Regulatory updates

Recently, the Securities and Exchange Board of India (SEBI), vide a notification dated 14 November 2022 issued various amendments to the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirement) Regulations, 2015 (LODR Regulations¹).

The amendments mainly pertain to the following areas:

• Appointment, re-appointment and removal of Independent Directors
• Appointment of monitoring agency in case of preferential issue and Qualified Institutions Placement
• Amendments relating to the financial reporting requirements of issuers of Non-Convertible Securities (NCS)
• Amendments relating to schemes of arrangement undertaken by issuers of NCS
• Unclaimed NCS and accrued benefits

These amendments are applicable from the date of publication in the Official Gazette, i.e., 14 November 2022. Some of the key changes introduced in this regard are discussed below:

a.   Appointment, re-appointment and removal of Independent Directors

Regulation 25(2A) of the Listing Regulations specifies that the appointment, re-appointment or removal of an Independent Director (ID) of a listed entity would be subject to the approval of shareholders by way of a Special Resolution (SR).

With a view to promote the participation of public shareholders² in the corporate governance framework of a listed company, SEBI, in its Board Meeting dated 30 September 2022 had approved an alternate threshold for the appointment and/or removal of IDs. The revised provisions have been subsequently incorporated in the LODR Amendment Regulations.

• Appointment of IDs: Where an SR for the appointment of ID fails to get the requisite majority of votes, in such cases, an alternate threshold would now need to be tested. In this regard, the appointment would be deemed to have been made if the following two conditions are satisfied:
  1. Ordinary majority³ has been achieved based on the votes cast by all shareholders (i.e., promoters as well as public shareholders), and
  2. Ordinary majority has been achieved based on the votes cast by public shareholders.
• Removal of IDs: Where an ID has been appointed through an SR, then he/she can also be removed only by passing an SR. However, if the appointment has been made using the alternate threshold criteria specified above, then removal would also need to be approved in the similar manner. These amendments are applicable to all the entities that have listed their specified securities⁴ as well as High Value Debt Listed Entities (HVDLEs)⁵.

b.   Appointment of monitoring agency in case of preferential issue and Qualified Institutions Placement (QIP) Regulation 32 of the LODR Regulations requires listed entities to submit a quarterly statement of deviation(s) or variation(s) to the stock exchange(s), thereby indicating deviation, if any, in utilization of the proceeds of the issue with the objectives of the issue⁶.

Before amendment, Regulation 32(6) of the LODR Regulations required listed entities to submit to the stock exchange(s) any comments or report received from a monitoring agency (where such an agency had been appointed) relating to utilisation of proceeds of a public issue or a rights issue. Such comments or report had to be submitted within 45 days from the end of each quarter.

With the issuance of the LODR Amendment Regulations, an issuer of NCS may appoint a monitoring agency for utilisation of proceeds of:

• Public issue
• Rights issue
• Preferential issue and
• QIP

(Emphasis added to highlight the change)

c.   Amendments relating to the financial reporting requirements for issuers of Non-Convertible Securities (NCS) Chapter V of the LODR Regulations specifies the obligations of an issuer of NCS, including the financial reporting requirements of issuers of NCS. Some key amendments and clarifications that have been introduced by the LODR Amendment Regulations, with respect to the financial reporting requirements of such entities include:

• Timeline for submission of financial results for the last quarter [Regulation 52(1)] The timelines for submission of un-audited or audited quarterly and year to date standalone financial results (standalone financial results) to the stock exchange for the last quarter has been updated to be within 60 days from the end of the quarter. (Before amendment, the LODR Regulations required the standalone financial results to be submitted to the stock exchange within 45 days from the end of all quarters, except for the last quarter⁷.)
• Submission of annual financial results by companies subject to CAG audit [Proviso to Regulation 52(2)(d)] SEBI has prescribed a revised framework for issuers of NCS who are subject to audit by the Comptroller and Auditor General of India (CAG). Such entities would need to adopt the following two-step process for the disclosure of annual financial results: Step 1: Such entities would need to submit the unaudited financial results along with the limited review report issued by the CAG, an auditor appointed by the CAG, or a practising Chartered Accountant, to the stock exchange(s), within 60 days from the end of the financial year. Step 2: Post this, the audited financial results are required to be submitted to the CAG within nine months from the end of the financial year⁸.
• Filing of statement of utilisation of proceeds and statement of material deviation(s) along with the financial results [Regulation 52(7) and 52(7A)] The LODR Amendment Regulations now requires an issuer of NCS to submit along with the quarterly financial results the following statements in a prescribed format to the stock exchange:
  1. A statement indicating the utilisation of issue proceeds of NCS (before amendment this statement was required to be submitted within 45 days from the end of every quarter)
  2. A statement disclosing material deviations in the use of proceeds obtained from the issue of NCS from the objects of the issue (before amendment, the timelines for submission of this statement⁹ and time period upto which¹⁰ this statement was required to be submitted was not clearly specified)
  These statements would be submitted till such proceeds have been fully utilised or the purpose for which the proceeds were raised has been achieved.

• Disclosure of ratios [Regulation 52(4)] Regulation 52(4) of the LODR Regulations requires issuers of NCS to disclose certain ratios/financial information in the quarterly and annual financial results¹¹. The LODR Amendment Regulations has omitted the requirement to disclose sector specific equivalent ratios. Further, it has been clarified that in case the ratios or information in Regulation 52(4) of the LODR Regulations is not applicable to a listed entity, it should disclose other ratio/equivalent financial information, as may be required under applicable law.
• Publication of consolidated financial results in newspaper by issuers of NCS [Regulation 52(8)] Regulation 52(8) of the LODR Regulations requires an issuer of NCS to publish the financial results and other specified details, within two working days of the conclusion of the meeting of the Board of Directors, in at least one English national daily newspaper, circulating in the whole or substantially the whole country. The LODR Amendment Regulations have now clarified that where entities have submitted both standalone as well as consolidated financial results to the stock exchange, it should publish only the consolidated financial results in the newspaper. (Before amendment, there was no clarification on whether the standalone results, consolidated results, or both standalone as well as consolidated results were required to be published in the newspaper.)

d.   Amendments relating to schemes of arrangement undertaken by issuers of NCS (Regulation 59A and 94A): Sections 230 to 234¹² of the Companies Act, 2013 specify the provisions with regard to the schemes of arrangements of the Insolvency and Bankruptcy Code (IBC) in certain circumstances. entered into by the companies. Regulations 37 and 94 of the LODR Regulations specify provisions regarding such schemes of arrangement, entered into by the entities which have listed their specified securities. However, no such provisions existed for issuers of NCS. In this regard, SEBI has introduced a framework pertaining to schemes of arrangements for issuers of NCS (Regulations 59A and 94A of the LODR Regulations). Some of the key provisions introduced are discussed below:

• Applicability: Regulations 59A and 94A of the LODR Regulations would be applicable to all the schemes of arrangement undertaken by the issuers of NCS. However, it would not apply to a restructuring proposal approved as part of a resolution plan by the National Company Law Tribunal (NCLT) under Section 31¹³ of the Insolvency and Bankruptcy Code (IBC) in certain circumstances.
• Obtaining NOC from the stock exchange: The LODR Amendment Regulations specify that every issuer of NCS, before filing the scheme of arrangement under Sections 230 to 234 or under Section 66¹⁴ of the Companies Act, 2013 should file the draft scheme of arrangement with the stock exchange(s), along with non-refundable fees¹⁵ for obtaining the No-Objection Letter (NOL). Such NOL would be valid for a period of six months from the date of its issuance.
• Sanctioning of scheme by NCLT: The issuer of NCS would place the NOL before the NCLT at the time of seeking approval for the scheme of arrangement. Upon sanction of the scheme by the NCLT, the issuer of NCS should submit such documents to the stock exchange as may be specified by SEBI/stock exchange from time to time.

e.   Unclaimed NCS and accrued benefits Regulation 61A of the LODR Regulations state that an issuer of NCS should not forfeit unclaimed interest/dividend/redemption amount and such amounts should be transferred to an escrow account opened in any scheduled bank and to the Investor Education and Protection Fund within a prescribed period of time.

The LODR Amendment Regulations have now inserted a new provision that in case of listed entities which do not fall within the definition of “company” under the Companies Act, 2013 and the Rules made thereunder, then any amount in the escrow account that remains unclaimed for seven years should be transferred to the Investor Protection and Education Fund.

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To access the text of the LODR Amendment Regulations, please click here

To access the text of the circular, please click here

To access the text of the circular dated 9 December 2022, please click here

1. The amendments have been issued vide the SEBI LODR (Sixth Amendment) Regulations, 2022 (LODR Amendment Regulations).
2. Public shareholders refer to the shareholders other than the promoter and promoter group.
3. Ordinary majority is said to be achieved when the votes cast in favor of the resolution exceed the votes cast against the resolution.
4. Specified securities refer to the equity shares and convertible securities.
5. HVDLE refers to an entity which has listed its non-convertible debt securities and has an outstanding value of listed non-convertible debt securities of INR500 crore and above.
6. The objectives of the issue are mentioned in the offer document or explanatory statement to the notice for the general meeting
7. Requirements of Regulation 52(1) of the LODR Regulations
8. Before amendment, the two-step process for submission of audited financial results followed by issuers of NCS who were required to get their accounts audited by CAG was:
   1. The first level audit must be carried out by the auditor appointed by the CAG, and the audited financial results need to be submitted to the stock exchange(s) within 60 days from the end of the financial year, and
   2. After the completion of audit by the CAG, the financial results are required to be submitted to the stock exchange(s) within nine months from the end of the financial year.
9. Timeline refers to the time period from the end of the quarter within which these statements need to submitted. Post amendment, it has been clarified that this needs to be submitted along with the quarterly financial results.
10. Time period upto which refers to till when will such statements be submitted to the stock exchanges. Post amendment, it has been clarified that this needs to be submitted till such proceeds have been fully utilised or the purpose for which the proceeds were raised has been achieved.
11. Before amendment, the ratios prescribed by Regulation 52(4) included Debt-equity ratio, Debt service coverage ratio, Interest service coverage ratio, Outstanding redeemable preference shares (quantity and value), Capital redemption reserve/debenture redemption reserve, Net worth, Net profit after tax, Earnings per share, Current ratio, Long term debt to working capital, Bad debts to account receivable ratio, Current liability ratio, Total debts to total assets, Debtors’ turnover, Inventory turnover, Operating margin per cent, Net profit margin per cent, and Sector specific equivalent ratios, as applicable.
12. 1. Section 230: Power to compromise or make arrangements with creditors and members
    2. Section 231: Power of Tribunal to enforce compromise or arrangement
    3. Section 232: Merger and amalgamation of companies
    4. Section 233: Merger or amalgamation of certain companies
    5. Section 234: Merger or amalgamation of company with foreign company
13. Section 31: Approval of resolution plan
14. Section 66: Reduction of share capital
15. The fees to be paid to the stock exchanges has been prescribed in Schedule XI of the LODR Regulations.
16. The registered valuer should be independent
17. The merchant banker should be independent
18. The accounting treatment should be in compliance with all the Accounting Standards specified by the Central Government under Section 133 of the Companies Act, 2013 read with the rules framed thereunder or the Accounting Standards issued by ICAI, as applicable, and other generally accepted accounting principles.

Regulation 30 of the LODR Regulations requires a listed entity to provide disclosures of events or information which, in the opinion of the Board of Directors of the listed entity, are material. While providing such disclosures, listed entities should also consider providing disclosures in accordance with the provisions of Part A of Schedule III¹⁹ of the LODR Regulations (Schedule III-A).

However, SEBI received various representations from the stakeholders regarding inadequate and delayed information being reported by the listed entities, while providing such disclosures. In this regard, on 12 November 2022, SEBI issued a consultation paper, ‘Consultation Paper on Review of disclosure requirements for material events or information’, with an aim to streamline the disclosure requirements for material events or information by a listed entity. Some of the key recommendations provided by the consultation paper include:

• Materiality threshold for disclosure: The existing regulation, rationale for change and proposed regulation have been discussed hereunder:

Materiality policy: The existing regulation, rationale for change and proposed regulation have been discussed hereunder:

• Timeline for disclosure: The existing regulation, rationale for change and proposed regulation have been discussed hereunder:

• Verification of market rumours: The existing regulation, rationale for change and proposed regulation have been discussed hereunder:

• Disclosure of cyber security incidents or breaches and loss of data/documents: It has been provided that the listed entities should provide disclosures in relation to ‘cyber security incident’²² or ‘cyber security breaches’ or loss of data/documents in the quarterly corporate governance report in the format as prescribed by SEBI
• Addition and modification of events: The consultation paper has proposed certain additions and modifications to events specified under Para A and Para B of Schedule III-A²³.

The consultation paper is open for comments up to 12 December 2022²⁴

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To access the text of the consultation paper, please click here

To access the text of the circular extending the timeline for issuing the comment period, please click here

19. Schedule III Part A: Disclosures of events or information: Specified securities. Para A of Schedule III Part A are deemed to be material events and listed entities should make disclosures of such events. Para B of Schedule III Part A and other events, which may be disclosed by listed entities based on application of the guidelines for materiality. The guidelines for determining materiality of an event have been prescribed in Regulation 30(4) of the LODR Regulations.
20. Annexure II to the consultation paper has provided the proposed timelines for disclosure of events/information prescribed in Schedule III-A of the LODR Regulations.
21. The top 250 listed entities should be determined on the basis of market capitalisation, as at the end of the immediate previous financial year.
22. As defined in Information Technology (The Indian Computer Emergency Response Team and Manner of Performing Function and Duties) Rules, 2013
23. Some of the key additions to para A of Schedule III-A of the LODR Regulations include:
    1. Details of the regulatory actions taken against listed entity, its directors, KMP, senior management, promoter, or subsidiary;
    2. Delay or default in payment of fines, penalties, dues, etc. to any regulatory, statutory, enforcement or judicial authority;
    3. Details regarding voluntary revision of financial statements or the report of the Board of Directors of the listed entity;
    4. The letter of resignation along with detailed reasons in case of resignation of a KMP, a senior management, or a director other than independent director, to the stock exchange(s) by the listed entities within seven days from the date of resignation etc.
24. As per the consultation paper, the last date for comments was 27 November 2022. This has been extended upto 12 December 2022 vide a circular issued by SEBI on 1 December 2022.

On 16 November 2022, SEBI issued a consultation paper on ‘Review of SEBI (Buyback of Securities) Regulations, 2018’ (the consultation paper). The consultation paper has proposed certain amendments to regulations pertaining to buyback of specified securities, buyback through tender offer as well as from open market through stock exchange mechanism, etc²⁵.

Some of the key changes proposed by the consultation paper are as follows:

• Open market buy backs through stock exchanges
  1. In view of certain drawbacks associated with buyback under the stock exchange mechanism, SEBI has proposed a glide path for reduction in the maximum limit and time period for completion of buyback offer under the stock exchange mechanism. The glide path is given hereunder:

• A minimum of 75 per cent of the amount earmarked for buy-back (as specified in the resolution of the Board of Directors or the special resolution, as the case may be) should be utilised for buying back shares or other specified securities (currently, this limit is 50 per cent). Additionally, 40 per cent of the amount earmarked for buy back should be utilized within half of the duration specified as per the glide path specified above
• Buy-back through stock exchanges should only be undertaken in respect of frequently traded shares
• Restrictions on volume and price and quantum of buyback has also been proposed.
• Companies should create an escrow account towards security for performance of its obligations within two working days of the public announcement (currently, no timeline for creation of an escrow account has been prescribed) .

• Buy-backs through tender offers: Some of the recommendations proposed with respect to buy-backs that are undertaken through the tender offer process are as follows:
  1. It has been proposed that the Board of Directors should be allowed the flexibility to revise the buy-back price prior to the opening of the buy-back offer (currently, the maximum buy-back price is not permitted to be revised once it has been approved by the Board of Directors or shareholders) .
  2. In order to simplify the process and reduce the timelines for buy-back, it has been proposed that merchant bankers should be allowed to directly disseminate the Letter of Offer (LOF) to the shareholders, thereby removing the current requirement for SEBI to review the Draft LOF (DLOF) prior to the LOF being released by the merchant bankers.
  3. Companies should create an escrow account towards security for performance of its obligations within two working days of the public announcement (currently, no timeline for creation of an escrow account has been prescribed).

• Framework for effecting open market buy-backs through the book building process While the framework for effecting open market buy-backs through the book-building process has been provided under the SEBI (Buy-back of Securities) Regulations, 2018, it has been rarely used. Accordingly, the SEBI through the consultation paper has proposed a revised mechanism for effecting open market buy-backs through the book building process.
• Other matters: The SEBI has also prescribed total limits to buy-backs, cooling off periods between buy-backs and post buy-back compliances.

The comment period on the consultation paper closed on 1 December 2022.

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To access the text of the consultation paper, please click here

25. These recommendations are basis the sub-group on the SEBI (Buy-back of Securities Regulations), 2018 issued in October 2022.

Recently, SEBI, vide a notification dated 21 November 2022 issued amendments to the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 (ICDR Regulations)²⁶. Some of the key amendments issued include:

Pre-filing of draft offer document

In May 2022, SEBI had issued a consultation paper²⁷ proposing that issuers of securities be permitted to pre-file offer documents when contemplating an Initial Public Offer (IPO).

The ICDR Amendment Regulations have incorporated the proposals by inserting a new chapter, ‘Chapter IIA, Initial Public Offer on Main Board through pre-filing of draft offer document’ in the ICDR Regulations. Chapter IIA gives details of the steps to be followed while prefiling an offer document. The key guidelines prescribed by the ICDR Amendment Regulations are given below:

Step 1: Pre-filing of draft offer document with SEBI and the stock exchanges Prior to an IPO, following documents will be filed with SEBI and the stock exchanges:

* All public announcements will be undertaken in one English newspaper, one Hindi newspaper and one regional language newspaper at the place where the registered office of the issuer is situated. All three newspapers should have a wide circulation.

It is to be noted that pre-filed DOD will not be made available to the public.

Step 2: Changes and observations by SEBI SEBI will recommend changes or issue observations on the pre-filed DOD within a prescribed time period.

Step 3: Updated Draft Red Herring Prospectus I (UDRHP I)

A. Submission of UDRHP I to SEBI

Changes suggested by SEBI will be processed by the issuer and LM on the pre-filed DOD, and a UDRHP I will be submitted to SEBI²⁸ along with:

1. a statement certifying that all changes, suggestions and observations made by SEBI have been incorporated in the offer document
2. a due diligence certificate issued by the LM in a prescribed format at the time of filing of the offer document.

B. Making UDRHP I public The UDRHP I will be made public for comments for a period of at least 21 days from the date of filing. It will be hosted on the websites of SEBI, the stock exchange(s) and of the LM.

Step 4: UDRHP II

After expiry of the public comment period, the issuer and the LM will submit the following documents to SEBI:

• Comments received by them from the public on the UDRHP I and consequential changes required to be processed to the same
• UDRHP-II – (i.e., document issued after changes have been processed upon UDRHP I).

Step 5: Filing offer document

A. Before filing offer document Before filing the offer document with the Registrar of Companies (ROC), the LM will submit the following documents to SEBI:

1. a statement certifying that all changes, suggestions and observations made by SEBI have been incorporated in the offer document;
2. a due diligence certificate issued by the LM, in prescribed format, at the time of filing of the offer document;
3. a copy of the resolution passed by the Board of Directors of the issuer for allotting specified securities to promoter(s) towards amount received against promoters’ contribution, before opening of the issue;
4. a certificate from a statutory auditor, before opening of the issue, certifying that promoters’ contribution has been received in accordance with the ICDR Regulations, along with stipulated details of the promoters and amounts received from them;
5. a due diligence certificate issued by the LM, in a prescribed format, in the event the issuer has made a disclosure of any material development by issuing a public notice pursuant to para 4 of Schedule IX of the ICDR Regulations²⁹.

B. Filing offer document The offer document will be filed with ROC, and post that with SEBI and the stock exchanges. It will also be hosted on the websites. The subsequent procedures with respect to price band advertisement/issue opening would remain same as prescribed in Chapter II.

Interaction with the Qualified Institutional Buyers (QIBs): The ICDR Amendment Regulations specify that the interaction with QIBs would be permitted, provided such interaction is only limited to the extent of the information contained in the pre-filed draft offer document. Further, it has been provided that the issuer must prepare a list of the QIBs who have participated in such interaction and obtain a confirmation of interaction from the QIBs, to be submitted to SEBI.

Appointment of monitoring agency

Requirement of monitoring agency: Chapters V and VI of the ICDR Regulations lay down the principles governing preferential issue and Qualified Institutions Placement (QIP) respectively. The ICDR Amendment Regulations have introduced the requirement to have the use of the proceeds of the preferential issues and QIPs monitored by a credit rating agency registered with SEBI (acting as a monitoring agency) in certain cases. Following principles have been specified in this regard:

1. Applicability: Where the issue size of the preferential issue or QIP exceeds INR100 crore³⁰, the issuer must appoint a monitoring agency to monitor the use of proceeds of the issue. However, this requirement would not apply to an issue of specified securities made by a bank or public financial institution or an insurance company.
2. Submission of report by the monitoring agency: The monitoring agency would submit its report to the issuer in the specified format, on a quarterly basis, till 100 per cent of the proceeds of the issue have been utilised. Post this, the Board of Directors and management of the issuer must provide their comments on the findings of the monitoring agency.
3. Submission of report to the stock exchange(s) and upload on website: The issuer should, within 45 days from the end of each quarter, upload the report of the monitoring agency on its website and also submit it to the stock exchange(s) on which its equity shares are listed.
4. Preferential issue of shares of companies having stressed assets: The ICDR Amendment Regulations have specified that in case of preferential issue of shares of companies having stressed assets, the issuer should make arrangements for monitoring the use of proceeds of the issue by a credit rating agency registered with SEBI (earlier public financial institution or by a scheduled commercial bank, which is not a related party to the issuer) . Also, the monitoring agency should submit its report to the issuer on a quarterly basis till 100 per cent (earlier until at least 95 per cent) of the proceeds of the issue have been utilised.

Other amendments Other amendments introduced by the ICDR Regulations include:

• Amendments to Schedule VI of the ICDR Regulations: Part A of Schedule VI of the ICDR Regulations (Schedule VI-A) deals with disclosures required in the offer document/letter of offer. The ICDR Amendment Regulations have introduced certain additional requirements in Schedule VI-A of the ICDR Regulations, with regard to the Key Performance Indicators (KPIs) disclosed by the issuer in the offer document. These include:

• Approval by an audit committee: KPIs disclosed in the offer document must be approved by the audit committee of the issuer company
• Certification: KPIs disclosed in the offer document should be certified by the statutory auditor(s), Chartered Accountants, or firm of Chartered Accountants, holding a valid certificate issued by the Peer Review Board of the ICAI or by Cost Accountants, holding a valid certificate issued by the Peer Review Board of the Institute of Cost Accountants of India. The certificate issued in this regard must be included in the list of material documents for inspection.
• Explanation of KPIs: KPIs disclosed in the offer document should be comprehensive along with an explanation stating how they have been used by the management historically to analyse, track or monitor the operational and/or financial performance of the issuer company. Further, the issuer company should also explain the comparison of KPIs over time, based on additions or dispositions to the business, if any.
• Disclosures under ‘Basis for Issue Price’ section: The issuer company is required to make certain disclosures under ‘Basis for Issue Price’ section. Some of the key disclosures required to be made are as follows:

1. Disclosure of all the KPIs that have been disclosed by the issuer to its investors at any point of time during the three years preceding the date of filing of the DRHP or Red Herring Prospectus (RHP),
2. Confirmation by the audit committee stating that the verified and audited details for all the KPIs that have been disclosed to the earlier investors at any point of time during the three years, prior to the date of filing of the DRHP/RHP are disclosed under ‘Basis for Issue Price’ section of the offer document,
3. Comparison of the KPIs disclosed with Indian listed peer companies and/or global listed peer companies, as the case may be.

Effective date³¹: The amendments are effective from the date of publication in the Official Gazette, i.e., 21 November 2022.

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To access the text of the ICDR Amendment Regulations, please click here

26. The amendments have been issued by the SEBI (Issue of Capital and Disclosure Requirements) (Fourth Amendment) Regulations, 2022 (ICDR Amendment Regulations).
27. https://www.sebi.gov.in/reports-and-statistics/reports/may-2022/consultation-paper-on-pre-filing-of-offer-document-in-case-of-initial-public-offerings_58875.html
28. There has to be a minimum prescribed time gap between the date of intimation to SEBI about the completion of interaction with the qualified institutional buyers and the date of filing the UDRHP I.
29. Schedule IX of the ICDR Regulations deals with public communications and publicity materials.
30. In case of a QIP issue, the threshold of INR100 crore would exclude the size of offer for sale by selling shareholders.
31. The amendments to Schedule VI of the ICDR Regulations would be applicable for all issues where RHP is filed with the Registrars of Companies on or after the date of publication of these amendments in the Official Gazette i.e., 21 November 2022.

Regulation 53 of the SEBI (Mutual Funds) Regulations, 1996 (Mutual Fund Regulations) explains the procedure for dispatch of dividend warrants and redemption/repurchase proceeds to the unitholders.

On 15 November 2022, SEBI issued the SEBI (Mutual Funds) (Third Amendment) Regulations, 2022 (MF Amendment Regulations) to introduce new provisions on the transfer of dividend to unitholders and redemption of proceeds, thereby replacing the erstwhile Regulation 53. Also, on 25 November 2022, SEBI issued a circular stipulating the timelines for transfer of such dividend and redemption of proceeds to the unitholders.

The key guidelines issued in the revised Regulations are discussed below:

• Payment of dividend: The record date for payment of dividend should be two working days from the issue of public notice and dividend would be transferred to the unitholders within seven working days from the record date (before amendment, dividend was required to be dispatched to unitholders within 15 days from record date) .
• Redemption or repurchase: The proceeds should be transferred to the unitholders within three working days from the date of redemption or repurchase³² (before amendment, the redemption or repurchase was required to be dispatched within 10 working days from the date of redemption or repurchase).
• Delay in transfer of dividend, proceeds on redemption, or repurchase: The interest would be payable to unitholders at the rate of 15 per cent per annum. The details of such interest payments must be sent to SEBI as per the specified format and investors should be informed about the rate of interest and the amount of interest.

Effective date: The amendment would come into effect from 15 January 2023³³.

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To access the text of the MF Amendment Regulations, please click here

To access the text of the circular dated 25 November 2022,please click here

32. In case of mutual fund schemes wherein 80 per cent of total assets are invested in permissible overseas investments, the timeline for transfer is within five working days from the date of redemption or repurchase.
33. On the sixtieth day from the date of publication of the MF Amendment Regulations in the Official Gazette.

Regulation 38 of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 (ICDR Regulations) specifies that an issuer, before the opening of subscription list, must deposit with the stock exchange, one per cent of the issue size available for subscription to the public. This amount of one per cent would be released to the issuer after obtaining the No Objection Certificate (NOC) from SEBI. The application for NOC has to be filed by the Post Issue Lead Merchant Banker (PILMB) on the letterhead of the listed entity in a prescribed format. This application will be made after the expiry of two months from the date of listing on the stock exchange, and after all issue related complaints have been resolved.

In this regard, SEBI issued a master circular dated 7 November 2022 on issuance of NOC for release of one per cent of the issue amount and prescribed the relevant instructions and procedure to obtain the NOC from SEBI. It has also provided the formats for making applications under the various processes.

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To access the text of the master circular, please click here