New Delhi: To strengthen corporate governance practices and disclosure requirements, Sebi has notified new rules, including that top 1,000 listed firms will have to formulate a dividend distribution policy.
The regulator has also put in place a framework in relation to applicability, constitution and role of the Risk Management Committee (RMC) and eased norms for re-classification of a promoter as a public shareholder, according to a notification dated May 5.
In addition, the regulator has asked listed firms to make available audio and video recordings of analyst and investor meets on their websites as well as stock exchanges within 24 hours or before the next trading day and also notified rules regarding Business Responsibility and Sustainability Report (BSSR). Sebi has amended Listing of Obligations and Disclosure Requirements (LODR) rules and the new rules have come into effect from May 5.
In a notification, Sebi said the requirement for formulation of dividend distribution policy by the existing top 500 listed entities has been extended to the top 1,000 listed entities on the basis of market capitalisation.
The other listed entities can disclose their dividend distribution policies on a voluntary basis on their websites and provide a web-link in their annual reports.
In addition, requirement to constitute the RMC has been extended to the top 1,000 listed entities by market capitalisation from the existing top 500 listed entities. The RMC need to have minimum three members with majority of them being members of the board of directors, including at least one independent director.
The quorum for a meeting of the RMC need to be either two members or one third of the members of the committee, whichever is higher, including at least one member of the board of directors in attendance.
"The meetings of the Risk Management Committee shall be conducted in such a manner that on a continuous basis not more than 180 days shall elapse between any two consecutive meetings," as per the notification.
The role of the RMC has been specified which, includes formulation of a detailed risk management policy and monitoring its implementation; periodic review of such policy; review of the appointment, removal and terms of remuneration of the chief risk officer (if any). Further, the regulator has rationalised the existing framework pertaining to reclassification of promoter/ promoter group entities.
This includes exemption from existing requirements, in cases of reclassification pursuant to an order of the regulator under any law in line with existing exemption already available in cases of resolution plan approved under the Insolvency and Bankruptcy Code.
The exemption has also been provided from the requirement of seeking approval of shareholders in cases where the promoter seeking reclassification holds shareholding of less than 1 per cent, subject to the promoter not being in control, Sebi said.
In addition, exemptions have been granted in few procedural requirements related to reclassification such as obtaining request from promoter, approval from the board and shareholders in case of open offer under Sebi Takeover Regulations and scheme of arrangement.
This exemption would be subject to the outgoing promoter's intent of reclassification being disclosed in the letter of offer or scheme of arrangement alongwith fulfilling other requirements such as not being in control and not being represented on the board.
Also, it has reduced the time gap between the date of board meeting and shareholders' meeting for consideration of reclassification request, to a minimum of one month and a maximum of three months. The existing requirement in this regard is minimum period of three months and maximum of six months.