Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 – Key Changes
The Securities and Exchange Board of India (SEBI) on October 08, 2020 has issued the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Third Amendment) Regulations, 2020 to further amend the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. The following amendments have been made:
1. Broaden the requirement of assets cover in case of non-convertible debt securities
Regulation 54 (1), which specifies that the listed entity shall maintain hundred percent asset cover, has been substituted, namely: “In respect of its listed non-convertible debt securities, the listed entity shall maintain hundred percent. asset cover or asset cover as per the terms of offer document/ Information Memorandum and/ or Debenture Trust Deed, sufficient to discharge the principal amount at all times for the non-convertible debt securities issued.” Earlier, in such cases, the Companies were required to maintain 100% assets cover; even-if the offer document has something else. Thus, the SEBI has broadened the requirement of maintaining the assets cover, subject to minimum of 100%..
2. Only Statutory Auditor of the Company to provide half-yearly certificate
Now, after amendment, the Companies will be required to submit half-yearly certificate regarding maintenance of 100% cover or assets cover as per other terms duly certified by the STATUTORY AUDITOR. Earlier, any practicing company secretary or practicing chartered accountant was eligible to provide the certificate.
The amended text of Regulation 56 (1)(d), which specifies the need for half-yearly certificate for the maintenance of the hundred percent asset cover, is as under:
“A half-yearly certificate regarding maintenance of hundred percent asset cover or asset cover as per the terms of offer document/ Information Memorandum and/or Debenture Trust Deed, including compliance with all the covenants, in respect of listed non-convertible debt securities, by the statutory auditor, along with the half-yearly financial results.”
3. Withdrawal of exemption given to Banks and NBFC in respect of submission of half-yearly certificate
Earlier, blanket exemptions were provided to Banks and NBFC in respect of providing a half-yearly certificate regarding maintenance of hundred percent assets cover or asset cover as per other terms. The same has been withdrawn and thus, after amendment, Banks/NBFCs are also required to submit the half yearly certificate duly signed by the statutory auditor.
4. Intimation of initiation of the forensic audit to SEBI
The Companies are now required to intimate the initiation of the forensic audit to SEBI. Companies are also required to intimate the name of the entity initiating the audit along with the reason, if available. Further, the Company shall also share the final forensic audit report with SEBI. Following paragraph has been inserted in Schedule III, Part A (A)(17), which specifies the initiation of forensic audit: “In case of initiation of the forensic audit, (by whatever name called), the following disclosures shall be made to the stock exchanges by listed entities:
1. The fact of initiation of forensic audit along-with name of entity initiating the audit and reasons for the same, if available.
2. Final forensic audit report (other than for forensic audit initiated by regulatory / enforcement agencies) on receipt by the listed entity along with comments of the management, if any.”