SEBI notifies amendments to Listing Regulations

-Payal Agarwal, Manager  (payal@vinodkothari.com) 

Keeping in view of the significance of the amendments, we are conducting a workshop on the same. Details can be accessed here – https://vinodkothari.com/2023/06/workshop-on-sebi-lodr-2nd-amendment-regulations-2023/

The importance of transparency and timely dissemination of material information for a listed entity needs no emphasis, since most of these events and information may have a direct bearing on the price discovery of the securities of the listed entities and the investors’ decisions. The intent of Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“Listing Regulations”) is to ensure a seamless flow of information; the Regulation is complemented by Schedule III thereto, which provides an indicative list of the events or information in a listed entity that may be considered “material” and thereby, requires prompt disclosure by way of intimations to the stock exchange(s) in which the entity is listed.

While Para A of Part A of Schedule III specifies the list of information/ events which are “deemed” material, Para B specifies a list of information/ events which are to be tested based on the application of guidelines of materiality. Further, Para C requires intimation of any major development that is likely to affect the business and Regulation 30 also provides a residuary provision of intimation of any other information or event that does not fall either under Para A or Part B of Part A of the Listing Regulations, however, is material.  The guidelines of materiality for the purpose of testing the events/ information under Para B of Part A of Schedule III are provided in sub-regulation (4) of Reg 30 and are supposed to be documented in the policy for determination of materiality (“Materiality Policy”) of the listed entity. The Materiality Policy of a listed entity plays a prominent role in determining the disclosure practices of a listed entity.

SEBI vide an amendment notification dated 14th June 2023 has notified (“Amendment Regulations”) several changes to the Listing Regulations which were earlier proposed in a Consultation Paper with respect to the disclosure of material events. The same has now been incorporated under the Listing Regulations itself. A few of these include :

1. Quantifying the meaning of “material”, thereby limiting discretion with the listed entities,
2. Requiring amendments in Materiality Policy;
3. Reducing timelines for disclosures;  
4. Mandatory verification of market rumours by top 100 (250 from FY 24-25) listed entities;
5. Broadening and shuffling of the events/ information listed under Schedule III etc.

The Amendment Regulations are applicable from the 30th day of the  publication of the notification, i.e., on and from 14th July, 2023. Further, the amendments are applicable only to the equity-listed entities, since debt-listed entities including High-value Debt Listed Entities are outside the scope of Regulation 30. We have listed some of the major amendments in this write-up.