Introduction

1. SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015By: Ilam KambojAsso. V.P.-Legal & CSHero MotoCorp Ltd.February 20, 2016

2. Introduction • SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 notified on Sep 02, 2015 effective from Dec 1, 2015. • The Regulation structured by consolidating into one single document across various types of securities listed on SE: • Equity Share listed on Main Board; • SME Companies listed on SME & SME–ITP Trading Platform; • Non Convertible Debentures (NCDs); • Non-Convertible Redeemable Preference Shares (NCRPS); • Indian Depository Receipts; and • Securitized Debt Instruments and units issued by Mutual Fund Schemes.

3. Introduction • Regulations Contains 11 Chapters and 10 Schedules. • Chapters on Principles (Disclosures and C.G),General Obligations, Exchange Responsibility. • Shortened version of Listing Agreement (LA) required to be executed within 6 months from the Notification.

4. Salient Features –Principles • Reg. 4(1) - Principles governing disclosures and obligation: • To provide adequate, accurate, sufficient, timely & cost efficient access of information to the investors. • Disclosure submitted should be in compliance with regulations in letter and spirit & taking into consideration the interest of all stakeholders. • To implement the prescribed accounting standards in letter and spirit in the preparation of financial statements taking into consideration the interest of all stakeholders. • Ensure that the annual audit is conducted by an independent, competent and qualified auditor. • Ensure that disseminations made under provisions of these regulations and circulars made thereunder, are adequate, accurate, explicit, timely and presented in a simple language.

5. Salient Features –Principles Channels for disseminating information shall provide for equal, timely and cost efficient access to relevant information by investors. Periodic filings, reports, statements, documents and information reports shall contain information that shall enable investors to track the performance of a listed entity over regular intervals of time and shall provide sufficient information to enable investors to assess the current status of a listed entity. Rights of Shareholders: opportunity to ask questions to the board of directors, to place items on the agenda of general meetings, and to propose resolutions, subject to reasonable limitations. protection of minority shareholders from abusive actions by, or in the interest of, controlling shareholders acting either directly or indirectly, and effective means of redress.

6. Salient Features –Principles Timely information Capital structures and arrangements that enable certain shareholders to obtain a degree of control disproportionate to their equity ownership. rights attached to all series and classes of shares, which shall be disclosed to investors before they acquire shares. Equitable Treatment Ensure equitable treatment to all shareholders, including minority and foreign shareholders particularly with reference to participation in decisions, voting rights, general meetings etc.

7. Salient Features –Principles Role of Stakeholders in Corporate Governance To recognize the rights of its stakeholders and encourage co-operation between listed entity and the stakeholders. Disclosure and transparency Ensure timely and accurate disclosure on all material matters including the financial situation, performance, ownership, and governance of the listed entity

8. Salient Features –Principles Responsibilities of the Board of Directors: The Board of Directors of the listed entity shall have the following responsibilities: Disclosure of information: Members of Board of Directors and KMP shall disclose to the Board of Directors whether they, directly, indirectly, or on behalf of third parties, have a material interest in any transaction or matter directly affecting the listed entity. The Board of Directors and Senior Management shall conduct themselves so as to meet the expectations of operational transparency to stakeholders while at the same time maintaining confidentiality of information in order to foster a culture of good decision-making.

9. Salient Features –Principles Key functions of the Board of Directors- Reviewing and guiding corporate strategy, major plans of action, risk policy, annual budget and business plans, setting performance objectives, monitoring implementation and corporate performance, and overseeing major capital expenditures, acquisitions and divestments. Selecting, compensating, monitoring and, when necessary, replacing KMP and overseeing succession planning. Aligning KMP and remuneration of Board of Directors with the longer term interests of the listed entity and its shareholders.

10. Salient Features –Principles Key functions of the Board of Directors- Ensuring a transparent nomination process to the Board of directors with the diversity of thought, experience, knowledge, perspective and gender in the Board of Directors. Monitoring and managing conflicts of interest of management, members of the Board of Directors and shareholders, including misuse of corporate assets and abuse in related party transactions Overseeing the process of disclosure and communications. Monitoring and reviewing Board of Director’s evaluation framework

11. Salient Features –Principles Other responsibilities: Members of the Board of Directors shall act on a fully informed basis, in good faith, with due diligence and care, and in the best interest of the listed entity and the shareholders. The Board of Directors shall ensure that, while rightly encouraging positive thinking, these do not result in over-optimism that either leads to significant risks not being recognised or exposes the listed entity to excessive risk. When committees of the Board of Directors are established, their mandate, composition and working procedures shall be well defined and disclosed by the board of directors.

12. Salient Features –Principles Other responsibilities: The Board of Directors shall maintain high ethical standards and take into account the interest of stakeholders. Shall exercise objective independent judgement on corporate affairs. In order to fulfil their responsibilities, members of the board of directors shall have access to accurate, relevant and timely information. The Board of Directors and Senior management shall facilitate the independent directors to perform their role effectively as a member of the Board/Committees. In case of ambiguity, Principles will prevail.

13. Salient Features –Replicated from LA • No change in submission time line for Financial Results, Shareholding Pattern, Corporate Governance Report. • Disclosures of Voting Pattern results within 48 hours of General meeting vs. 3 days under E-voting.

14. Salient Features –Amended Provisions from LA • Reg. 6: • Requirement to appoint Qualified CS as Compliance Officer (CO).- Need not be the designated Company Secretary. • CO to be responsible for ensuring compliance with applicable laws in letter and spirit , monitoring grievance redressal. • Ensure process/procedures have been followed that would result in correctness, authenticity and comprehensiveness of the information, statements and reports filed with SEs. • Coordinate with SEBI, SEs & Depositories.

15. Salient Features –Amended Provisions from LA • Reg. 13 : • Registration with SCORES made mandatory and serious. • Quarterly submission of Investor complaint status report within 21 days of end of quarter to SE. • Place the said report before BOD. • Reg. 16: • Material Subsidiary definition includes all subsidiary which are material. • Concept of material unlisted Indian subsidiary has been done away with.

16. Salient Features –Amended Provisions from LA • Reg. 29 : • Reduction in days of Intimation of Board Meeting (BM) for consideration of Financial results to 5 days from 7 days.

17. Salient Features –Amended Provisions from LA • Reg.30 - Disclosures of Events: • Framing of Policy for determining materiality; • Materiality policy to be approved by BOD and disclosed on its website; • One or more KMP to be designated for determining materiality of disclosures and submission to Exchange; • Contact details of such KMP’s to be disclosed to Stock Exchanges and disclosed on website; • Disclosure ASAP but not later than 24 hrs from occurrence of event/information; • If delay, explain delay; • Regular updation of disclosure until the event is resolved/closed with relevant explanations;

18. Salient Features –Amended Provisions from LA Disclosures submitted to SEs to be on Company’s website also for minimum 5 years; Further removal as per archival policy * of the Company; * Archival Policy to be prepared , approved and placed on the website. Disclosures of material events or information of subsidiaries also; Format/form for disclosures to be specified by SEBI through circulars; and Outcome of BM to be submitted within 30 minutes.

19. Salient Features –Amended Provisions from LA • Disclosure of material event/information : material in the opinion of the BOD. • Schedule III provide events: • Para A of Part A – Events deemed to be material – No choice but to disclose. • Para B of Part A – Based on application of the guidelines of the materiality. • Criteria for determining materiality • the omission of an event or information, which is likely to result in discontinuity or alteration of event or information already available publicly; or • the omission of an event or information is likely to result in significant market reaction if the said omission came to light at a later date; • If in the opinion of the board of directors of listed entity, the event / information is considered material.

20. Circular dated September 9, 2015 • Guidance on when an event/information has occurred: • Instances where discussion, negotiation or approval is required the events/information can be said to have occurred upon receipt of approval of Board of Directors. • Other instances e.g. Natural calamities, disruptions etc., the events/information can be said to have occurred when a listed entity becomes aware of the events/information, or as soon as, an officer of the entity has, or ought to have reasonably come into possession of the information in the course of the performance of his duties. • Here, the term ‘officer’ shall have the same meaning as defined under the Companies Act, 2013 and shall also include promoter of the listed entity.

21. Circular dated September 9, 2015 Sample disclosures – Para A Part A – Deemed Material: • Acquisition shall mean,- • acquiring control, whether directly or indirectly; or, • acquiring or agreeing to acquire shares or voting rights in, a company, whether directly or indirectly, such that – • the Company holds shares or voting rights aggregating to 5 per cent or more of the shares or voting rights in the said company, or; • there has been a change in holding from the last disclosure made under sub-clause (a) of clause (ii) of the Explanation to this sub-para and such change exceeds 2 per cent of the total shareholding or voting rights in the said company.

22. Circular dated September 9, 2015 Information to be provided in disclosure: • Acquisition (including agreement to acquire): • name of the target entity, details in brief such as size, turnover etc.; • Whether RPT or any other interest ? If yes, nature of interest and details thereof and whether the same is done at “arms length”; • Industry to which the entity being acquired belongs; • Objects and effects of acquisition – Reasons for acquisition ; • Brief details of any regulatory approvals – required for acquisition;

23. Circular dated September 9, 2015 indicative time period for completion of the acquisition; nature of consideration; cost of acquisition or the price; percentage of shareholding / control / number of shares acquired; Brief background about the entity acquired in terms of - products/line of business acquired, - date of incorporation, - history of last 3 years turnover, - country in which the acquired entity has presence and - any other significant information (in brief);

24. Circular dated September 9, 2015 • Agreements – Shareholders Agreement, JV Agreement, Family Settlement Agreement • Name(s) of parties; • Purpose; • Shareholding, if any, in the entity with whom agreement is executed; • Significant terms of the agreement (in brief); • Relation with promoter/promoter group/ group companies in any manner. If yes, nature of relationship; • Whether RPT or not? If yes, whether the same is done at “arms length”; • Details of issue price and class of shares issued, if any;

25. Circular dated September 9, 2015 Other disclosures, if any, e.g. Nominee on the Board, Potential conflict of interest etc. In case of termination or amendment disclose the following to stock exchange(s): - Name of parties; - Nature of the agreement; - Date of execution; Details of amendment and impact thereof or reasons of termination and impact thereof.

26. Circular dated September 9, 2015 • Fraud/ Defaults by promoter or KMP or by the Company or arrest of KMP or promoter: • At the time of unearthing of fraud or occurrence of the default / arrest: - nature of fraud/default/arrest; - estimated impact on the listed entity; - time of occurrence; - person(s) involved; - estimated amount involved (if any); - whether such fraud/default/arrest has been reported to appropriate authorities.

27. Circular dated September 9, 2015 Subsequently intimate the stock exchange(s) further details regarding the fraud/default/arrest including: - actual amount involved in the fraud /default (if any); - actual impact of such fraud /default on the listed entity and its financials; and - corrective measures taken by the listed entity on account of such fraud/default.

28. Circular dated September 9, 2015 • Change in directors, KMP (MD, CEO, CFO, CS etc.), Auditor and CO: • Reason for change viz. appointment, resignation, removal, death or otherwise; • Date of appointment/cessation (as applicable) & term of appointment; • Brief profile (in case of appointment); • Disclosure of relationships between directors (in case of appointment of a director).

29. Circular dated September 9, 2015 • Disclosure for events where the Company may apply materiality • Commencement or any postponement in the date of commencement of commercial production or commercial operations of any unit/division: • The Company shall notify the SE regarding the • commencement of commercial production or • commencement of commercial operations of any unit/ division. • Details in case of postponement of the date of commencement.

30. Circular dated September 9, 2015 • Change in the general character or nature of business brought about by: • Arrangements for strategic, technical, manufacturing, or marketing tie-up: - Agreement / joint venture (JV) with companies: • name of the entity(ies) with whom agreement/ JV is signed; • area of agreement/JV; • domestic/international; • share exchange ratio / JV ratio; • scope of business operation of agreement / JV; • details of consideration paid / received in agreement / JV; • significant terms and conditions of agreement / JV in brief;

31. Circular dated September 9, 2015 whether the acquisition would fall within related party transactions and whether the promoter/ promoter group/ group companies have any interest in the entity being acquired? If yes, nature of interest and details thereof and whether the same is done at “arms length; size of the entity(ies); rationale and benefit expected. - If arrangement called off- Reasons for calling off.

32. Circular dated September 9, 2015 • Capacity addition or product launch • Capacity addition: - existing capacity; - existing capacity utilization; - proposed capacity addition; - period within which the proposed capacity is to be added; - investment required; - mode of financing; - rationale.

33. Circular dated September 9, 2015 Product launch: - name of the product; - date of launch; - category of the product; - whether caters to domestic/ international market; - name of the countries in which the product is launched (in case of international).

34. Circular dated September 9, 2015 • Disruption of operations of any one or more units or division of the listed entity due to natural calamity (earthquake, flood, fire etc.), force majeure or events such as strikes, lockouts etc.: • At the time of occurrence: • expected quantum of loss/damage caused; • whether loss/damage covered by insurance or not including amount; • estimated impact on the production/operations in case of strikes/lock outs; • factory/unit where the strike/lock out takes place including reasons for such strike.

35. Circular dated September 9, 2015 • Regularly, till complete normalcy is restored: • insurance amount claimed and realized by the listed entity for the loss/damage; • the actual amount of damage caused due to the natural calamity or other force majeure events; • details of steps taken to restore normalcy and the impact of the natural calamity/other force majeure events on production or service, financials of the entity.

36. Circular dated September 9, 2015 • Litigation(s) / dispute(s) / regulatory action(s) with impact: The Company shall notify the stock exchange(s) upon it or its KMP or its promoter or ultimate person in control becoming party to any litigation etc. • At the time of becoming the party: - brief details of litigation viz. name(s) of the opposing party, court/ tribunal/agency where litigation is filed, brief details of dispute/litigation; - expected financial implications, if any, due to compensation, penalty etc; - quantum of claims, if any;

37. Circular dated September 9, 2015 Regularly till the litigation is concluded or dispute is resolved: - the details of any change in the status and / or any development in relation to such proceedings; - in the case of litigation against key management personnel or its promoter or ultimate person in control, regularly provide details of any change in the status and / or any development in relation to such proceedings; - in the event of settlement of the proceedings, details of such settlement including - terms of the settlement, compensation/penalty paid (if any) and impact of such settlement on the financial position of the Company.

38. Salient Features –Amended Provisions from LA • Reg.33–Financial Results: • Only Board is authorised to approve financial results. • Limited review report to be place before Board • Company can opt for submission of quarterly consolidated results to the Exchange and shall intimate the same in first quarter of FY. • Form A (for unmodified opinion)/B(for modified opinion) to be submitted along with annual results(stand alone as well as consolidated)

39. Salient Features –Amended Provisions from LA • Reg.34: • Annual Report to be submitted to SE within 21 working days of its adoption at Annual General Meeting (AGM). • Annual Report to be sent to the securities holders at least 21 days before AGM. • Reg.36: • Disclosures of only listed companies, in which a person holds directorship, while appointment/ reappointment of directors.

40. Salient Features –Amended Provisions from LA • Reg.39: • The timeline for issuance of certificate pursuant to split/ consolidation/ renewal/ exchanges/ duplicate have been stream lined to 30 days from date of lodgement. (earlier 6 week). • Company can delegate power of transfer of securities to Committee or CO or RTA. • Delegated authority shall report on transfer of securities to the BOD in each meeting. • Reg.42: • Annual Book closure requirement is done away with. Company has to fix the RD (BC is optional). 5 working days gap between BM and RD for dividend/cash bonuses. • Time gap between two record dates – Minimum 30 days

41. Salient Features –Amended Provisions from LA • Reg. 45 – Name Change: • Mandatory name change (within 6 months) in case company change its activities which is not reflected in its name. • Prior approval of SE is mandatory before making application to ROC.

42. Salient Features –Amended Provisions from LA • Reg. 46 - Disclosure on website, following additional in formation required: • BOD committee composition, • Details of familiarisation program imparted to IDs, No. of programmes attended by IDs during the year and cumulative till date. • No. of hours spent by IDs in such programs during the year and cumulative till date; • Disclosures submitted to SE, BM, Results, SHP etc. • Schedule of analyst or institutional investors meet and presentation made by the Company to them simultaneously with submission to SE. • In case of name change – New Name and Old Name (upto 1 year)

43. Salient Features –Amended Provisions from LA Notices sent to shareholders, AR; Policy on material events, Archival policy, RPT, Material Subsidiary; Agreement with Media Co; Contact info. of designated person responsible for handling Investor Grievance & email id; and Updation of website within 2 working days of its change.

44. Salient Features –New provisions • Reg. 5: Company to ensure that KMPs, Directors, Promoters or any other person discharge their obligation under the regulations. • Reg. 7: C.O. and RTA provide half yearly compliance certificate regarding maintenance of activity of transfer facility (Reg.7(1)) within 1 month.

45. Salient Features –New provisions • Reg. 8: Company need to co operate & provide information to SEBI Registered Intermediaries. (e.g.: Credit rating agencies, debenture trustees). • Reg. 9: Company has to devise policy approved by BOD to preserve documents (physically or electronic) either permanently or upto 8 years. • Reg. 10: Company shall make the filings on electronic platform as specified by SE & sufficient infrastructure has to be in place for the same.

46. Salient Features –New provisions • Reg.12: Dividend/ Interest/ Redemption payment: • Has to be made in electronic mode approved by RBI. • RTA shall maintain bank details of investors. • Dividend exceeding Rs. 1500 to be paid by cheque/ warrant (speed post). • Obligatory to print bank a/c details or address on payment warrant. • Sch VI: All shares in respect of which unpaid or unclaimed dividend has been transferred u/s 124(5) of the Companies Act to IEPF shall also be transferred to IEPF.

47. Salient Features –New provisions • Reg. 31A - Reclassification of promoters pursuant to (i) Transmission/ Inheritance, (ii) Open Offer, (iii) Company becoming professionally managed: • Share holders approval is required. • Outgoing promoters cannot hold more than 10% shares/ VRs • Outgoing promoters cannot act as KMP for more than 3 years without share holder approval. • They shall not exercise control over the listed entity & all Special rights shall be terminated. • In case of professionally managed companies – No group can hold more than 1%.

48. Salient Features –New provisions • Reg. 34: BRR is applicable to top 500 listed companies as on March 31 every financial year. • Reg. 35: Annual Information Memorandum to be submitted as specified by SEBI. • Reg. 40: Detailed procedures with timelines has been prescribed for transfer/ transmission/ transposition of securities. • Prohibitory order to be served by transferor within 60 working days Sch. VII requires PAN from Transferor as well as transferee • Detailed procedure given to deal with difference in Signature. • In case of delay in transfer the company has to compensate to aggrieved party and any claim/ dispute is to be settled by arbitration as per exchange bye-law.

49. Salient Features –New provisions • Reg. 47: Website link to be given in newspaper publications. • Reg. 108(4): Refund subscription monies in case of non-receipt of listing permission/ withdrawal of observation letter • Schedule V (10): Following non-compliance to be disclosed in AR • Non-compliance, penalties imposed by SE/ SEBI/ Regulatory Authority on any matter related to capital market. • Web link of material subsidiary policy, RPT policy • Disclosures of commodity price risks & Commodity hedging activities • Non-compliance of any requirement of CG along with reason.

50. Salient Features –New provisions • Chapter X – Duties & Obligation of Stock Exchanges: • Dissemination of all the filings submitted by the listed entity immediately. • Monitoring of compliance and adequacy / accuracy of the disclosures filing by listed entity. • Action by Exchange in case of Default by listed entity. • Obligation w.r.t. scheme of Arrangement (in line with SEBI circular dated Feb 4, 2013)