Listing Obligations and Disclosure Requirements

Section 203(3) of the Companies Act, provides that a whole-time key managerial personnel shall not hold office in more than one company except in its subsidiary company at the same time. However, third proviso to Section 203(3) of the Companies Act, 2013 provides that a company may appoint or employ a person as its managing director, if he is the managing director or manager of one, and of not more than one, other company and such appointment or employment is made or approved by a resolution passed at a meeting of the Board with the consent of all the directors present at the meeting and of which meeting, and of the resolution to be moved thereat, specific notice has been given to all the directors then in India.

In the given case, Mr. P is managing director/whole time director in total 3 companies i.e. ABC Ltd., XYZ Ltd. and KLM Ltd., which is in contravention to the provisions of the Companies Act, 2013.

However, in terms of count of directorship,

i.Section 165 of the Companies Act,2013, states that a person shall not hold office as a director, including any alternate directorship, in more than 20 companies at the same time. However, the maximum number of public companies in which a person can be appointed as a director shall not exceed 10.

ii.Further, in the case of listed company, the maximum number of directorships is provided in Regulation 17A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, which states that a person shall not be a director in more than eight listed entities with effect from April 1, 2019 and in not more than seven listed entities with effect from April 1, 2020.

Therefore, in terms of count of directorship, Mr. P being managing director/whole time director in total 3 companies i.e. ABC Ltd., XYZ Ltd. and KLM Ltd, is within the limit of Section 165 of the Companies Act,2013 and Regulation 17A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 as stated above.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2023, Q. 6A(i) (Syllabus 2022).

In terms of proviso of regulation 2(1)(zc) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, following shall not be a related party transaction:

a)the issue of specified securities on a preferential basis, subject to compliance of the requirements under the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018;

b)the following corporate actions which are uniformly applicable / offered to all shareholders in proportion to their shareholding:

–payment of dividend,

–subdivision or consolidation of securities,

–issuance of securities by way of a rights issue or a bonus issue, and

–buy-back of securities.

c)acceptance of fixed deposits by banks / Non-Banking Finance Companies at the terms uniformly applicable / offered to all shareholders/public, subject to disclosure of the same along with the disclosure of related party transactions every six months to the stock exchange(s), in the format as specified by the SEBI.

d)acceptance of current account deposits and saving account deposits by banks in compliance with the directions issued by the Reserve Bank of India or any other central bank in the relevant jurisdiction from time to time:

Explanation: For the purpose of clauses (c) and (d) above, acceptance of deposits includes payment of interest thereon.

e)retail purchases from any listed entity or its subsidiary by its directors or its employees, without establishing a business relationship and at the terms which are uniformly applicable/offered to all employees and directors.

The definition of related party transaction shall not be applicable for the units issued by mutual funds which are listed on a recognised stock exchange(s).

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2025, Q. 4(b) (Syllabus 2022).

Compliances required to be complied with under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 by Earth Limited being among top 1,000 listed companies are as under:

a)Board of directors shall have at least one independent woman director.

b)Entities shall undertake Directors and Officers insurance (‘D and O insurance’) for all their independent directors of such quantum and for such risks as may be determined by its board of directors.

c)The provisions of Risk Management Committee shall be applicable.

d)Company shall formulate a dividend distribution policy which shall be disclosed on the website of the listed entity and a web-link shall also be provided in their annual reports.

e)The Annual Report shall contain a Business Responsibility and Sustainability Report (BRSR) on the environmental, social and governance disclosures, in the format as may be specified by SEBI from time to time.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2025, Q. 6A(i) (Syllabus 2022).

Roles of a Company Secretary, under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 are as under:

(i)For Company Secretary in Employment:

a)A listed entity shall appoint a Qualified Company Secretary as the Compliance Officer. The compliance officer of the listed entity shall be responsible for:

-ensuring conformity with the regulatory provisions applicable to the listed entity in letter and spirit.

-co-ordination with and reporting to SEBI, recognised stock exchange(s) and depositories with respect to compliance with rules, regulations and other directives of these authorities in manner as specified from time to time.

-ensuring that the correct procedures have been followed that would result in the correctness, authenticity and comprehensiveness of the information, statements and reports filed by the listed entity under these regulations.

-monitoring email address of grievance redressal division as designated by the listed entity for the purpose of registering complaints by investors.

b)The Company Secretary shall act as the secretary to the audit committee.

(ii)For Company Secretary in Practice:

a)Secretarial Audit and Secretarial Compliance Report: Every listed entity and its material unlisted subsidiaries incorporated in India shall undertake secretarial audit by a Secretarial Auditor who will be a Peer Reviewed Company Secretary and shall annex a Secretarial Audit Report, in such form as specified, with the annual report of the listed entity. Further, every listed entity shall submit a secretarial compliance report in such form as specified, to stock exchanges, within sixty days from end of each financial year. The listed entity shall ensure that the Secretarial Compliance Report submitted to the stock exchange(s) on annual basis is signed only by the Secretarial Auditor or by a Peer Reviewed Company Secretary. [Regulation 24A].

b)Certification regarding Directors’ Disqualification: A certificate shall be obtained from a Company Secretary in Practice that none of the directors on the board of the company have been debarred or disqualified from being appointed or continuing as Directors of Companies by the Board/ Ministry of Corporate Affairs or any such Statutory Authority. [Schedule V, Part C, Clause 10(i) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015]

c)Certificate Regarding Compliance of Conditions of Corporate Governance under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015: SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 authorizes Company Secretary in Practice to issue certificate regarding compliance of conditions of Corporate Governance which shall be annexed with the directors’ report. [Schedule V, Part E of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015]

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2026, Q. 4(a) (Syllabus 2022).

Regulations 6 (1A) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, states that any vacancy in the office of the Compliance Officer shall be filled by the listed entity at the earliest and in any case not later than three months from the date of such vacancy. However, the listed entity shall not fill such vacancy by appointing a person in interim capacity, unless such appointment is made in accordance with the laws applicable in case of a fresh appointment to such office and the obligation under such laws are made applicable to such person.

As per Regulation 6 (1) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a compliance officer shall be a qualified company secretary. However, the Compliance Officer shall be an officer, who is in whole time employment of the listed entity, not more than one level below the board of directors and shall be designated as a Key Managerial Personnel. There is no restriction prescribed under these regulations which prohibits the director of the listed company, if in the employment, to act as a compliance officer of the listed entity.

Therefore, appointment of A as compliance officer in the given case would be valid if the appointment meets the conditions as stated above.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2025, Q. 4(a) (Syllabus 2022).

VXL Limited shall be required to comply with following requirements as One-time compliance under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015:

-Under Regulation 6(1) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a listed entity shall appoint a Company Secretary as the Compliance Officer. Any vacancy in the office of the Compliance Officer shall be filled by the listed entity at the earliest and in any case not later than three months from the date of such vacancy. However, the listed entity shall not fill such vacancy by appointing a person in interim capacity, unless such appointment is made in accordance with the laws applicable in case of a fresh appointment to such office and the obligations under such laws are made applicable to such person.

-Under Regulation 7(1) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the listed entity shall appoint a share transfer agent or manage the share transfer facility in house. However, in the case of in-house share transfer facility, as and when the total number of holders of securities of the listed entity exceeds one lakh, the listed entity shall either register with the SEBI as a Category II share transfer agent or appoint Registrar to an issue and share transfer agent registered with the SEBI.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2025, Q. 4(a) (Syllabus 2022).

As per SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, corporate governance provisions shall apply to listed companies subject to certain exceptions.

Corporate governance provisions as specified in Regulations 17 to 27 and clauses

(b)to (i) of Regulation 46(2) and para C, D and E of Schedule V shall not apply, in respect of following:

The listed entity having:

•paid up equity share capital not exceeding rupees 10 crore and

•Net worth not exceeding rupees 25 crore, as on the last day of the previous financial year.

In the given case -

Situation –I

–Paid up equity share capital is ₹8 Crore i.e. not exceeding ₹10 Crores AND

–Net worth is ₹15 Crores i.e. not exceeding 25 Crores.

Hence, regulation 17(5) for Code of Conduct of Board of Directors & Senior Management does not apply to GK Ltd.

Situation-II

If paid up equity share capital is increased to ₹15 Crores and Net worth is increased to ₹35 Crores, the regulation 17(5) for Code of Conduct for Board of Directors & Senior Management shall become applicable as it will exceed the criteria of share capital and net worth.

Note: Preference share capital do not have any bearing on the instant case.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2020, Q. 3(a) (Syllabus 2017).

In terms of the provisions of regulation 16(1)(c) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, “material subsidiary” shall mean a subsidiary, whose income or net worth exceeds 10% of the consolidated income or net worth respectively, of the listed company and its subsidiaries in the immediately preceding accounting year.

In the given case, 10% of consolidated income and net worth of XYZ Limited would be ₹ 30 crores and ₹ 60 crores respectively.

•Hence X Limited since crossed threshold in terms of Net Worth, would be a material subsidiary of XYZ Limited.

•Y Limited since crossed threshold in terms of income, would be a material subsidiary of XYZ Limited.

•Z Limited since does not cross either of the threshold, would not be material subsidiary of XYZ Limited.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2023, Q. 2A(iii) (Syllabus 2017).

As per the Regulation 16 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015:

"Independent director" means a non-executive director, other than a nominee director of the listed entity who, satisfies the conditions as prescribed therein. It also states that such director neither himself/herself, nor whose relative(s) -

d)Elika holds 1% of the total voting power, which is less than 2% of limit prescribed, hence he/she is eligible for appointment as an Independent director.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2022, Q. 2A(ii) (Syllabus 2017).

In accordance with Regulation 17(1) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board of Directors shall have optimum combination of executive and non-executive directors with at least one-woman director and not less than fifty per cent. of the board of directors shall comprise of non-executive directors. However, the Board of directors of the top 1000 listed entities shall have at least one independent woman director.

Where the chairperson of the board of directors is a non-executive director, at least one-third of the board of directors shall comprise of independent directors and where the listed entity does not have a regular non-executive chairperson, at least half of the board of directors shall comprise of independent directors:

However, where the regular non-executive chairperson is a promoter of the listed entity or is related to any promoter or person occupying management positions at the level of board of director or at one level below the board of directors, at least half of the board of directors of the listed entity shall consist of independent directors.

Thus, in accordance with the Regulation 17 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Tech Solutions Limited has made the below mentioned non-compliances in respect of the following:

(i)Independent Directors – Since the Chairperson of Tech Solutions Limited is a non-executive director and a promoter, at least half of the board shall comprise of independent directors. Thus, Tech Solutions Limited shall have 5 Independent Directors. Here, only 3 out of 10 (30%) are independent directors. Hence, it has violated the regulation.

(ii)Independent Woman Director - For top 1000 listed, Regulation requires at least one independent woman director. Here, the only woman director is a non-executive non-independent. Hence, Tech Solutions Limited has violated the regulation.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2026, Q. 3(c) (Syllabus 2022).

(i)Section 152(6) of the Companies Act, 2013 states that unless the articles provide for the retirement of all directors at every annual general meeting, not less than two-thirds of the total number of directors of a public company shall be persons whose period of office is liable to determination by retirement of directors by rotation.

Explanation: For the purposes of this sub-section, “total number of directors” shall not include independent directors, whether appointed under this Act or any other law for the time being in force, on the Board of a company.

In the given situation, the total strength excluding three nominee directors and four independent directors is 12. Therefore, total number of directors including nominee directors and excluding independent directors is 15. Therefore, 2/3 of 15 i.e. 10 shall be liable to retire by rotation at the Annual General Meeting. Thus 10 Directors shall be liable to retire by rotation. 10 out of 12 remaining directors (as three nominee directors are not liable to retire by rotation) shall be liable retire by rotation in the ensuing AGM.

(ii)According to the regulation 17(1A) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, no listed entity shall appoint a person or continue the directorship of any person as a non-executive director who has attained the age of seventy five years unless a special resolution is passed to that effect, in which case the explanatory statement annexed to the notice for such motion shall indicate the justification for appointing such a person.

In the instant case, Nirvan, non-executive director will be attaining the age of 65 years after listing, hence he can continue as such till the maximum age limit for non-executive director is 75 years.

(iii)According to the regulation 17A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a person shall not serve as an independent director in more than seven listed entities.

Notwithstanding the above, any person who is serving as a whole-time director / managing director in any listed entity shall serve as an independent director in not more than three listed entities. For the purpose of this regulation, the count for the number of listed entities on which a person is a director / independent director shall be only those whose equity shares are listed on a stock exchange.

In view of above, the managing director can only be appointed as Independent Director in maximum of three listed companies and he is already the director in two listed companies, therefore he can accept the post of Independent Director in further one listed company.

(iv)According to the regulation 292G of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, a Not for Profit Organization may raise funds on a Social Stock Exchange through issuance of Zero Coupon Zero Principal Instruments to eligible investors, donations through Mutual Fund schemes as specified by SEBI and any other means as specified by SEBI from time to time.

(v)According to the regulation 17(1E) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, any vacancy in the office of a director shall be filled by the listed entity at the earliest and in any case not later than three months from the date of such vacancy. However, if any vacancy caused due to expiration of term of office of any director, the resulting vacancy shall be filled by the listed entity not later than the date such office is vacated. Provided that this shall not apply if the listed entity fulfils the requirement under regulation 17(1) without filling the vacancy.

Therefore, if Director has vacated office due to medical reasons, and the company continues to comply with requirement of Regulation 17(1) with respect to composition of Directors, then such the company is not required to fill such vacancy. Otherwise, the vacancy shall be filled in three months from the date of such vacancy.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2024, Q. 1(b) (Syllabus 2022).

In light with the provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the answer is provided below:

(i)No listed entity shall appoint a person or continue the directorship of any person as a non-executive director who has attained the age of 75 years unless a special resolution is passed to that effect, in which case the explanatory statement annexed to the notice for such motion shall indicate the justification for appointing such a person. [Regulation 17(1A) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015]

(ii)The board of directors of the top 1000 listed entities with effect from April 1, 2019 shall comprise of not less than six directors. [Regulation 17(1)(c) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015]

(iii)The Board of Directors shall meet at least four times a year, with a maximum time gap of one hundred and twenty days between any two meetings. Thus, the maximum gap between two meetings can be of 120 days and therefore, gap of 14 days between the two board meetings is sufficient provided the minimum number of meetings in a year shall be complied with. [Regulation 17(2) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015]

(iv)The quorum for every meeting of the board of directors of the top 1000 listed entities with effect from April 1, 2019 shall be one-third of its total strength or three directors, whichever is higher, including at least one independent director.

Explanation: For removal of doubts, it is clarified that the participation of the directors by video conferencing or by other audio-visual means shall also be counted for the purposes of such quorum. [Regulation 17(2A) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015]

(v)The committee shall comprise of at least three directors. All directors of the committee shall be non- executive directors. At least two-thirds of the directors shall be independent directors. [Regulation 19(1) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015]

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2024, Q. 1(c) (Syllabus 2017).

(i)Regulation 17(1)(a) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 provides that the top 1000 listed entities shall have at least one independent woman director by April 1, 2020. In the given case, PQR Limited is having one Executive woman director and hence, it will be required to appoint one independent woman director to meet the requirement as stated above.

(ii)Regulation 17(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 inter alia provides that where the regular non-executive chairperson is a promoter of the listed entity or is related to any promoter or person occupying management positions at the level of board of director or at one level below the board of directors, at least half of the board of directors of the listed entity shall consist of independent directors. In the given case, X is Chairperson of RST Limited, who is non-executive director and X is related to promoter A of the company. Thus, RST Limited will be required to appoint at least half of the board of directors as independent directors.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2024, Q. 2(c) (Syllabus 2017).

(i)Requirement of Appointment of Woman Director: The Board of Directors shall have an optimum combination of executive and non-executive directors with at least one woman director. The Board of directors of the top 500 listed entities shall have at least one independent woman director by April 1, 2019 and the Board of directors of the top 1000 listed entities shall have at least one independent woman director by April 1, 2020. [Regulation 17(1)(a) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015]

(ii)Meetings & Quorum of the Board Meeting: The Board of directors shall meet at least four times a year, with a maximum time gap of one hundred and twenty days between any two meetings. The quorum for every meeting of the board of directors of the top 1000 listed entities with effect from April 1, 2019 and of the top 2000 listed entities with effect from April 1, 2020 shall be one-third of its total strength or three directors, whichever is higher, including at least one independent director. [Regulation 17(2) & 17(2A) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015]

(iii)Composition of an Audit Committee: The audit committee shall comprise minimum three directors as members. At least Two-third of the members of audit committee shall be independent directors. In case of a listed entity having outstanding SR equity shares, the audit committee shall only comprise of independent directors. All members of audit committee shall be financial literate and at least one member shall have accounting or related financial management expertise. The chairperson of the audit committee shall be an independent director. [Regulation 18 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015]

Accordingly, Neeraj is advised.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2024, Q. 3(c) (Syllabus 2022).

(i)As per regulation 17 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board of directors of the top 500 listed entities shall have at least one independent woman director by April 1, 2019. In the given situation, the company will be required to appoint one independent woman director as RJS Ltd. in in the list of top 500 listed entities and has an executive woman director, who is non independent.

(ii)As per regulation 17 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, where the non-executive chairperson is a promoter of the listed entity or is related to any promoter, at least half of the board of directors of the listed entity shall consist of independent directors. In the given situation, P is the non-executive chairman of RJS Ltd. and is related to one of the promoters. Therefore RJS Ltd. will be required to appoint at least half of the board as independent directors.

(iii)As per the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, all related party transactions shall be approved by only independent directors in the Audit Committee.

(iv)C can be appointed as a non-executive director of the company as his age is not beyond 75 years as prescribed under regulation 17(1A) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2023, Q. 2(a) (Syllabus 2017).

As per Regulation 17(1A) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, no listed entity shall appoint a person or continue the directorship of any person as a non- executive director who has attained the age of 75 years unless a special resolution is passed to that effect, in which case the explanatory statement annexed to the notice for such motion shall indicate the justification for appointing such a person.

Thus, in the given case, the appointment of Dr. Grace as non-executive director of PQR Ltd. is not valid as special resolution is not passed.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2022, Q. 1(c) (Syllabus 2017).

Regulation 17(1C) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 provides that the listed entity shall ensure that approval of shareholders for appointment of a person on the Board of Directors or as a manager is taken at the next general meeting or within a time period of three months from the date of appointment, whichever is earlier.

In view of above and since the general meeting of listed company has already been held prior to appointment of Mr. Mihir, the company is required to hold the general meeting within three months to regularise the appointment of Mr. Mihir.

Regulation 17(1C) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 further provides that if the appointment or a re-appointment of a person, including as a managing director or a whole-time director or a manager, who was earlier rejected by the shareholders at a general meeting, shall be done only with the prior approval of the shareholders. Further, the statement referred to under sub-section (1) of section 102 of the Companies Act, 2013, annexed to the notice to the shareholders, for considering the appointment or re-appointment of such a person earlier rejected by the shareholders shall contain a detailed explanation and justification by the Nomination and Remuneration Committee and the Board of directors for recommending such a person for appointment or re-appointment.

In case the earlier appointment of Mr. Mihir as a director on the Board was rejected by the shareholders, the appointment of Mr. Mihir requires prior approval of shareholders complying with the above-mentioned Regulation.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2022, Q. 2A(i) (Syllabus 2017).

As per the Regulation 17A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the directors of listed entities shall comply with the following conditions with respect to the maximum number of directorships, including any alternate directorships that can be held by them at any point of time:

(1)A person shall not be a director in more than eight listed entities with effect from April 1, 2019 and in not more than seven listed entities with effect from April 1, 2020.

However a person shall not serve as an independent director in more than seven listed entities.

(2)Notwithstanding the above, any person who is serving as a whole time director/ managing director in any listed entity shall serve as an independent director in not more than three listed entities.

In the given case, Saatvik is a Managing Director in a listed company as well as an Independent Director in other three listed companies and hence he is already holding the maximum permissible directorship under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. He therefore cannot accept the independent directorship in a listed e-Commerce company.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2022, Q. 1(b) (Syllabus 2017).

(i)According to the Regulation 17(6) of the SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015, the fees or compensation payable to executive directors who are promoters or members of the promoter group, shall be subject to the approval of the shareholders by special resolution in general meeting, if -

(i)the annual remuneration payable to such executive director exceeds rupees 5 crore or 2.5 per cent of the net profits of the listed entity, whichever is higher; or

(ii)where there is more than one such director, the aggregate annual remuneration to such directors exceeds 5 per cent of the net profits of the listed entity.

Provided that the approval of the shareholders under this provision shall be valid only till the expiry of the term of such director.

In the given case Kiyan International Ltd. is paying the aggregate annual remuneration to such directors in excess of five per cent of the net profit of the Company and in view of above the Company is required to take approval of shareholders by way of special resolution in general meeting.

(ii)As per Section 2 (78) of the Companies Act, 2013 “remuneration" means any money on its equivalent given or passed to any person for services rendered by him and includes perquisites is defined under the Income-tax Act. 1961.

Further, Sections 197(5) and (6) of the Companies Act, 2013 state that a director may receive remuneration by way of fee for attending meetings of the Board or Committee thereof or for any other purpose whatsoever as may be decided by the Board and that a director or manager may be paid remuneration either by way of a monthly payment or at a specified percentage of the net profits of the company or partly by one way and partly by the other.

In view of above, it will not make any difference, if the Company pays fees/ compensation instead of fixed monthly salary, as the definition under the Companies Act, 2013 is all inclusive of the fees / compensation.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2022, Q. 1(d) (Syllabus 2017).

Maximum Number of Directorships

Regulation 17A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 provides that a person shall not be a director in more than eight listed entities with effect from April 1, 2019 and in not more than seven listed entities with effect from April 1, 2020. However, a person shall not serve as an independent director in more than seven listed entities.

Any person who is serving as a whole time director / managing director in any listed entity shall serve as an independent director in not more than three listed entities. For the purpose of this regulation, the count for the number of listed entities on which a person is a director / independent director shall be only those whose equity shares are listed on a stock exchange.

Exceptions in the compliance with the corporate governance provisions

As per Regulation 15(2) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the compliance with the corporate governance provisions shall not apply, in respect of following -

A listed entity having:

•paid up equity share capital not exceeding rupees 10 crore and

•net worth not exceeding rupees 25 crore, as on the last day of the previous financial year.

However, where the provisions of regulations 17 to 27, clauses (b) to (i) and (t) of sub-regulation (2) of regulation 46 and para C, D and E of Schedule V become applicable to a listed entity at a later date, it shall ensure compliance with the same within six months from such date.

Home Technology Ltd. is having paid up share capital of rupees 8 crore and having net worth (paid up capital plus + free reserve) of rupees 20 crore. Therefore, both paid up capital and net worth are within the limit and hence the company is exempted with regards to compliance of corporate governance provisions.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2021, Q. 2(a) (Syllabus 2017).

As per Regulation 17A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, any person who is serving as a whole time director / managing director in any listed entity shall serve as an independent director in not more than three listed entities.

Hence, X being the Managing Director of ABC Ltd., can join in only 3 listed companies as an independent Director.

As per Regulation 17A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a person shall not be a director in more than eight listed entities with effect from April 1, 2019 and in not more than seven listed entities with effect from April 1, 2020. However a person shall not serve as an independent director in more than seven listed entities.

Therefore, after retirement X cannot serve as an Independent Director in ten listed companies and is restricted to only seven listed companies as stated above. Hence the planning of X is not as per the Regulations on Corporate Governance.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2021, Q. 3(a) (Syllabus 2017).

According to Regulation 17(1) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the composition of board of directors of the listed entity shall be as follows:

(1)The board of directors shall have an optimum combination of executive and non-executive directors with at least one woman director.

(2)At least 50% of the board of directors shall comprise of non-executive directors.

(3)If the chairperson of the board of directors is a non-executive director, at least 1/3rd of the board of directors shall comprise of independent directors.

(4)If the chairperson of the board of directors is not a regular non-executive, at least half of the board of directors shall comprise of independent directors.

(5)If the regular non-executive chairperson is a promoter of the listed entity or is related to any promoter or person occupying management positions at the level of board of director or at one level below the board of directors, at least half of the board of directors of the listed entity shall consist of independent directors.

(6)The board of directors of the top 2000 listed entities (with effect from April 1, 2020) shall comprise of not less than six directors.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2021, Q. 6(b) (Old syllabus).

(i)The quorum for every meeting of the board of directors of the top 1000 listed entities with effect from April 1, 2019 and of the top 2000 listed entities with effect from April 1, 2020 shall be one-third of its total strength or three directors, whichever is higher, including at least one independent director.

Thus, keeping in mind the above provisions, Suzan Limited is required to comply with above provisions with respect to quorum in board meeting with effect from 1st April, 2019.

(ii)SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 provides that the directors of listed entities shall comply with the following conditions with respect to the maximum number of directorships, including any alternate directorships that can be held by them at any point of time :

A person shall not be a director in more than eight listed entities with effect from April 1, 2019 and in not more than seven listed entities with effect from April 1, 2020. However, a person shall not serve as an independent director in more than seven listed entities.

Further, any person who is serving as a whole time director / managing director in any listed entity shall serve as an independent director in not more than three listed entities.

For the purpose of this sub-regulation, the count for the number of listed entities on which a person is a director / independent director shall be only those whose equity shares are listed on a stock exchange.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2021, Q. 2(a) (Syllabus 2017).

As per the Regulation 17 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 as amended, the composition of board of directors of the listed entity shall have optimum combination of executive and non-executive directors with at least one woman director and not less than fifty percent of the board of directors shall comprise of non-executive directors, provided that;

–Board of directors of the top 500 listed entities shall have at least one independent woman director by April 1, 2019 and the Board of directors or the top 1000 listed entities shall have at least one independent woman director by April 1, 2020.

–The board of directors of the top 1000 listed entities w.e.f. April 1. 2019 shall comprise of not less than six directors.

–With effect from April 1, 2020, the top 500 listed entities shall ensure that the Chairperson of the board of such listed entity shall -

(a)be a non-executive director;

(b)not be related to the Managing Director or the Chief Executive Officers as per the definition of the term "relative" defined under the Companies Act, 2013

However this requirement shall not be applicable to the listed companies which do not have identifiable promoters as per the shareholding pattern filed with the stock exchange.

The quorum for every meeting of the board of directors of the top 1000 listed entities with effect from April 1, 2019 shall be one-third of its total strength or three directors, whichever is higher, including at least one independent director.

However, the participation of directors by video conferencing or by other audio-visual means shall also be counted for the purposes of such quorum.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2019, Q. 2(a) (Syllabus 2017).

Based on the recommendations of Kotak Committee, the amendments made in the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 with respect to Independent Directors are as follows:

i.The Board of Directors of the top 500 listed entities shall have at least one independent woman director by April 1, 2019 and the Board of Directors of the top 1000 listed entities shall have at least one independent woman Director By April 1, 2020.

ii.The quorum for every meeting of the Board of Directors of the top 1000 listed entities with effect from April 1, 2019 and the top 2000 listed entities with effect from April 1, 2020 shall be one-third of its total strength or three Directors, whichever is higher, including at least one independent director.

iii.A person shall not serve as an independent director in more than seven listed entities. However, any person who is serving as a whole time director / managing director in any listed entity shall serve as an independent director in not more than three listed entities.

iv.The evaluation of independent director shall be done by the entire Board of Directors which shall include:-

(a)performance of the director; and

(b)fulfilment of the Independence criteria as specified in SEBI Listing Regulations and their Independence from the management.

However in the above evaluation, directors who are subject to evaluations shall not participate.

v.The quorum for a meeting of the nomination and remuneration committee shall be either two members or one-third of the members of the committee whichever is greater, including at least one independent director in attendance.

vi.At least one independent director on the Board of Directors of the listed entities shall be a director on the Board of Directors of an unlisted material subsidiary, whether incorporated in India or not.

vii.No person shall be appointed or continue as an alternate director for an independent director of a listed entity with effect from October 1, 2018.

viii.Detailed reasons for the resignation of an independent director who resigns before the expiry of his tenure along with a confirmation by such director that there are no other material reasons other than those provided.

ix.At least one independent director on the Board of Directors of the listed entity shall be a director on the Board of Directors of an unlisted material subsidiary, whether incorporated in India or not.

x.Every independent director shall, at the first meeting of the Board in which he participates as a director and thereafter at the first meeting of the board in every financial year or whenever there is any change in the circumstances which may affect his status as an independent director, submit a declaration that he meets the criteria of independence as provided in clause (b) of sub-regulation (1) of regulation 16 of SEBI Listing Regulations and that he is not aware of any circumstance or situation, which exist or may be reasonably anticipated, that could impair or impact his ability to discharge his duties with an objective independent judgment and without any external influence.

(Students may write any four amendments)

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2018, Q. 2(c) (Syllabus 2017).

Validity of Meeting:

Regulation 18 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 provides that the quorum for audit committee meeting shall either be two members or one third of the members of the audit committee, whichever is greater, with at least two independent directors.

In the given case, Excel Limited is having 5 directors in the Audit committee and 2 directors were present at the meeting. However, one director was non-executive and other was independent. Assuming that Excel Limited is not exempted under Regulation 15 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Excel Limited shall comply with the above requirements.

Therefore, the aforesaid meeting is invalid as only one independent director was present instead of two independent directors as required under the Regulations.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2024, Q. 2A(iv) (Syllabus 2017).

Composition of the Audit Committee

Regulation 18 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 stipulates the provisions pertaining to the composition and role of the Audit Committee which provides that:

•The audit committee shall have minimum three directors as members.

•At least two-thirds of the members of audit committee shall be independent directors.

•In case of a listed entity having outstanding SR equity shares, the audit committee shall only comprise of independent directors.

•The Chairperson of the audit committee shall be an independent director.

•The Company Secretary shall act as the secretary to the audit committee.

•The audit committee at its discretion shall invite the finance director or head of the finance function, head of internal audit and a representative of the statutory auditor and any other such executives to be present at the meetings of the committee. However, occasionally the audit committee may meet without the presence of any executives of the listed entity.

All members of audit committee shall be financially literate and at least one member shall have accounting or related financial management expertise.

Role of Audit Committee

The role of the audit committee and the information to be reviewed by the audit committee shall be as specified in Part C of Schedule II to the SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015. The role of the audit committee includes the following:

(1)oversight of the listed entity’s financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible;

(2)recommendation for appointment, remuneration and terms of appointment of auditors of the listed entity;

(3)approval of payment to statutory auditors for any other services rendered by the statutory auditors;

(4)reviewing, with the management, the annual financial statements and auditor’s report thereon before submission to the board for approval, with particular reference to:

(a)matters required to be included in the director’s responsibility statement to be included in the board’s report in terms of clause (c) of sub-section (3) of Section 134 of the Companies Act, 2013;

(b)changes, if any, in accounting policies and practices and reasons for the same;

(c)major accounting entries involving estimates based on the exercise of judgment by management;

(d)significant adjustments made in the financial statements arising out of audit findings;

(e)compliance with listing and other legal requirements relating to financial statements;

(f)disclosure of any related party transactions;

(g)modified opinion(s) in the draft audit report;

(5)reviewing, with the management, the quarterly financial statements before submission to the board for approval;

(6)reviewing, with the management, the statement of uses / application of funds raised through an issue (public issue, rights issue, preferential issue, etc.), the statement of funds utilized for purposes other than those stated in the offer document / prospectus / notice and the report submitted by the monitoring agency monitoring the utilisation of proceeds of a public issue or rights issue or preferential issue or qualified institutions placement, and making appropriate recommendations to the board to take up steps in this matter;

(7)reviewing and monitoring the auditor’s independence and performance, and effectiveness of audit process;

(8)approval or any subsequent modification of transactions of the listed entity with related parties;

(9)scrutiny of inter-corporate loans and investments;

(10)valuation of undertakings or assets of the listed entity, wherever it is necessary;

(11)evaluation of internal financial controls and risk management systems;

(12)reviewing, with the management, performance of statutory and internal auditors, adequacy of the internal control systems;

(13)reviewing the adequacy of internal audit function, if any, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit;

(14)discussion with internal auditors of any significant findings and follow up there on;

(15)reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the board;

(16)discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern;

(17)to look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of non-payment of declared dividends) and creditors;

(18)to review the functioning of the whistle blower mechanism;

(19)approval of appointment of chief financial officer after assessing the qualifications, experience and background, etc. of the candidate;

(20)Carrying out any other function as is mentioned in the terms of reference of the audit committee;

(21)reviewing the utilization of loans and/ or advances from/investment by the holding company in the subsidiary exceeding rupees 100 crore or 10% of the asset size of the subsidiary, whichever is lower including existing loans / advances / investments existing as on the date of coming into force of this provision;

(22)consider and comment on rationale, cost-benefits and impact of schemes involving merger, demerger, amalgamation etc., on the listed entity and its shareholders.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2023, Q. 3(c) (Syllabus 2022).

As per regulation 18(2)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the quorum for audit committee meeting shall either be two members or one third of the members of the audit committee, whichever is greater, with at least two independent directors.

In the given case, in terms of the aforesaid listing regulation, quorum requirement will be either two members or one third of the six members, whichever is greater. Therefore, it shall be two members who shall be independent directors only to fulfil the requirement of Quorum.

In the given case, though two directors were present but one non-executive director and one independent director. Therefore, the aforesaid meeting is not invalid as only one independent director was present.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2023, Q. 6A(ii) (Syllabus 2022).

Nomination and remuneration committee [Regulation 19 of SEBI (LODR) Regulations, 2015]

•The Nomination and Remuneration committee shall comprise of at least three directors;

•All directors of the committee shall be non-executive directors;

•At least fifty percent of the directors shall be independent directors and in case of a listed entity having outstanding SR equity shares, two thirds of the nomination and remuneration committee shall comprise of independent directors;

•The Chairperson shall be an independent director;

•The quorum for a meeting of the nomination and remuneration committee shall be either two members or one third of the members of the committee, whichever is greater, including at least one independent director in attendance;

•Nomination and Remuneration Committee plays a key role in formulation of the criteria for determining qualifications, positive attributes and independence of a director and recommend to the Board of directors a policy relating to, the remuneration of the directors, key managerial personnel and other employees.

Risk Management Committee [Regulation 21 of SEBI (LODR) Regulations, 2015]

•Applicable to top 500 listed entities determined on the basis of market capitalization, as at the end of the immediate previous financial year;

•The majority of members shall consist of members of the Board of directors. However, in case of a listed entity having outstanding SR equity shares, at least two thirds of the Risk Management Committee shall comprise of independent directors;

•The Chairperson of the Risk management committee shall be a member of the Board of directors and senior executives of the listed entity may be members of the committee;

•The committee shall meet at least once in a year;

•The Board of directors shall define the role and responsibility of the Risk Management Committee and may delegate monitoring and reviewing of the risk management plan to the committee and such other functions as it may deem fit (such function shall specifically cover cyber security).

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2021, Q. 2A(i) (Syllabus 2017).

In terms of the regulation 20 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Stakeholders Relationship Committee of a listed company shall comprise of at least three directors, including at least one independent director. In case of a listed entity having outstanding SR equity shares, at least two thirds of the Stakeholders Relationship Committee shall comprise of independent directors. The chairperson of Stakeholders Relationship Committee shall be a non-executive director.

The role of the Stakeholders Relationship Committee has been specified in Part D of the Schedule II of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The role of Stakeholders Relationship Committee shall inter-alia include the following:

1.Resolving the grievances of the security holders of the listed entity including complaints related to transfer/transmission of shares, non-receipt of annual report, non-receipt of declared dividends, issue of new/duplicate certificates, general meetings etc.

2.Review of measures taken for effective exercise of voting rights by shareholders.

3.Review of adherence to the service standards adopted by the listed entity in respect of various services being rendered by the Registrar & Share Transfer Agent.

4.Review of the various measures and initiatives taken by the listed entity for reducing the quantum of unclaimed dividends and ensuring timely receipt of dividend warrants / annual reports / statutory notices by the shareholders of the company.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2024, Q. 3(b) (Syllabus 2017).

Composition of Risk Management Committee [Regulation 21 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015

•The Risk Management Committee shall have minimum three members with majority of them being members of the board of directors, including at least one independent director.

•In case of a listed entity having outstanding SR equity shares at least two thirds of the Risk Management Committee shall comprise independent directors.

•The Chairperson of the Risk management committee shall be a member of the board of directors and senior executives of the listed entity may be members of the committee.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2024, Q. 6A(i) (Syllabus 2022).

The provisions for Risk Management Committee are covered under the Regulation 21 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and provided as under:

(1)The board of directors shall constitute a Risk Management Committee.

(2)The Risk Management Committee shall have minimum three members with majority of them being members of the board of directors, including at least One Independent Director and in case of a listed entity having outstanding SR equity shares, at least two thirds of the Risk Management Committee shall comprise Independent Directors.

(3)The Chairperson of the Risk management committee shall be a member of the board of directors and senior executives of the listed entity may be members of the committee.

(3A) The risk management committee shall meet at least twice in a year.

(3B) The quorum for a meeting of the Risk Management Committee shall 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.

(3C) 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.

(4)The Board of Directors shall define the role and responsibility of the Risk Management Committee and may delegate monitoring and reviewing of the risk management plan to the committee and such other functions as it may deem fit such function shall specifically cover cyber security. The role and responsibilities of the Risk Management Committee shall mandatorily include the performance of functions specified in Part D of Schedule II.

(5)The provisions of this regulation shall be applicable to:

i the top 1000 listed entities, determined on the basis of market capitalization as at the end of the immediately preceding financial year, and,

ii a high value debt listed entity.

(6)The Risk Management Committee shall have powers to seek information from any employee, obtain outside legal or other professional advice and secure attendance of outsiders with relevant expertise, if it considers necessary.

RNG Ltd. intends to pass an ordinary resolution in relation to appointment of independent director. As per the Regulation 25 (2A) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, any appointment or reappointment or removal of an independent director shall be subject to the approval of shareholders through special resolution in a general meeting. Hence, appointment of independent director is not valid under the SEBI (LODR) Regulations, 2015 unless passed by way of special resolution.

With effect from 1st October, 2018, no person shall be appointed or continued as an Alternate director for an independent director of a listed company. In the given case, X is intended to be appointed as Alternate director at the place of independent director Y, which is not valid.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2023, Q. 4(a) (Syllabus 2017).

Vigil Mechanism

According to the Regulation 22 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the listed entity shall formulate a vigil mechanism / whistle blower policy for directors and employees to report genuine concerns.

The vigil mechanism shall provide for adequate safeguards against victimization of director(s) or employee(s) or any other person who avail the mechanism and also provide for direct access to the chairperson of the audit committee in appropriate or exceptional cases.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2022, Q. 6(c) (Syllabus 2017).

As per Regulation 23(3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the audit committee may grant omnibus approval for related party transactions proposed to be entered into by the listed entity or its subsidiary subject to the following conditions:

(a)the audit committee shall lay down the criteria for granting the omnibus approval in line with the policy on related party transactions and such approval shall be applicable in respect of transactions which are repetitive in nature;

(b)the audit committee shall satisfy itself regarding the need for such omnibus approval and that such approval is in the interest of the listed entity;

(c)the omnibus approval shall specify:

(i)the name(s) of the related party, nature of transaction, period of transaction, maximum amount of transactions that shall be entered into;

(ii)the indicative base price / current contracted price and the formula for variation in the price if any; and

(iii)such other conditions as the audit committee may deem fit.

However, where the need for related party transaction cannot be foreseen and aforesaid details are not available, audit committee may grant omnibus approval for such transactions subject to their value not exceeding rupees one crore per transaction.

(d)the audit committee shall review, at least on a quarterly basis, the details of related party transactions entered into by the listed entity or its subsidiary pursuant to each of the omnibus approvals given.

(e)such omnibus approvals shall be valid for a period not exceeding one year and shall require fresh approvals after the expiry of one year.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2026, Q. 6A(i) (Syllabus 2022).

As per the Regulation 23 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a transaction with a related party shall be considered material, if the transactions to be entered into individually or taken together with previous transactions during a financial year, exceeds rupees one thousand crore or ten per cent of the annual consolidated turnover of the listed entity as per the last audited financial statements of the listed entity, whichever is lower. Further, w.e.f. July 01, 2019 a transaction involving payments made to a related party with respect to brand usage or royalty shall be considered material if the transactions to be entered into individually or taken together with previous transactions during a financial year, exceed 5% of the annual consolidated turnover of the listed entity as per the last audited financial statements of the listed entity.

The consolidated turnover of the listed company Yaksha Motors Ltd. amounts to (₹ 450 + ₹ 70) i.e. ₹ 520 crores as per the latest audited financial statements. The threshold for material related party transaction, would be lower of ₹ 1000 crore or 10% of annual consolidated turnover (i.e. ₹ 52 crore) of Yaksha Motors Limited. Therefore, it would be ₹ 52 crore.

For royalty transaction, the threshold for material related party transaction, would be 5% of annual consolidated turnover of Yaksha Motors Limited. Therefore, it would be ₹ 26 crore.

(i)Purchase of goods amounting to ₹ 60 crores is a material related party transaction as it exceeds 10% of the annual consolidated turnover of the listed entity (i.e. ₹ 52 crore).

(ii)Payment of royalty amounting to ₹ 30 crores is a material related party transaction as it exceeds 5% of the annual consolidated turnover of the listed entity (i.e. ₹ 26 crore).

(iii)Payment of ₹ 15 crores towards supply of service is not a material related party transaction as it is below 10% of the annual consolidated turnover of the listed entity (i.e. ₹ 52 crore).

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2024, Q. 1(b) (Syllabus 2017).

Vide SEBI notification dated November 9, 2021, Regulation 23 of the SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015 (“LODR Regulations”) was amended, inter-alia, mandating listed entities, that have listed specified securities, to submit to the stock exchanges disclosure of Related Party Transactions (RPTs) in the format specified by the SEBI from time to time.

SEBI vide circular no. SEBI/HO/CFD/CMDI1/CIR/P/2021/662 dated November 22, 2021 has prescribed the information to be placed before the audit committee and the shareholders for consideration of Related Party Transactions (RPTs).

A.Information to be reviewed by the Audit Committee for approval of RPTs The listed entity shall provide the following information, for review of the audit committee for approval of a proposed RPT:

a.Type, material terms and particulars of the proposed transaction;

b.Name of the related party and its relationship with the listed entity or its subsidiary, including nature of its concern or interest (financial or otherwise);

c.Tenure of the proposed transaction (particular tenure shall be specified);

d.Value of the proposed transaction;

e.The percentage of the listed entity’s annual consolidated turnover, for the immediately preceding financial year, that is represented by the value of the proposed transaction (and for a RPT involving a subsidiary, such percentage calculated on the basis of the subsidiary’s annual turnover on a standalone basis shall be additionally provided);

f.If the transaction relates to any loans, inter-corporate deposits, advances or investments made or given by the listed entity or its subsidiary:

(i)details of the source of funds in connection with the proposed transaction;

(ii)where any financial indebtedness is incurred to make or give loans, inter-corporate deposits, advances or Investments, -nature of indebtedness; -cost of funds; and -tenure;

(iii)applicable terms, including covenants, tenure, interest rate and repayment schedule, whether secured or unsecured; if secured, the nature of security; and

(iv)the purpose for which the funds will be utilized by the ultimate beneficiary of such funds pursuant to the RPT.

g.Justification as to why the RPT is in the interest of the listed entity;

h.A copy of the valuation or other external party report, if any such report has been relied upon;

i.Percentage of the counter-party’s annual consolidated turnover that is represented by the value of the proposed RPT on a voluntary basis;

j.Any other information that may be relevant.

The audit committee shall also review the status of long-term (more than one year) or recurring RPTs on an annual basis.

B.Information to be provided to shareholders for consideration of RPTs

The notice being sent to the shareholders seeking approval for any proposed RPT shall, in addition to the requirements under the Companies Act, 2013, include the following information as a part of the explanatory statement:

a.A summary of the information provided by the management of the listed entity to the audit committee; b. Justification for why the proposed transaction is in the interest of the listed entity;

c.Where the transaction relates to any loans, inter-corporate deposits, advances or investments made or given by the listed entity or its subsidiary, the details specified under point (f) above; (The requirement of disclosing source of funds and cost of funds shall not be applicable to listed banks/NBFCs.)

d.A statement that the valuation or other external report, if any, relied upon by the listed entity in relation to the proposed transaction will be made available through the registered email address of the shareholders;

e.Percentage of the counter-party’s annual consolidated turnover that is represented by the value of the proposed RPT, on a voluntary basis;

f.Any other information that may be relevant.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2023, Q. 4(a) (Syllabus 2017).

(i)Joshi Limited, a listed entity entered into transaction with related party, namely Hosh Ltd. for an amount of Rs. 59 crore is a related party transaction.

(ii)Yes, the payment made for brand uses is a related party transaction.

(iii)As per Regulation 23 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a transaction with a related party shall be considered material, if the transaction to be entered into individually or taken together with previous transactions during a financial year, exceeds Rs. 1000 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.

Notwithstanding the above, a transaction involving payments made to a related party with respect to brand usage or royalty shall be considered material if the transaction(s) to be entered into individually or taken together with previous transactions during the year, exceed five percent of the annual consolidated turnover of the listed entity as per the last audited financial statements of the listed entity.

In the given case, Joshi Ltd. has a consolidated turnover of Rs. 610 Crore and therefore, threshold for materiality would be Rs. 61 crore for a transaction with related party and threshold for materiality for a transaction with related party with respect to brand use or royalty would be Rs. 30.5 crore.

In the given case, Joshi Ltd. has entered into a transaction with related party, Hosh Ltd. for an amount of Rs. 59 crore i.e. within the limit of Rs. 61 crore. Therefore, in case Joshi Limited has not entered into any other financial transaction with Hosh Ltd. during financial year which crosses the overall limit of Rs. 61 Crore including the existing Rs. 59 Crore transaction then it is not material related party transaction.

In the given case, Joshi Limited has made payment of Rs. 10 crore for brand use i.e. within the limit of Rs. 30.5 crore. Therefore, in case Joshi Ltd. has not entered into any other financial transaction with Hosh Ltd. during financial year which crosses the overall limit of Rs. 30.5 Cr including the existing Rs. 10 Cr transaction then it is not material related party transaction.

(iv)Omnibus Approval means a consolidated approval given by the Committee in respect of transactions which are repetitive in nature. As per Regulation 23 (3) of SEBI (Listing Obligations and Disclosure Requirements) 2015, the Audit committee may grant omnibus approval for related party transactions proposed to be entered into by the listed entity subject to the following conditions-

(a)the audit committee shall lay down the criteria for granting the omnibus approval in line with the policy on related party transactions of the listed entity and such approval shall be applicable in respect of transactions which are repetitive in nature;

(b)the audit committee shall satisfy itself regarding the need for such omnibus approval and that such approval is in the interest of the listed entity;

(c)the omnibus approval shall specify:

(i)the name(s) of the related party, nature of transaction, period of transaction, maximum amount of transactions that shall be entered into;

(ii)the indicative base price/content contracted price and the formula for variation in the price if any; and

(iii)such other conditions as the audit committee may deem fit.

However, where the need for related party transaction cannot be foreseen and aforesaid details are not available, audit committee may grant omnibus approval for such transactions subject to their value not exceeding rupees one crore per transaction.

(d)the audit committee shall review, at least on a quarterly basis, the details of related party transactions entered into by the listed entity pursuant to each of the omnibus approvals given.

(e)Such omnibus approvals shall be valid for a period not exceeding one year and shall require fresh approvals after the expiry of one year.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2022, Q. 4(a) (Syllabus 2017).

Yes, the Audit Committee may grant omnibus approval for related party transactions proposed to be entered into by the listed entity subject to the following conditions :

a)the Audit Committee shall lay down the criteria for granting the omnibus approval in line with the policy on related party transactions of the listed entity and such approval shall be applicable in respect of transactions which are repetitive in nature;

b)the Audit Committee shall satisfy itself regarding the need for such omnibus approval and that such approval is in the interest of the listed entity;

c)the omnibus approval shall specify:

(i)the name(s) of the related party, nature of transaction, period of transaction, maximum amount of transactions that shall be entered into;

(ii)the indicative base price / current contracted price and the formula for variation in the price if any; and

(iii)such other conditions as the audit committee may deem fit.

However, where the need for related party transaction cannot be foreseen and aforesaid details are not available, Audit Committee may grant omnibus approval for such transactions subject to their value not exceeding rupees one crore per transaction.

d)the Audit Committee shall review, at least on a quarterly basis, the details of related party transactions entered into by the listed entity pursuant to each of the omnibus approvals given;

e)such omnibus approvals shall be valid for a period not exceeding one year and shall require fresh approvals after the expiry of one year.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2021, Q. 1(b) (Syllabus 2017).

According to Regulation 23 (2) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, all related party transactions shall require prior approval of the Audit Committee.

The Audit Committee may grant omnibus approval for related party transactions proposed to be entered into by the listed entity subject to the following conditions:

(i)The audit committee shall lay down the criteria for granting the omnibus approval in line with the policy on related party transactions of the listed entity and such approval shall be applicable in respect of transactions which are repetitive in nature;

(ii)The audit committee shall satisfy itself regarding the need for such omnibus approval and that such approval is in the interest of the listed entity;

(iii)The omnibus approval shall specify:

A.the name(s) of the related party, nature of transaction, period of transaction, maximum amount of transactions that shall be entered into;

B.the indicated base price/current contracted price and the formula for variation in the price if any; and

C.such other conditions as the audit committee may deem fit.

However, where the need for related party transaction cannot be foreseen and aforesaid details are not available, audit committee may grant omnibus approval for such transactions subject to their value not exceeding rupees one crore per transaction.

(iv)The audit committee shall review, at least on a quarterly basis, the details of related party transactions entered into by the listed entity pursuant to each of the omnibus approval is given.

(v)Such omnibus approval shall be valid for a period not exceeding one year and shall require fresh approvals after the expiry of one year.

However, provisions related to the prior approval of audit committee shall not apply, in case the transactions are entered between a holding company and its wholly owned subsidiary whose accounts are consolidated with such holding company and placed before the shareholders at the general meeting for approval. Therefore, in the case of MAP Ltd. which is a wholly owned subsidiary of MCS Ltd., the approval of audit committee is not required.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2018, Q. 3(b) (Syllabus 2017).

The corporate governance requirements with respect to subsidiary of listed entity are specified under Regulation 24 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. In terms of the said regulation, Prosperity Limited being the holding company, shall meet the following compliances with respect to Elegance Limited:

i)At least one independent director on the board of directors of the listed entity shall be a director on the board of directors of an unlisted material subsidiary, whether incorporated in India or not.

The term “material subsidiary” shall mean a subsidiary, whose income or net worth exceeds twenty percent of the consolidated income or net worth respectively, of the listed entity and its subsidiaries in the immediately preceding accounting year.

ii)The audit committee of the listed entity shall review the financial statements, in particular, the investments made by the unlisted subsidiary.

iii)The minutes of the meetings of the board of directors of the unlisted subsidiary shall be placed at the meeting of the board of directors of the listed entity.

iv)The management of the unlisted subsidiary shall periodically bring to the notice of the board of directors of the listed entity, a statement of all significant transactions and arrangements entered into by the unlisted subsidiary. The term “significant transaction or arrangement” shall mean any individual transaction or arrangement that exceeds or is likely to exceed ten percent of the total revenues or total expenses or total assets or total liabilities, as the case may be, of the unlisted subsidiary for the immediately preceding accounting year.

v)A listed entity shall not dispose of shares in its material subsidiary resulting in reduction of its shareholding (either on its own or together with other subsidiaries) to less than or equal to fifty percent or cease the exercise of control over the subsidiary without passing a special resolution in its General Meeting except in cases where such divestment is made under a scheme of arrangement duly approved by a Court/Tribunal, or under a resolution plan duly approved under section 31 of the Insolvency Code and such an event is disclosed to the recognized stock exchanges within one day of the resolution plan being approved.

vi)Selling, disposing and leasing of assets amounting to more than twenty percent of the assets of the material subsidiary on an aggregate basis during a financial year shall require prior approval of shareholders by way of special resolution, unless the sale/disposal/lease is made under a scheme of arrangement duly approved by a Court/Tribunal, or under a resolution plan duly approved under section 31 of the Insolvency Code and such an event is disclosed to the recognized stock exchanges within one day of the resolution plan being approved.

vii)Where a listed entity has a listed subsidiary, which is itself a holding company, the provisions of this regulation shall apply to the listed subsidiary in so far as its subsidiaries are concerned.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2025, Q. 3(c) (Syllabus 2022).

To, The Board of Directors Prisma Ltd.

Sub: Detailed representation regarding corporate governance requirements with respect to subsidiaries of a listed entity.

Regulation 24 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 deals with the corporate governance requirements with respect to subsidiary of listed entity which provides that -

1)At least one independent director of the listed entity shall be a director on the board of directors of an unlisted material subsidiary, whether incorporated in India or not.

2)The audit committee of the listed entity shall also review the financial statements, in particular, the investments made by the unlisted subsidiary.

3)The minutes of the meetings of the board of directors of the unlisted subsidiary shall be placed at the meeting of the board of directors of the listed entity.

4)The management of the unlisted subsidiary shall periodically bring to the notice of the board of directors of the listed entity, a statement of all significant transactions and arrangements entered into by the unlisted subsidiary.

5)A listed entity shall not dispose of shares in its material subsidiary resulting in reduction of its shareholding (either on its own or together with other subsidiaries) to less than or equal to fifty percent or cease the exercise of control over the subsidiary without passing a special resolution in its General Meeting except in cases where such divestment is made under a scheme of arrangement duly approved by a Court/Tribunal or under a resolution plan duly approved under section 31 of the Insolvency Code and such an event is disclosed to the recognized stock exchanges within one day of the resolution plan being approved.

6)Selling, disposing and leasing of assets amounting to more than twenty percent of the assets of the material subsidiary on an aggregate basis during a financial year shall require prior approval of shareholders by way of special resolution, unless the sale/disposal/ lease is made under a scheme of arrangement duly approved by a Court/Tribunal or under a resolution plan duly approved under section 31 of the Insolvency Code and such an event is disclosed to the recognized stock exchanges within one day of the resolution plan being approved.

7)Where a listed entity has a listed subsidiary, which is itself a holding company, the provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 shall apply to the listed subsidiary in so far as its subsidiaries are concerned.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2021, Q. 6(a) (Old syllabus).

Regulation 25(11) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 provides that Independent Director, who resigns from a listed entity, shall not be appointed as an Executive / Whole Time Director on the board of the listed entity, its holding, subsidiary or associate company or on the board of a company belonging to its promoter group, unless a period of one year has elapsed from the date of resignation as an independent director.

In view of the above, Nikunj is not eligible for appointment as an executive director on the Board for next four months as only eight months have been elapsed after his resignation.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2022, Q. 2(e) (Syllabus 2017).

According to the Regulation 25 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the independent directors of the listed entity must hold at least one meeting in a financial year without the presence of non-independent directors and members of the management. All Independent directors shall strive to be present at such meeting.

In the given case the action of the Amar, Independent Director of Ignite Colour Ltd. is valid as the Managing Director was not invited.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2022, Q. 2A(v) (Syllabus 2017).

Regulation 29(1) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 provides that the listed entity shall give prior intimation of at least two working days in advance, excluding the date of the intimation and date of the meeting, to stock exchange about the meeting of the board of directors in which any of the following proposals is due to be considered:

a)financial results viz. quarterly, half yearly, or annual, as the case may be;

b)proposal for buyback of securities;

c)proposal for voluntary delisting by the listed entity from the stock exchange(s);

d)fund raising by way of issue of securities (excluding security receipts, securitized debt instruments or money market instruments regulated by the Reserve Bank of India), through further public offer, rights issue, American Depository Receipts/Global Depository Receipts/ Foreign Currency Convertible Bonds, qualified institutions placement, debt issue, preferential issue or any other method and for determination of issue price:

Provided that intimation shall also be given in case of any annual general meeting or extraordinary general meeting or postal ballot that is proposed to be held for obtaining shareholder approval for further fund raising indicating type of issuance.

Provided further that intimation for determination of issue price in a qualified institutions placement is not required if such placement is done in accordance with the provisions of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018.

e)declaration/ recommendation of dividend, issue of convertible securities. including convertible debentures or of debentures carrying a right to subscribe to equity shares or the passing over of dividend;

f)the proposal for declaration of bonus securities;

g)any alteration in the form or nature of any of its securities that are listed on the stock exchange or in the rights or privileges of the holders thereof;

h)any alteration in the date on which, the interest on debentures or bonds, or the redemption amount of redeemable shares or of debentures or bonds, shall be payable.

Further, Regulation 29(2) provides that the intimation required under sub-regulation (1) shall mention the date of such meeting of board of directors.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2024, Q. 2(c) (Syllabus 2017).

Prior Intimations (Regulation 29 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015)

Yes, Diamond Company Limited shall give prior intimation to BSE about its annual financial results.

As per Regulation 29, the matters for which the prior intimation of the Board Meeting shall be given to the BSE are as follows:

a)Financial Result viz. quarterly, half yearly or annual;

b)Proposal for Buy-back of Securities

c)Proposal for Voluntary delisting by the listed entity from the stock exchange(s)

d)Fund raising by way of FPO, Right Issue, ADR, GDR, QIP, FCCB, Preferential Issue, debt issue or any other method and for determination of issue price. However, intimation shall also be given in case of any annual general meeting or extraordinary general meeting or postal ballot that is proposed to be held for obtaining shareholder approval for further fund raising indicating type of issuance.

e)Declaration/recommendation of dividend

f)Proposal for declaration of Bonus securities etc.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2020, Q. 2(e) (Syllabus 2017).

29(2) about Board Meeting of directors in which the financial results viz., quarterly, half-yearly, or annual, as the case may be, at least 5 working days in advance excluding the date of the intimation and date of meeting.

29(2) to be considered: -

–buy-back of securities

–voluntary delisting

–fund raising by way of FPO, rights issue, QIP, debt issue, ADR/GDR/FCCB, preferential issue or any other method and for determination of issue price

–Declaration/recommendation of dividend, issue of convertible securities including convertible debentures or of debentures carrying a right to subscribe to equity shares or the passing over of dividend

–Declaration of bonus securities where such proposal is communicated to the board of directors of the listed entity as part of the agenda papers.

Such intimation shall be given, at least 2 working days in advance, excluding the date of the intimation and date of meeting.

about Board Meeting days before any of the following proposal is placedbefore the board of directors

–any alteration in the form or nature of any of its securities that are listed on the stock exchange or in the rights or privileges of the holders thereof.

–any alteration in the date on which, the interest on debentures or bonds, or the redemption amount of redeemable shares or of debentures or bonds, shall be payable.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2019, Q. 6(a) (Old syllabus).

Various outcomes of the Board Meetings which are essential to be disclosed to the Stock Exchange in which the Company is Listed within 30 minutes of the closure of the meeting, are as under:

1.dividends and/ or cash bonuses recommended or declared or the decision to pass any dividend and the date on which dividend shall be paid/ dispatched,

2.any cancellation of dividend with reasons thereof,

3.the decision on buyback of securities,

4.the decision with respect to fund raising proposed to be undertaken,

5.increase in capital by issue of bonus shares through capitalization including the date on which such bonus shares shall be credited/ dispatched,

6.reissue of forfeited shares or securities, or the issue of shares or securities held in reserve for future issue or the creation in any form or manner of new shares or securities or any other rights, privileges or benefits to subscribe to,

7.short particulars of any other alterations of capital, including calls,

8.financial results,

9.decision on voluntary delisting by the listed entity from stock exchange(s).

In case of board meetings being held for more than one day, the financial results shall be disclosed within thirty minutes of end of the meeting for the day on which it has been considered.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2024, Q. 6A(iii) (Syllabus 2022).

(i)As per regulation 31A(3)(b)(v) of the SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015, the promoters seeking re-classification and persons related to the promoters seeking re-classification shall not act as key managerial personnel in the listed entity. Raman is acting as Company Secretary of the listed entity. Therefore, Raman is a key managerial person of the listed entity. As promoter is acting as a key managerial person in the listed entity, therefore he is not eligible to apply for re- classification as public shareholder.

(ii)As per regulation 31A(3)(b)(vi) of the SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015, the promoters seeking re-classification and persons related to the promoters seeking re-classification shall not be a ‘wilful defaulter’ as per the Reserve Bank of India Guidelines. Naina, being a promoter, is declared as wilful defaulter as per RBI guidelines. In this case, Naina is not eligible to apply for re-classification as public shareholder.

(iii)As per regulation 31A(3)(b)(i) of the SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015, the promoters seeking re-classification and persons related to the promoters seeking re-classification shall not together, hold more than ten percent of the total voting rights in the listed entity. Mayank is holding 15% of total voting rights in the listed entity. As Mayank, being a promoter, holds more than ten percent of the total voting rights in the listed entity, hence he is not eligible for re-classification as public shareholder.

(iv)As per Regulation 31A(3)(c)(ii) of the SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015, the listed entity shall not have trading in its shares suspended by the stock exchanges. As trading of equity shares of the company is suspended by the stock exchange, hence reclassification will not be allowed.

(v)As per regulation 31A(3)(b)(v) of the SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015, the promoters seeking re-classification and persons related to the promoters seeking re-classification shall not act as key managerial personnel in the listed entity. Minal is acting as Chief Finance Officer of the listed entity. Therefore, Minal is a key managerial person of the listed entity. As promoter is acting as a key managerial person in the listed entity, and therefore not eligible to apply for re- classification.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2024, Q. 4(b) (Syllabus 2022).

Regulation 31A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“SEBI LODR Regulations”) deals with the conditions for re-classification of any person as promoter / public.

Based on the provisions of Regulation 31A of the SEBI LODR Regulations, the following are the answers to the circumstances given:

(a)Promoter is declared as wilful defaulter as per RBI guidelines. As per Regulation 31A (b)(vi), the Promoter declared as a ‘wilful defaulter’ as per the Reserve Bank of India Guidelines is not eligible to apply for re-classification themselves as public shareholders.

(b)Promoter is holding 12 % of total voting rights in the listed entity. As per Regulation 31A (b)(i), if the promoter holds more than 10% of the total voting rights in the listed entity, they are not eligible for re-classification. Hence in this case, the promoter is not eligible to apply for re-classification.

(c)As per Regulation 31A (b)(v), if the promoter acts as a key managerial person in the listed entity he is not eligible for re-classification. In the given case, the promoter is a CEO hence he is not eligible for re-classification

(d)As per Regulation 31A (c)(iii), the listed entity shall not have any outstanding dues to the SEBI, the stock exchanges or the depositories to be is eligible to apply for reclassification. In this case, the promoter company has outstanding listing fees for one year, hence it is not eligible for re-classification.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2019, Q. 2(a) (Syllabus 2017).

X cannot transfer his shares to Y in physical form. SEBI has amended relevant provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 to disallow listed companies from accepting request for transfer of securities which are held in physical form, with effect from April 1, 2019. The shareholders who continue to hold shares and other types of securities of listed companies in physical form even after this date, will not be able to lodge the shares with company/ its RTA for further transfer. They will need to convert them to demat form compulsorily if they wish to effect any transfer.

Since X wants to transfer his shares to another shareholder Y on 1st May, 2019 i.e. after 1st April, 2019, therefore he would not be allowed to do so.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2021, Q. 1(b)(i) (Syllabus 2017).

The SEBI (LODR) Regulations, 2015 has given the following recognitions to Company Secretary in practice:

1.Certificate regarding Transfer of Securities [Regulation 40(9)]

Certification to the effect that all transfers have been completed within the stipulated time.

2.Secretarial Audit Report [Regulation 24A]

Every listed entity and its material unlisted subsidiaries incorporated in India shall undertake Secretarial Audit and shall annex with its Annual Report, a Secretarial Audit Report, given by a Company Secretary in Practice, in such form as may be specified with effect from the year ended March 31, 2019.

3.Certificate Regarding Compliance of Conditions of Corporate Governance under SEBI (LODR) Regulations [Schedule V]

The Regulations authorize Company Secretary in Practice to issue certificate regarding compliance of conditions of Corporate Governance.

4.Certification regarding Director's Disqualification [Schedule V]

A certificate from a Company Secretary in Practice that none of the directors on the Board of the company have been debarred or disqualified from being appointed or continuing as Directors of Companies by the Board/ Ministry of Corporate Affairs or any such Statutory Authority.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2021, Q. 2A(iii) (Syllabus 2017).

Book Closure and Record Date

Book closure is the periodic closure of the Register of Members and Transfer Books of the company, to take a record of the shareholders to determine their entitlement to dividends or to bonus or right shares or any other rights pertaining to shares. Record date is the date on which the records of a company are closed for the purpose of determining the stock holders to whom dividends, proxies rights etc. are to be sent.

In accordance with Section 91 of the Companies Act, 2013, a company may close the register of members for a maximum of 45 days in a year and for not more than 30 days at any one time, subject to giving at least seven days previous notice. If such company is a listed company, at least seven days previous notice is required to be given by advertisement at least once in a vernacular newspaper in the principal vernacular language of the district and having a wide circulation in the place where the registered office of the company is situated, and at least once in English language in an English newspaper circulating in that district and having wide circulation in the place where the registered office of the company is situated.

Book closure/record date is necessary for the purpose of paying dividend, rights issue, bonus issue, etc. For the companies whose securities are listed on the Exchange are required to comply with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. As per the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the companies are required to give at least seven working days (excluding the date of intimation and the record date) advance notice of book closure or record date to stock exchange where the securities of the companies are listed. In the case of rights issues, the listed entity shall give notice in advance of atleast three working days (excluding the date of intimation and the record date).

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2024, Q. 6(a) (Syllabus 2017).

Book closure is the periodic closer of the Register of Members and Transfer Books of the company, to take a record of the shareholders to determine their entitlement to dividend or to bonus or right shares or any other rights pertaining to shares.

Record date is the date on which the records of a company are closed for the purpose of determining the stockholders to whom dividends, proxies rights etc. are to be sent.

In accordance with Section 91 of the Companies Act, 2013 a company may close the register of members for a maximum of 45 days in a year and for not more than 30 days at any one time. Book closure/record date is necessary for the purpose of paying dividend, rights issue, bonus issue, etc. For the companies whose securities are listed on the Stock Exchange are required to comply with the SEBI Listing Regulations, 2015. As per the SEBI Listing Regulations, 2015, the companies are required to give 7 working days advance notice of book closure or record date to stock exchange where the securities of the companies are listed.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2018, Q. 6(b) (Syllabus 2017).

Regulation 44 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 provides that the listed entity shall provide the facility of remote e-voting facility to its shareholders, in respect of all shareholders' resolutions and shall submit to the stock exchange, within two working days of conclusion of its General Meeting, details regarding the voting results in the format specified by the SEBI.

Further provided that, the top 100 listed entities by market capitalization, determined as on March 31st of every financial year, shall hold their annual general meetings within a period of five months from the date of closing of the financial year and shall provide one-way live webcast of the proceedings of the annual general meetings.

Thus, in view of the above:

(i)The action of the Pritam Ltd. is not tenable. Pritam Ltd. shall hold its AGM within five months from the date of closing of financial year i.e. by 31st August, 2022.

(ii)The top 100 listed entities shall provide one-way live webcast of the proceedings of the annual general meetings.

(iii)Yes, Pritam Ltd. shall provide the facility of remote e-voting to its shareholders mandatorily. The e-voting facility to be provided to shareholders shall be provided in compliance with the conditions specified under the Companies (Management and Administration) Rules, 2014, or amendments made thereto.

(iv)The time for submitting to stock exchange is within 2 working days of conclusion of its General Meeting, details regarding the voting results in the format specified by the SEBI.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2022, Q. 1(b) (Syllabus 2017).

In terms of the Regulation 44 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, listed entities are required to provide remote e-voting facility to its shareholders, in respect of all shareholders' resolutions. However, it has been observed that the participation by the public non-institutional shareholders/retail shareholders is at a negligible level. Currently, there are multiple e-voting service providers (ESPs) providing e-voting facility to listed entities in India. This necessitates registration on various ESPs and maintenance of multiple user IDs and passwords by the shareholders.

In order to increase the efficiency of the voting process, pursuant to a public consultation, it has been decided by the SEBI vide its circular dated 9th December, 2020, to enable e-voting to all the demat account holders, by way of a single login credential, through their demat accounts/ websites of Depositories/ Depository Participants. Demat account holders would be able to cast their vote without having to register again with the ESPs, thereby, not only facilitating seamless authentication but also enhancing ease and convenience of participating in e-voting process. The same shall be implemented in a phased manner as prescribed under the circular.

The aforementioned facility shall be available to all individual shareholders holding the securities in demat mode.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2022, Q. 2(b) (Syllabus 2017).

Meetings of shareholders and voting (Regulation 44 of SEBI (LODR) Regulations, 2015]

1.The listed entity shall provide the facility of remote e-voting facility to its shareholders, in respect of all shareholders resolutions.

2.The e-voting facility to be provided to shareholders, shall be provided in compliance with the conditions specified under the Companies (Management & Administration) Rules, 2014, or amendments made thereto.

3.The listed entity shall submit to the stock exchange, within 48 hours of conclusion of its General Meeting details regarding the voting results in the format Specified by SEBI.

4.The listed entity shall send proxy forms to holders of securities in all cases mentioning that a holder may vote either for or against each resolution.

5.The top 100 listed entities by market capitalization, determined as on March 31st of every financial years, shall hold their annual general meetings within a period of 5 months from the date of closing of the financial year.

6.The top 100 listed entities shall provide one-way live webcast of the proceedings of the annual general meetings.

Explanation : The top 100 entities shall be determined on the basis of market capitalization, as at the end of the immediate previous financial year.

The manner for e-voting as per Section 108 of the Companies Act, 2013 read with Rule 20 of Companies (Management & Administration) Rules, 2014, or amendments made thereto is as follow:-

—The notice of AGM state that the company is providing the facility for voting by electronic means and indicate the process and manner for voting by electronic means.

—The company shall cause a public notice by way of an advertisement to be published in newspapers atleast 21 days before the AGM and specify the manners for e-voting.

—The Board of Directors shall appoint scrutiniser who, in the opinion of the Board can scrutinise the e-voting process in a fair and transparent manner.

—The Chairman shall declare the result of the voting and the results declared along with the report of the scrutiniser shall be forward to the stock exchange where the shares of the company are listed and be placed on the website of the company.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2019, Q. 5(d) (Old syllabus).

As per Regulation 46 of SEBI (LODR) Regulations, 2015, every listed company required to maintain a functional website containing the following business information under a separate section on its website as under:

(a)details of its business;

(b)terms and conditions of appointment of independent directors;

(c)composition of various committees of board of directors;

(d)code of conduct of board of directors and senior management personnel;

(e)details of establishment of vigil mechanism/ Whistle Blower policy;

(f)criteria of making payments to non-executive directors, if the same has not been disclosed in annual report;

(g)policy on dealing with related party transactions;

(h)policy for determining “material” subsidiaries;

(i)details of familiarization programmes imparted to independent directors including the following details:-

i.number of programmes attended by independent directors (during the year and on a cumulative basis till date),

ii.number of hours spent by independent directors in such programmes (during the year and on cumulative basis till date), and

iii.other relevant details

(j)the email address for grievance redressal and other relevant details;

(k)contact information of the designated officials of the listed entity who are responsible for assisting and handling investor grievances;

(l)Financial information including:

i.notice of meeting of the board of directors where financial results shall be discussed;

ii.financial results, on conclusion of the meeting of the board of directors where the financial results were approved;

iii.complete copy of the annual report including balance sheet, profit and loss account, directors report, corporate governance report etc; shareholding pattern;

(m)shareholding pattern;

(n)details of agreements entered into with the media companies and/or their associates;

(o)schedule of analyst or institutional investor meet and presentations made by the listed entity to analysts or institutional investors simultaneously with submission to stock exchange;

(p)new name and the old name of the listed entity for a continuous period of one year, from the date of the last name change;

(q)items in sub-regulation (1) of regulation 47;

(r)With effect from October 1, 2018, all credit ratings obtained by the entity for all its outstanding instruments, updated immediately as and when there is any revision in any of the ratings;

(s)separate audited financial statements of each subsidiary of the listed entity in respect of a relevant financial year, uploaded at least 21 days prior to the date of the annual general meeting which has been called to inter alia consider accounts of that financial year.

It has to ensure by the listed company that the contents of the website are correct and updated.

The listed entity shall update any change in the content of its website within two working days from the date of such change in content.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2019, Q. 5(a) (Old syllabus).

Company issuing Indian Depository Receipts (IDRs) has to comply with Regulation 71 of the SEBI(Listing Obligations and Disclosure Requirements) Regulations, 2015, which provides for following:

Regulation 71 Annual Report • The listed entity shall submit to stock exchange an annual report at the same time as it is disclosed to the security holder in its home country or in other jurisdictions where such securities are listed..

•The annual report shall contain the following :

(a)Report of board of directors;

(b)Balance sheet;

(c)Profit and loss account;

(d)Auditors Report

(e)All periodical and special reports (if applicable);

(f)Any such other report which is required to be sent to security holders annually.

•The listed entity shall comply with the requirements with respect to preparation and disclosure in financial results in annual report as specified in Part B of Schedule IV.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2019, Q. 2A(iii) (Old syllabus).

Statement of utilisation of funds

According to regulation 91F of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 read with SEBI circular No. SEBI/HO/CFD/PoD-1/P/CIR/2022/120 dated September 19, 2022, a listed Not for Profit Organization shall submit to the Social Stock Exchange(s) the following statement in respect of utilisation of the funds raised within 45 days from the end of quarter:-

(a)category-wise amount of monies raised;

(b)category-wise amount of monies utilised;

(c)balance amount remaining unutilised.

The unutilised amount shall be kept in a separate bank account and shall not be co mingled with other funds. The statement required shall be given till the time the issue proceeds have been fully utilised or the purpose for which they were raised, has been achieved.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2024, Q. 2A(v) (Syllabus 2017).

Yearly Compliances as per the SEBI (LODR) Regulations, 2015

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2021, Q. 1(c) (Syllabus 2017).

Corporate Governance is looked upon as a distinctive brand and benchmark in the profile of Corporate Excellence. This is evident from the continuous amendments/ modifications of guidelines, rules and regulations by SEBI for ensuring transparency and accountability. In the process, SEBI had constituted a Committee on Corporate Governance under the Chairmanship of Kumar Mangalam Birla. The Committee in its report observed that “the strong Corporate Governance is indispensable to resilient and vibrant capital markets and is an important instrument of investor protection. It is the blood that fills the veins of transparent corporate disclosure and high quality accounting practices. It is the muscle that moves a viable and accessible financial reporting structure.

Based on the recommendation of the Committee, the SEBI had specified principles of Corporate Governance and introduced a new clause 49 in the Listing agreement of the Stock Exchanges in the year 2000. SEBI notified the Listing Regulations with SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 replacing the earlier listing agreement.

The Companies Act, 2013 which provides for a major overhaul in the Corporate Governance norms for all companies. Further as a good governance initiative and with a view to consolidate and streamline the provisions of listing agreement of the capital market and to align the provisions relating to listed entities with the Companies Act, 2013.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2020, Q. 5(b) (Old syllabus).

Half Yearly Compliances as per SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015

Regulation 7(3) : The listed entity shall submit a compliance certificate to the exchange, duly signed by both the compliance officer of the listed entity and the authorized representative of the share transfer agent within one month of end of each half of the financial year.

Regulation 29(1) : The listed entity shall give prior intimation to stock exchange about the meeting of the board of directors in which the proposals is due to be considered for financial results viz. quarterly, half yearly, or annual, as the case may be.

Proviso to Regulation 31(1) : listed entities which have listed their specified securities on SME Exchange, the Holding of specified securities and shareholding pattern shall be submitted on a half yearly basis within twenty one days from the end of each half year.

Regulation 32 : The listed entity shall submit to the stock exchange the following statement(s) on a quarterly basis for public issue, rights issue, preferential issue etc.

a.indicating deviations, if any, in the use of proceeds from the objects stated in the offer document or explanatory statement to the notice for the general meeting, as applicable;

b.indicating category wise variation (capital expenditure, sales and marketing, working capital etc.) between projected utilisation of funds made by it in its offer document or explanatory statement to the notice for the general meeting, as applicable and the actual utilisation of funds.

For the purpose of this regulation, reference to “quarterly/quarter” in case of listed entity which has listed their specified securities on SME Exchange shall respectively be read as “half yearly/half year”.

Regulation 33(3)(f) : While preparing financial results, the listed entity shall also submit as part of its standalone or consolidated financial results for the half year, by way of a note, a statement of assets and liabilities as at the end of the half – year.

Regulation 33(3)(g) : The listed entity shall also submit as part of its standalone and consolidated financial results for the half year, by way of a note, statement of cash flows for the half-year.

Regulation 33(5) : For the purpose of ‘Financial Results’ (Regulation 33), any reference to “quarterly/quarter” in case of listed entity which has listed their specified securities on SME Exchange shall be respectively read as “half yearly/half year” and the requirement of submitting ‘year-to-date’ financial results shall not be applicable for a listed entity which has listed their specified securities on SME Exchange.

Regulation 40(9) : The listed entity shall ensure that the share transfer agent and/or the in-house share transfer facility, as the case may be, produces a certificate from a practising company secretary within one month of the end of each half of the financial year, certifying that all certificates have been issued within thirty days of the date of lodgement for transfer, sub-division, consolidation, renewal, exchange or endorsement of calls/allotment monies.

As per Regulation 40(10) of SEBI (LODR), the listed entity shall ensure that certificate mentioned at Regulation 40 (9), shall be filed with the stock exchange(s) simultaneously.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2019, Q. 2A(iii) (Syllabus 2017).

The followings are the quarterly compliances required to be made under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015:

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2018, Q. 2A(iv) (Syllabus 2017).

As per Schedule V of SEBI (LODR), Regulations, 2015, a Management Discussion and Analysis report should form part of the Annual Report to the shareholders. This report should include discussion on the following matters within the limits set by the company’s competitive position:

–Industry structure and developments;

–Opportunities and threats;

–Segment/product wise performs;

–Outlook;

–Risks and concerns;

–Internal control systems and their adequacy;

–Mission and organizational structure;

–Performance goals and results;

–Financial statements;

–Systems, controls, and legal compliance;

–Discussion on financial performs with respect to operational performance;

–Material developments in Human Resources/ Industrial Relations Front, including number of people employed.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2019, Q. 6(b) (Old syllabus).

SEBI vide its Circular dated May 3, 2018, prescribed the criteria for suspension of the trading in the shares of the listed entities which are as follows:

Failure to comply with respect to:

(i)board composition including appointment of woman director for two consecutive quarters;

(ii)constitution of audit committee for two consecutive quarters;

(iii)submission of corporate governance compliance report for two consecutive quarters;

(iv)submission of the shareholding pattern for two consecutive quarters;

(v)submission of financial result for two consecutive quarters;

(vi)submission of Annual Report for two consecutive financial years;

(vii)submit information on the reconciliation of shares and capital audit report, for consecutive quarters;

(viii)receipt of the notice of suspension of trading of that entity by any other recognised stock exchange or any or all of the above grounds.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2018, Q. 2(d) (Syllabus 2017).