Enhancement of disclosure and governance requirements by listed companies under LODR Regulations
SEBI Circular No. SEBI/HO/CFD/CFD-PoD-1/P/CIR/2023/123, dated July 13, 2023
SEBI has amended SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR) by way of its notification dated June 14, 2023 which shall come into force on with effect from July 14, 2023. Some of the key changes include the following:
Quantitative materiality thresholds specified: A listed entity is required to make
disclosure of event/information if the value or expected value impact exceeds 2% of the
turnover or net worth or 5% of the average profit/loss after tax. Further, these thresholds can’t be diluted through company’s internal materiality policy.
Comment on market rumours: Top 100 listed entities (w.e.f October 01, 2023), and, later on, top 250 listed entities (w.e.f April 01, 2024) are required to confirm/deny/clarify on any reported event or information in ‘mainstream media’ within 24 hours.
Disclose agreements binding listed companies, irrespective of whether the listed entity is a party to such agreements.
Timelines for disclosures: listed entity is required to intimate stock exchanges not later than: (a) 30 minutes from closure of the board meeting, in which decisions pertaining to the event/information has been taken, (b) 12 hours from the occurrence of the event/information, in case the event/information is emanating from within the listed entity, and (c) 24 hours from the occurrence of the event/information, in case the event/information is not emanating from within the listed entity.
New disclosure requirements and changes in existing disclosures: listed entities are
required to company with new disclosures such as ESG disclosures, cyber security
incidents or breaches or loss of data/documents; communication from any regulatory, statutory, enforcement or judicial authority, unless prohibited; sale, lease or disposal of an undertaking outside scheme of arrangement (including taking prior approval of shareholders); sale or disposal of whole or substantially the whole of the undertaking and sale of stake in associate company of the listed entity; new ratings; change in senior management; certain announcement/communication by director, promoter, KMP or senior management in the social media, etc.
The notification contains 4 annexures with receipt to disclose requirements and these are as follows:
Annexure I specifies the details that need to be provided while disclosing events given in Part A of Schedule III (Annexure 18 to the Master Circular).
Annexure II specifies the timeline for disclosing events given in Part A of Schedule III.
Annexure III provides guidance on when an event/information can be said to have
occurred (Annexure 19 to the Master Circular).
Annexure IV provides guidance on the criteria for determination of materiality of events/information.
