Compliance of Listed Company

A listed company refers to a public company whose shares are listed and traded on a stock exchange. These are public limited joint-stock companies whose shares are available for trading on the central stock market. Companies often opt for public issues as a crucial method for raising funds.

Statutory Provisions for Regulating Listed Companies

The regulation of listed companies is governed by the following provisions:

• Companies Act, 2013
• SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015

Compliance of Listed Companies as per Companies Act, 2013

Listed companies are required to comply with both SEBI regulations and the provisions of the Companies Act, 2013. The following provisions must be met:

• Section 91: Close Register of Members A company can close its register of members, debenture holders, or any other security holders for a maximum of 45 days in a year. However, it cannot be closed for more than 30 days at a time.

• Section 92: Annual Return The annual return must be certified by a Company Secretary in practice, confirming that the return is accurate and that the company has adhered to all applicable provisions. This applies to:

  • Listed companies
  • Companies with paid-up share capital exceeding INR 10 Crore
  • Companies with a turnover over INR 25 Crore

• Section 93: Change in Shareholding Pattern Listed companies must file a return (MGT-10) for any change in shareholding of 2% or more, in terms of value or volume. This must be done within 15 days of the change.

• Section 108: E-Voting Companies with 1000 or more shareholders must provide the option for electronic voting at general meetings.

• Section 120: Maintenance of Records in Electronic Format Listed companies with 1000 or more security holders must maintain their records electronically in a tamper-proof format, including:

  • Registers
  • Index agreements
  • Memorandum of Association & Articles of Association
  • Minutes of meetings

• Section 121: Report on Annual General Meeting A report on the AGM must be prepared and filed with the Registrar of Companies (ROC) within 30 days using form MGT-15. This report ensures the AGM was held in accordance with the provisions of the Companies Act.

• Section 131: Director’s Report The director’s report must include:

  • An evaluation of the board, committees, and individual directors' performances.
  • The effectiveness of internal financial controls.
  • The ratio of director’s remuneration to median employee remuneration.

• Section 136: Mode of Sending Financial Statements Financial statements can be dispatched:

  • Electronically to shareholders with dematerialized shares.
  • Physically via post, courier, or hand delivery.
  • Online by placing the financial statement on the company’s website.

• Section 138: Internal Auditor Every listed company must appoint an internal auditor who is a qualified Chartered Accountant, Cost Accountant, or Company Secretary. The audit committee determines the scope, roles, responsibilities, and remuneration.

• Section 139: Rotation of Auditors Listed companies must rotate their auditors, appointing an individual auditor for one term of five years and an audit firm for two terms of five consecutive years.

• Section 149(1): Woman Director The following companies must appoint at least one woman director:

  • Every listed company
  • Every public company with paid-up share capital exceeding INR 10 Crore
  • Every public company with a turnover exceeding INR 100 Crore
  • Every public company with outstanding loans, debentures, and deposits exceeding INR 50 Crore

• Section 149(7): Certificate of Independence Independent directors must declare their independence during their first board meeting and at every subsequent meeting if there is a change in their independence status.

• Section 151: Small Shareholder’s Director Listed companies must appoint a small shareholder’s director when they receive notice from:

  • 1000 shareholders, or
  • 1/10th of the total number of shareholders

• Section 177: Audit Committee Listed companies must constitute an audit committee, as should any public company with:

  • Paid-up capital exceeding INR 10 Crore
  • A turnover exceeding INR 100 Crore
  • Outstanding loans, debentures, or deposits exceeding INR 50 Crore

• Section 178(1): Nomination & Remuneration Committee Every listed company must form a nomination and remuneration committee with at least three non-executive directors, the majority of whom must be independent.

• Section 178(2): Stakeholders Relationship Committee Listed companies with more than 1000 shareholders must form a stakeholders relationship committee, consisting of non-executive directors with a chairperson.

• Section 203: Key Managerial Personnel (KMP) Listed companies and public companies with paid-up capital of INR 10 Crore or more must appoint whole-time key managerial personnel.

• Section 204: Secretarial Audit Listed companies must conduct a secretarial audit by a practicing company secretary (PCS), and the report must be annexed with the board report. This also applies to:

  • Public companies with paid-up capital exceeding INR 50 Crore
  • Public companies with a turnover exceeding INR 250 Crore

Compliance of Listed Companies as per SEBI (LODR) Regulations 2015

Listed companies are required to comply with several monthly, quarterly, half-yearly, and annual obligations as stipulated in the SEBI (LODR) Regulations 2015. Below are the key compliance requirements:

• Regulation 7 – Appointment of New Share Transfer Agent
  The company must inform SEBI within 7 days of appointing a new share transfer agent.

• Regulation 7(2) – Continual Disclosure
  The company must ensure continual disclosure of information as required under SEBI regulations.

• Regulation 7(3) – Compliance Certificate
  A compliance certificate must be filed within one month from the end of the half-year.

• Regulation 13(3) – Statement of Investor Complaints
  The company must submit a statement detailing investor complaints within 21 days from the end of each quarter.

• Regulation 14 – Listing Charges
  The company must adhere to the listing charges as prescribed by the relevant stock exchange.

• Regulation 27(2) – Corporate Governance
  Companies with paid-up capital exceeding INR 10 Crore and net worth exceeding INR 25 Crore must submit a corporate governance report within 15 days of the end of each quarter.

• Regulation 29 – Notice
  Notices must be submitted within the prescribed timelines for various matters:

  • 5 days for financial results
  • 11 days for matters related to securities and redemption of debentures
  • 2 working days for all other matters

• Regulation 30 – Price Sensitive Information
  The company must disclose any price-sensitive information as required under the regulation.

• Regulation 31 – Shareholding Pattern
  The shareholding pattern must be submitted:

  • 21 days from the end of the quarter
  • One day before the listing of its shares on the stock exchange
  • Within 10 days if there is any change exceeding 2% in the paid-up share capital

• Regulation 33 – Financial Results
  Financial results must be submitted within the prescribed deadlines, depending on the case.

• Regulation 34 – Annual Report
  The annual report must be submitted within 21 days of the Annual General Meeting (AGM).

• Regulation 40(9) – Certificate from PCS
  A certificate from a Practicing Company Secretary (PCS) must be submitted within one month from the end of the half-year.

• Regulation 42 – Notice for Record Date
  The company must issue a notice regarding the record date.

• Regulation 43A – Dividend Distribution Policy
  Listed companies must adopt and disclose a dividend distribution policy.

• Regulation 44 – Voting Results
  The company must disclose the voting results within 48 hours of the meeting.

• Regulation 46 – Company Website
  Every listed company is required to maintain an official website containing key details. Any updates or changes must be made within 2 days of the change.