Sebi's new listing regulations comes into force tomorrow

Listed firms will face monetary penalties and suspension of trading for non-compliance with the Sebi's new listing regulations, including for timely and proper disclosure of 'price sensitive' developments, which are coming into force from tomorrow.
The new Sebi's Listing regulations would come into force from December 1.
To comply with the new norms, several companies today informed exchanges that they approved and adopted a policy on determination of materiality and have further authorised certain officials for the purpose of determining materiality of an event and for the purpose of making disclosures to the bourses under new regulation.
In a circular, Sebi said stock exchanges will impose fines for non-compliance with Listing regulations and invoke suspension of trading in case of subsequent and consecutive defaults.

In order to maintain consistency and uniformity of approach, exchanges will follow uniform fine structure for non-compliance with Listing Regulations with regard to non-submission of certain periodic reports as well as Standard Operating Procedure for suspension and revocation of trading suspension.
To ensure effective enforcement of the Listing Regulations, the depositories, on receipt of intimation from concerned exchange, will have to freeze or unfreeze, as the case may be, the entire shareholding of the promoter and promoter group in such entity.

Under the mechanism, the initial penal action would be a minimum fine of Rs 1,000-5,000 per day depending on the violation, while repeated offences would lead to actions like transfer to restricted-trade category, freezing of promoter shares and overall suspension on trading in company shares.

The exchange will have to give a 21-day (prior to the proposed date of suspension) public notice on its website proposing suspension of trading in the shares of non-compliant listed entity.
Sebi's provisions for listed entities have been aligned with those of the Companies Act, 2013.
Sebi (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations) have been divided into two parts. They are substantive provisions incorporated in the main body of regulations and procedural requirements in the form of schedules to the regulations.
In an another circular, the Securities and said Exchange Board of India (Sebi) said that listed entity will have to comply with minimum public shareholding requirements in the manner as specified by the regulator from time to time.

To achieve the norms, the listed company will have to adopt methods like issuance of shares to public through prospectus, offer for sale of shares held by promoters to public, sale of shares held by promoters through the secondary market, institutional placement programme, right issue and bonus issues.
"Any other method as may be approved by SEBI on a case to case basis. For this purpose, the listed entities may approach Sebi with appropriate details," the regulator noted.
"Sebi would endeavour to communicate its decision within 30 days from the date of receipt of the proposal or the date of receipt of additional information as sought from the company," it added.

Listed companies need to submit quarterly financial
results, preceding three months, year-to-date figures details for the current fiscal along with comparative figures for the year ago period. All figures should be in lakh.
Under the format, firms will have to disclose about net sales, net profit, expenditures, exceptional items, paid-up capital, earnings per share, revenues from different segments, among others.
Apart from these disclosures, banks and NBFCs will have to make submission about non-performing assets (NPA) and capital adequacy ratios.
All listed entities, who have listed their equity and convertibles on the stock exchanges, will have to submit the draft scheme of arrangement under the Securities Contracts (Regulation) for seeking relaxation from the strict enforcement for listing of its equity shares on a recognised stock exchange without making an initial public offer.

These are subject to certain conditions like at least 25 per cent of the post-scheme paid up share capital of the transferee entity comprise of shares allotted to the public shareholders in the transferor entity, transferee entity will not issue/ reissue any shares, not covered under the draft scheme of arrangement.
These entities will have to submit documents like amalgamation scheme, valuation report, auditor's certificate, fairness opinion by merchant banker on valuation of assets, redressal of complaints, pre and post amalgamation shareholding pattern of unlisted company among others to the exchanges.