disclosure [Reg 30 (4)]

20. In the qualitative criteria, how to determine ‘significant market reaction’?

21. What is included in ‘turnover’?

22. Whether it is enterprise based or entity based?

Identification as Unpublished Price Sensitive Information (UPSI)

Determination of expected impact on value

29. Whether the impact should be positive or negative?

Policy for determination of materiality under Reg 30(4)

Timeline for disclosure

Nature of information Timelines for disclosure

Developments happening or information originating Within 12 hours

Information originating outside a listed entity that is Within 24 hours

Nature of information Timelines for disclosure

Transcripts of analyst/ investor meet Within 5 working days of conclusion of such

48. What if the event occurs on a non-working day/ trading holidays?

Acquisition and disposal related [Para A (1) of Part A of Schedule III]

51. Whether disposal of every undertaking is required to be disclosed?

Ratings related [Para A (3) of Part A of Schedule III]

Disclosure of Agreements impacting listed entities - Para A (5A) of Part A of Schedule

58. What kind of agreements are required to be disclosed?

● Scope of the agreement:

● Nexus: The above things in the scope may be arising

Fraud or Default [Para A (6) of Part A of Schedule III]

65. Fraud or Default is required to be disclosed in relation to whom?

66. What is the meaning of Fraud?

67. What is the meaning of Default?

68. How is Default to be ascertained in case of revolving facilities?

71. How is the impact on the listed company to be ascertained?

77. In case of unavailability of MD/CEO what are the disclosure requirements?

78. How is the indisposition or unavailability to be ascertained?

Senior Management Personnel (‘SMP’)

80. Whether any annual disclosure is required to be made?

Regulatory actions/ orders [Para A (19), (20) of Part A of Schedule III]

83. What kind of actions/ orders are required to be disclosed?

Actions taken or orders passed in relation to the following is required to be disclosed:

84. In case of an action/ order, what needs to be disclosed and when?

88. In case of action against a subsidiary, only if material is to be disclosed?

Other disclosure requirements

90. If the analyst meet is canceled, will it require disclosure?

Events determined as Material under Para B

96. In case of litigations/ disputes, when is the disclosure required to be made?

Responding to market rumors [Reg 30(11)]

103. What is the timeline available for responding to the same?

104. What is the meaning of mainstream media?

Suggestive approach for responding to market rumours:

108. Is it mandatory to confirm/ deny/ clarify any rumor in mainstream media?

Shareholder special rights related [Reg 31B(1)]