Relief Measures for Corporates – By SEBI

Relief Measures for Corporates – By SEBI

Executive Summary

• Taking into consideration the prevailing situation, numerous relaxations have been granted by the Securities and Exchange Board of India (SEBI) in the past few months.
• The timeline for submission of financial results under SEBI (LODR) Regulations, 2015, for the quarter/half year/ financial year ended on 31st March, 2020, were extended till 31st July, 2020 and for the quarter/half year ended June 30, 2020, the timeline has been extended to 15th September, 2020.
• SEBI has dispensed with the requirements of dispatch of hard copies of annual report to shareholders, for all listed entities who conduct their AGM’s until 31st December, 2020.
• The meetings of the Board and Audit Committees of the listed entities are exempted the stipulated time gap between two meetings, held or proposed to be held between the period 1st December, 2019 and till 31 July, 2020.
• SEBI also permitted listed Issuers who have issued NCDs/NCRPS/CPs, on or after 1st July, 2020 and intend/propose to list such issued NCDs/NCRPS/CPs, on or before 31st July, 2020, to use available financials as on 31st December, 2019.
• SEBI has further extended the validity of relaxation from certain regulations of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 and SEBI (Buy-Back of Securities) Regulations, 2018 pertaining to open offers and buy-back tender offers opening upto 31st December, 2020.
• Delay in intimating stock exchanges, beyond the stipulated time period of 2 days from receipt of information, regarding loss of share certificates and issue of duplicate certificates would not attract specified penal provisions for intimations that were made between March 1, 2020 and May 31, 2020.
• Further relaxation on validity of timeline for compliances as to Right Issues under SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, pertaining to Rights Issue opening upto December 31, 2020.

Introduction:

The COVID 19 virus has hit populations around the world and has resulted in many restrictions, including free movement of people, thereby hampering businesses and day to day functioning of companies. Developments arising due to the spread of the virus require the need for temporary relaxations in compliance requirements for listed entities.

Taking into consideration the prevailing situation, the Securities and Exchange Board of India (SEBI) has granted numerous relaxations to listed entities (having listed equity shares or convertibles) from compliance with certain provisions of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR), Board and Committee Meetings, SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, SEBI (Depositories and Participants) Regulations, 2018 etc.

Key Measures by SEBI amidst COVID-19:

• Relaxations under SEBI (Listing and Disclosure Requirements) Regulations, 2015

SEBI has introduced the following relaxations to relevant provisions under the Listing Regulations:

• SEBI has dispensed with the requirements of dispatch of hard copies of annual report to shareholders, for all listed entities who conduct their AGM’s until 31st December, 2020.
• SEBI had earlier exempted the requirement for listed entities to publish advertisements in newspapers, regarding information such as notice of board meetings and financial results, for all events scheduled until 15 May 2020. This exemption has been extended for all events scheduled until 30 June 2020.
• The timeline for submission of financial results under regulations 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, for the quarter/half year/ financial year ended on 31st March, 2020, was extended till 31st July, 2020 and for the quarter/half year ended June 30, 2020, the timeline has been extended to 15th September, 2020.
• Relaxation from Publication of Quarterly Financial Results for Certain Listed Entities that are in or have subsidiaries in Banking or Insurance sector may submit consolidated financial results for the quarter ending 30th June, 2020 voluntarily.
• Minimum prior intimation to stock exchanges under Regulation 29, LODR of a minimum of 5 days for a board meeting where financial results are to be considered, has now been reduced to 2 days (whether or not working days) for board meetings that would be held until July 31, 2020;
• Delay by listed companies in informing stock exchanges, beyond the stipulated time period of 2 days from receipt of information, regarding loss of share certificates and issue of duplicate certificates would now not attract specified penal provisions for intimations that were made between March 1, 2020 and May 31, 2020;
• Digital signature certifications may be used for authentication of any filing and, or submissions made to the stock exchanges under the LODR till 31st December, 2020(which was earlier 30th June, 2020);
• Entities consisting of listed non-convertible debentures and/or non-convertible redeemable preference shares shall be exempted from requirement of publishing advertisements in newspapers relating to its half yearly and annual financial results under Regulation 52(8), LODR till 30th June, 2020 (earlier it was till 15th May, 2020).

• Relaxation for holding the Board and Committee Meetings:

• Vide circular dated 19th March, 2020, the meetings of the Board and Audit Committees of the listed entities were exempted from observing the maximum stipulated time gap between two meetings for the meetings held or proposed to be held between the period 1st December, 2019 and 30th June, 2020. However, this exemption was extended, vide circular dated 26th June, 2020 till 31 July, 2020.

• Annual General Meetings by top 100 listed companies:

• The top 100 listed companies are required to hold annual general meetings (AGM) within five months from the date of closing of the financial year. For the financial year ended March 31, 2020, the due date for their AGMs would, accordingly, have been August 31, 2020. The Circular extends this deadline till September 30, 2020.

• Relaxations from compliance with certain provisions of SEBI (SAST), 2011:

• Securities Exchange Board of India vide circular dated 27th March 2020, had relaxed the due date of filing disclosures under Regulations 30(1), 30(2) and 31 (4) of the SAST Regulations which require shareholders to compile, collate and disseminate information of their consolidated shareholding to the company and the stock exchanges within seven working days from the end of the financial year, 31st March, 2020 from April 15, 2020 to 1st June, 2020.
• Vide circular dated 27th July, 2020, SEBI further extended the validity of relaxation from strict enforcement of certain regulations of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 and SEBI (Buy-Back of Securities) Regulations, 2018 pertaining to open offers and buy-back tender offers opening upto 31st December, 2020 (earlier it was 31st July, 2020).

• Relaxations under SEBI (Depositories and Participants) Regulations, 2018:

• Vide a Circular dated 29th July, 2020, SEBI has granted further relaxations in the timelines of some compliance requirements relating to DPs, RTAs, issuers, KRAs, and stock brokers. The Circular prescribes that the time period between 23rd March, 2020 till 30th September, 2020 (earlier it was till 17th May, 2020), would now be excluded while computing timelines for the following activities:

-Processing of the dematerialization request form; and

-Uploading the Know Your Client (KYC) application form and other relevant and supporting documents on the system of the KRAs

• Further, a period of 15 days after 30th September, 2020 (earlier it was till 17th May, 2020), has also been granted to SEBI intermediaries so as to clear their backlog.

• Further, a period of 15 days after 30th September, 2020 (earlier it was till 17th May, 2020), has also been granted to SEBI intermediaries so as to clear their backlog.

• Relaxation in Regulation 24(i)(f), SEBI Buy-Back Regulations:

• Regulation 24(i)(f) of SEBI (Buy-back of Securities) Regulations, 2018, prescribes for a restriction that a company would not raise further capital for a total period of 1 year from the expiry of the buyback period, except while in discharge of their subsisting obligations. Vide a Circular dated April 23, 2020; SEBI reduced the said period to 6 months, so as to bring it in line with Section 68(8), Companies Act, 2013. The said relaxation is applicable till 31st December, 2020.
• Vide circular dated 27th July, 2020, SEBI further extended the validity of relaxation from strict enforcement of certain regulations of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 and SEBI (Buy-Back of Securities) Regulations, 2018 pertaining to open offers and buy-back tender offers opening upto 31st December, 2020 (earlier it was 31st July, 2020).

• Relaxations with respect to a Rights Issue:

• SEBI, vide its Circular dated April 21, 2020, introduced temporary relaxations for companies undertaking a Rights issue. Relaxations granted are in respect of:

-A Minimum subscriptions;

-A Minimum threshold for filing the draft letter of offer with SEBI; and

-An eligibility conditions for companies undertaking a fast track rights issue.

• These relaxations would be applicable for rights issue that may open on or before March 31, 2021. In terms of the above noted Circular, companies undertaking a Rights issue, the criteria for the minimum subscription have now been reduced to 75% from the earlier existing requirement of 90%. Furthermore, the companies would not be required to file a draft letter of offer with SEBI (as is/was required), if the issue size for a Rights issue is up to INR 25 crore, in contrast to the existing minimum threshold of INR 10 crore.
• Vide circular dated 24th July, 2020, SEBI granted further relaxation on validity of timeline for compliances as to Right Issues under SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, pertaining to Rights Issue opening upto December 31, 2020 (earlier it was 31st July, 2020).

• Relaxations under SEBI (Issue and Listing of Debt Securities) Regulations, 2008, SEBI (Non-Convertible Redeemable Preference Shares) Regulations, 2013 and SEBI (Issue and Listing of Municipal Debt Securities) Regulations, 2015:

• Vide circular dated 24th June, 2020, SEBI has further decided to grant relaxation to all the investors who have listed or are willing to propose their list of Non-Convertible Debentures (NCDs), Non-Convertible Redeemable Preference Shares (NCRPS), Commercial Papers (CPs) till 31st July, 2020 (earlier it was June 30, 2020) for the purpose of disclosure of financial results.
• Vide circular dated 15th July, 2020, it has also permitted listed Issuers who have issued NCDs/NCRPS/CPs, on or after 1st July, 2020 and intend/propose to list such issued NCDs/NCRPS/CPs, on or before 31st July, 2020, to use available financials as on 31st December,2019.
• Vide circular dated 7th July, 2020, SEBI granted further extension in the timelines for Investor grievances report, Financial results and Accounts maintained by Issuer under SEBI (Issue and Listing of Municipal Debit Securities) Regulations, 2015, till 31st July, 2020.

• Relaxations under SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018:

• The Securities and Exchange Board of India (SEBI) has decided to provide similar relaxations in the eligibility conditions related to Fast Track Further Public Offer (FPO) as contained in the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018. Vide the notification, sub-regulations (1), (2), (3), (4) and (5) and (9) of Regulation 123 shall not apply if the issuer satisfies the conditions mentioned under Regulation 155 of ICDR Regulations for making a further public offer through the fast track route. These temporary relaxations are applicable for FPOs that open on or before March 31, 2021.

Conclusion:

The relaxations granted by SEBI will continue to provide much-needed breather to the listed entities and act as a limited cushion to the impact caused by COVID-19. As COVID-19 continues to spread, listed entities should also be watchful of their compliance requirements under LODR and take appropriate steps to fulfill such obligations in a timely manner.

Regards,

Legal Team

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