RIL signs the new Listing Agreement with BSE

BSE announced the process of signing of the revised Listing Agreement as mandated under the newly introduced Listing Regulations notified by SEBI, has been initiated at the BSE, with Reliance Industries Ltd. having signed the new Listing Agreement today.

It is a matter of pride for both, that one of the top companies of the Indian corporate sector has become the first company to sign the new Listing Agreement with Asia’s oldest and the world’s fastest Stock Exchange - BSE. SEBI had notified the new Listing Regulations from September 2, 2015 and the same are effective from December 1, 2015. As part of the Listing Regulations, SEBI has mandated all existing listed entities to execute a fresh and simplified Listing Agreement with the Stock Exchange where they are listed, within six months of the notification date of September 2, 2015. BSE expects that all listed companies will strive to ensure that the new Listing Agreement is signed well within the timelines specified by SEBI.

SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015

SEBI on September 2, 2015 has notified SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, which shall come into force from December 1, 2015. All listed entities will be required to execute a new agreement with Stock Exchanges within six months from September 2, 2015.

2) While the Listing Agreement will continue to govern the relationship between a company and the Stock Exchanges, the new Regulations get greater statutory force and non-compliance with the new Regulations would result in direct violation of Securities Laws including SEBI Act and consequential penal provisions including freezing promoter holding in addition to other actions and fine.

3) Listing Regulations consolidate and streamline the provisions of the existing listing agreements for different segments of the Capital market such as equity shares (including convertibles), non-convertible debt securities, etc.

4) The Regulations are divided into two parts viz.:

(a) Substantive provisions are incorporated in the main body of the Regulations;

(b) Procedural requirements are incorporated in the form of Schedules to the Regulations (Formats of statement of holdings of securities and quarterly financial results are to be prescribed by SEBI).

5) Major changes under the new Regulations are as under:

(a) All listed entities now need to put in place a policy for preservation of documents / records by classifying them under two categories viz.:

(i) Documents / records which are to be preserved permanently; and

(ii) Documents / records which are to be preserved for not less than eight years after completion of relevant transactions.

(b) Dividends payable exceeding Rs.1500 should be sent by speed post only.

(c) Major changes in the provisions pertaining to dissemination / disclosure of material information. Information to be disclosed to Stock Exchanges is divided into two categories viz.:

(i) where the information to be disclosed without materiality test; and

(ii) where the information to be disclosed only if it passes materiality test.

Note: (i) Materiality to be determined by a Key Managerial Personnel (based on a Policy for determination of materiality approved by the board of directors of the listed entity) who is authorised by the Board for that purpose. The information disseminated / disclosures made to Stock Exchanges need to be hosted on the company’s website for minimum five years.

(ii) Circular dated September 9, 2015 issued by SEBI providing guidance to listed entities in this regard is attached as Annexure A.

(d) The company to frame an archival policy in respect of information / details hosted on its website.

(e) Material Related Party Transactions require approval of shareholders through resolution [earlier special resolution] (came into force w.e.f. September 2, 2015).

(f) Classification or reclassification of shareholding from promoters to non-promoters or vice versa to be governed by detailed criteria prescribed (came into force w.e.f. September 2, 2015).

(g) Separate regulation requiring the company to publish / host on its website various additional details viz.:

(i) Details of familiarization programmes imparted to independent directors with details as to number of programmes attended by the independent directors during the year and on a cumulative basis as also the number of hours spent by each independent director in such programmes.

(ii) Schedule of analyst and / or institutional investor meets and the presentations made by the company with simultaneous submission to Stock Exchanges.

(iii) Notice of meetings of Board of Directors where financial results would be discussed.

(iv) Quarterly / annual financial results alongwith limited review report of the auditors.

(h) Audit Reports with modified opinion are first subject to scrutiny by Stock Exchanges and further subject to scrutiny by Qualified Audit Report Review Committee nominated by SEBI.

(i) Timeline for intimation of the outcome of the Board meetings is increased to 30 minutes instead of 15 minutes after the closure of the meeting.

(j) Quarterly / annual financial results can be approved only by Board of Directors and not by a committee constituted by it.

(k) Submission of Annual Information Memorandum (Format to be prescribed by SEBI).

(l) The annual report to contain additional disclosure with respect to commodity price risk or foreign exchange risk and hedging activities under the section - Corporate Governance.

6) Chapter VI of Listing Regulations, which lists out the Obligations of listed entities having listed equity and NCDs / NCPS, clarifies that listed entity which has submitted any information to the Stock Exchanges in compliance with disclosure requirements under Chapter IV need not re-submit any such information.

7) Analysis of the Listing Regulations vis-à-vis Equity Listing Agreement and Debt Listing Agreement is attached as Annexure B and Annexure C, respectively.

8) Compliance Calendar for listed entities of equity segment, as issued by NSE, is attached as Annexure D.

9) List of items to be displayed on listed entity’s website is attached as Annexure E.

10) Suggested Action Plan for Listed Entities:

a) Frame a policy for Preservation of Documents / Records and get it approved by the Board of Directors.

b) Frame a policy for determination of materiality of events / information and get it approved by the Board of Directors; post Board of Directors’ approval, place it on the Company’s website.

c) Archival policy in respect of items / matters hosted on Company’s website to be placed on the Company’s website.

d) Amend existing Policy for determining ‘material subsidiaries’.

e) Secure approval of board of directors for executing the new listing agreement.

11) With a view to adhereing to the various requirements of the Listing Regulations, all listed entities should institutionalize a robust compliance system. All stakeholders under the Regulations and the Compliance Officer in particular are expected to adopt and follow the principles governing disclosures and obligations set out under the Listing Regulations. Company Secretaries in practice, while conducting secretarial audit, should verify whether the requirements set out in the Listing Regulations are complied with and report accordingly.

12) It is pertinent to note that as against nearly 19 periodic filings under the Equity Listing Agreement, the Listing Regulations require minimum 26 periodic filings (excluding the reconciliation of share capital audit report).