The weekly messenger | Edition 32.21

Regulatory news

SEBI LODR (Sixth Amendment) Regulations, 2021 ‒ 9 November 2021
 
The Securities and Exchange Board of India (SEBI) has issued the SEBI (Listing Obligations and Disclosure Requirements) (LODR) (Sixth Amendment) Regulations, 2021, wherein various amendments w.r.t. related party transactions have been made. Some of the important amendments are as follows:

• The scope of the definition of related party given under Regulation 2(1)(zb) has been increased, wherein the following persons/entities would also be now considered as deemed related party: -

1. any person or entity forming a part of the promoter or promoter group of the listed entity; or
2. any person or any entity, holding equity shares of 20% or more or of 10 % or more, w.e.f. 1 April 2023; in the listed entity either directly or on a beneficial interest basis as provided under section 89 of the Companies Act, 2013, at any time, during the immediate preceding financial year.

• New definition of Related Party Transactions has been added.
• Now, a transaction with a related party shall be considered material, if the transaction(s) to be entered into individually or taken together with previous transactions during a financial year, exceeds Rs. 1,000 crore or 10 % of the annual consolidated turnover of the listed entity as per the last audited financial statements of the listed entity, whichever is lower.
• In addition to related party transactions, any subsequent material modifications will also require prior approval of the audit committee. Such material modifications need to be defined by and disclosed as a part of policy on materiality of related party transactions by the audit committee.
• Number of disclosures to be provided by entities w.r.t. related party transactions have been enhanced.

These Regulations shall come into force w.e.f. 1 April 2022 unless otherwise specified in the respective provision of the Regulation.
For more information, click here.

Schemes of Arrangement by Listed Entities ‒ 16 November 2021
 
The SEBI vide its Master Circular dated 22 December 2020 had issued a framework for Schemes of Arrangement by listed entities.
 
Now, the SEBI has issued some further clarifications on the processing of draft schemes filed with the stock exchanges, and also made certain amendments to the aforesaid Circular such as:

• Valuation Report to be accompanied with an undertaking from the listed entity stating that no material event impacting the valuation has occurred during the intervening period of filing the scheme documents with stock exchange and period under consideration for valuation.
• Submission of Declaration from the listed entity on any past defaults of listed debt obligations of the entities forming part of the scheme.
• No   Objection   Certificate (NOC) from the lending scheduled commercial banks/financial institutions/debenture trustees.

The amended provisions will become applicable for all the schemes filed with the stock exchanges from the date of the Circular i.e., 16 November 2021.
For Original Circular, click here.
 
For Addendum, click here.
 
RBI introduces Internal Ombudsman mechanism for select NBFCs ‒ 15 November 2021
 
The Reserve Bank of India (RBI) has directed the following categories of Non-Banking Financial Companies (NBFCs) to appoint Internal Ombudsman at the apex of their internal grievance redress mechanism within a period of six months from the date of issue of the direction:

• Deposit-taking NBFCs with 10 or more branches, and
• Non-Deposit taking NBFCs with asset size of Rs.5,000 crore and above having public customer interface.

NBFCs not having public customer interface and certain types of NBFCs, viz., stand-alone Primary Dealers, NBFC - Infrastructure Finance Companies, Core Investment Companies, Infrastructure Debt Fund - Non-Banking Financial Companies, Non-Banking Financial Company – Account Aggregators, NBFCs under Corporate Insolvency Resolution Process, NBFCs in liquidation and NBFCs having only captive customers have been excluded from the requirement to appoint Internal Ombudsman.
 
For more information, click here.