Showing posts with label disclosures. Show all posts

Thursday, 3 September 2026

Requirement for Fund Management Entities (FMEs) to maintain a website or webpage

The International Financial Services Centres Authority (“IFSCA”) issued the Circular File No. IFSCA-SOF/2/2026-Capital Markets dated 26 August 2026, requiring Fund Management Entities (“FMEs”) registered under the IFSCA (Fund Management) Regulations, 2025 (“FM Regulations, 2025”) to maintain an official website or webpage.

The Circular is intended to strengthen transparency, investor access to information and dissemination of information relating to FMEs and their operations in the IFSC. The Circular is scheduled to come into force on 1 December 2026.

1. FMEs covered by the Circular

The website requirement applies to every FME registered under the FM Regulations, 2025. However, the nature of the website requirement differs depending upon the category of FME.

Category of FME	Website requirement
Authorised FME	Independent official website or dedicated webpage on parent/holding/group entity's website
Registered FME (Non-Retail)	Independent official website or dedicated webpage on parent/holding/group entity's website
Registered FME (Retail)	Independent official website dedicated to its fund management activities in the IFSC

These requirements are expressly set out in clauses 2 and 3 of the Circular.

Key distinction

The Circular provides greater flexibility to Authorised FMEs and Registered FMEs (Non-Retail) by permitting them to use a dedicated webpage on the website of their parent, holding or group entity.

However, a Registered FME (Retail) must maintain an independent official website dedicated to its IFSC fund management activities.

This distinction is significant because Retail FMEs are subject to substantially more extensive public disclosure requirements.

2. Basic requirements applicable to the website/webpage

The website or webpage must satisfy certain minimum accessibility and identification requirements.

Public accessibility

The information specified under the Circular must be publicly accessible without registration, subscription or login.

Therefore, FMEs should not place mandatory regulatory disclosures behind investor logins or restricted-access sections.

Clear identification of the FME

The website/webpage must prominently identify:

the FME by the name under which it is registered with IFSCA;
its IFSCA registration number; and
its IFSC activities distinctly from other activities of the parent, holding or group entity.

Where a group or parent website is being used, the dedicated FME webpage must therefore be sufficiently distinct to avoid confusion between the IFSC-regulated activities and other businesses of the group.

Link from parent/group website

Where an FME uses a webpage hosted on the website of its parent, holding company or group entity, that webpage must be accessible through a conspicuously identifiable link on the host website's home page.

3. Mandatory disclosures by all FMEs

Clause 4 establishes a fairly comprehensive disclosure framework.

The website/webpage must prominently display the following:

A. Profile and registration details

The FME must provide:

brief profile;
category of registration; and
IFSCA registration number.

B. Contact details

The following must be disclosed:

registered office address in the IFSC;
correspondence address;
telephone number; and
email address.

C. Funds and schemes managed

Details of schemes or funds managed from the IFSC must be disclosed.

Where the FME undertakes portfolio management services or another activity permissible under the FM Regulations, 2025, details of such activities must also be disclosed, wherever applicable.

D. Third-party fund management arrangements

Where the FME manages a scheme or fund for another person or investment manager not based in the IFSC, the FME must disclose:

name of each scheme/fund; and
its IFSCA registration number.

This is particularly relevant given the development of third-party fund management arrangements within the IFSC regulatory framework.

E. Service providers

The names and contact particulars of the following must be disclosed, wherever applicable:

Custodian;
Trustee;
Fund Administrator; and
Statutory Auditor.

4. Investor grievance disclosures

One of the more important provisions relates to investor grievance redressal.

The website must contain:

investor grievance redressal mechanism;
contact details of the Grievance Redressal Officer;
escalation matrix;
timelines for redressal; and
status of investor complaints received, disposed of and pending.

The complaint status must be updated quarterly.

Compliance implication

This effectively converts the website into an ongoing investor-facing compliance and disclosure platform, rather than merely a corporate information webpage.

FMEs will consequently need an internal process to ensure that grievance information is periodically reviewed and updated.

5. Key managerial personnel disclosures

The website must also disclose the:

name;
designation;
email address; and
telephone number

of the Principal Officer, Compliance Officer and other Key Managerial Personnel responsible for IFSC operations, wherever applicable.

This enhances accountability by making the individuals responsible for regulatory and operational functions identifiable to investors and stakeholders.

6. Regulatory and enforcement disclosures

The Circular also introduces an important transparency requirement concerning regulatory actions.

The FME must disclose details of any material regulatory or enforcement action taken against:

the FME; or
its key managerial personnel,

in relation to the FME's IFSC operations during the preceding three years, along with the current status of such action.

This is a significant disclosure requirement from an investor-protection perspective, as it requires relevant regulatory history to be made publicly accessible.

7. Mandatory regulatory disclaimer

The website must contain a statement clarifying that:

Registration with IFSCA does not imply approval or endorsement by IFSCA.

The disclaimer must also clarify that registration does not constitute approval or endorsement of:

the FME;
any scheme; or
the financial soundness or performance of the FME/scheme.

FMEs should ensure that this disclaimer is prominently displayed, rather than buried in general website terms and conditions.

8. Additional requirements for Retail FMEs

Registered FMEs managing Retail Schemes have significantly greater disclosure obligations.

In addition to the disclosures applicable to all FMEs, their official website must prominently disclose:

Scheme documentation

Scheme Information Documents;
Key Information Documents;
addenda; and
other scheme-related documents specified by IFSCA.

Periodic scheme disclosures

These include:

portfolio disclosures;
scheme performance;
comparison with the stated benchmark;
NAV;
total expense ratio and its components; and
distribution commission.

These disclosures must be made at the periodicity specified by IFSCA.

Valuation policy

The website must disclose the valuation policy, including:

basis for valuation of unlisted or illiquid securities; and
name of the independent valuer, wherever applicable.

Unclaimed amounts

Details of unclaimed redemption and distribution amounts, together with the procedure for claiming them, must be provided.

Investor education

Retail FMEs must also provide:

investor education material;
Investor Charter; and
other investor disclosures specified by IFSCA.

9. Format and accessibility requirements

The Circular goes beyond simply requiring information to be placed on a website.

The disclosed information must:

Be in English

The information under clauses 4 and 5 must be made available in the English language.

Identify monetary information properly

For every monetary figure, the website must state:

currency of denomination; and
date to which the figure relates.

For NAV and cut-off timings, the applicable time zone must also be specified.

Display the date of last update

Each relevant disclosure must carry a clearly visible date indicating when the information was last updated.

This is an important operational requirement because FMEs will need a mechanism for tracking and evidencing periodic updates.

Downloadable and machine-readable information

Information relating to:

NAV;
portfolio; and
expenses

must be made available in downloadable and, to the extent feasible, machine-readable formats.

Minimum three-year accessibility

The information must remain accessible for at least three years from the date of display, including after winding-up of the scheme.

This means FMEs should not treat website updates as simply replacing historical information. A proper website disclosure archive will be necessary.

10. Important compliance timelines

There are two important timelines.

Existing FMEs

Every existing FME must intimate the URL of its website/webpage to IFSCA at:

fme-reporting@ifsca.gov.in

on or before 1 December 2026.

Any subsequent change in the URL must be intimated through the subsequent quarterly reporting filings.

Newly registered FMEs

An FME registered on or after the Circular comes into force must:

comply with the website requirements before commencing fund management activities in the IFSC; and
intimate the website/webpage URL to IFSCA within 30 days of grant of registration.

11. Practical compliance checklist for FMEs

FMEs should ideally begin implementation well before 1 December 2026.

Website readiness

Determine whether an independent website or parent/group webpage is permissible.
Ensure public accessibility without login/subscription.
Display registered name and IFSCA registration number.
Clearly segregate IFSC activities from other group activities.
Provide a prominent link from the parent/group website, where applicable.

Regulatory disclosures

Additional Retail FME requirements

Website governance

Last-updated dates on disclosures.
Currency and relevant date for monetary figures.
Time zone for NAV/cut-off timings.
Downloadable disclosures.
Machine-readable formats wherever feasible.
Three-year historical archive.
Mechanism for retaining information after scheme winding-up.
URL intimation to IFSCA by the prescribed deadline.

12. Professional assessment

The Circular represents a material strengthening of the transparency and investor-disclosure framework for FMEs operating in GIFT-IFSC.

While the immediate requirement is simply expressed as an obligation to maintain a website or webpage, the substantive requirements make the website an important component of the FME's regulatory compliance architecture.

Three aspects are particularly noteworthy.

First, the requirement is not merely a corporate-information requirement. The disclosures encompass investor grievances, KMP details, regulatory/enforcement actions, schemes managed and service providers. The website therefore becomes an important channel for regulatory transparency.

Second, Retail FMEs face substantially higher disclosure obligations. The requirement to publish scheme documents, portfolio and performance information, NAV, expense information, valuation policies and investor-protection material brings a considerably greater degree of public disclosure into the Retail fund management framework.

Third, website governance will itself become a compliance function. The requirements concerning last-update dates, quarterly grievance updates, machine-readable data and three-year retention mean that FMEs should establish internal ownership, review and approval processes for website disclosures rather than treating the website as a conventional marketing platform.

The Circular is therefore best viewed as a move towards greater disclosure discipline, investor protection and regulatory transparency in the IFSC fund management ecosystem.

IFSCA's current Fund Management framework page also shows that this Circular forms part of a broader series of regulatory measures concerning FMEs, including KMP requirements, reporting, third-party fund management and governance of schemes.

Overall conclusion

FMEs should not wait until December 2026 to address the requirement. The preparation involves more than creating a website. It requires identification of all mandatory disclosures, allocation of responsibility for maintaining them, establishment of periodic review/update mechanisms, creation of historical archives and ensuring that the disclosures remain consistent with the FME's regulatory filings and scheme documentation.

For a Company Secretary/compliance professional, this Circular creates a useful opportunity to develop a formal “FME Website & Regulatory Disclosure Compliance Checklist” and periodic review mechanism, particularly for ensuring that regulatory disclosures, KMP particulars, grievance data and historical disclosures remain current and properly archived.

Saturday, 14 December 2024

LODR Amendment Dec 2024

SEBI has notified amendments to Listing Obligations and Disclosure Requirements (Regulations) 2015 (LODR) vide gazette notification dated 12th December, 2024

Salient features of the amendment are as follows:

1) In Regulation 5 a proviso has been added as follows:

“Provided that the key managerial personnel, directors, promoter, promoter group or any other person dealing with the listed entity shall disclose to the listed entity all information that is relevant and necessary for the listed entity to ensure compliance with the applicable laws.”

Regulation 5 is general obligations of compliance. Now the obligation has been put on the KMP, directors etc. to ensure compliance with all the laws applicable to a company.

2) in Regulation 6, a new proviso has been added below the requirement for a listed company to appoint a qualified company secretary as compliance officer.

“Provided that 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.”

The level of a CS has been maintained as not more than one level below the Board of Directors of the company. This is a significant upgradation for the profession of the Company Secretary.

3) A new sub regulation has been added in respect of those companies undergoing the resolution plan under the IBC.

“(1B) Any vacancy in the office of the Compliance Officer of such listed entity in respect of which a resolution plan under section 31 of the Insolvency Code has been approved, shall be filled within a period of three months of such approval:
Provided that, in the interim, such listed entity shall have not less than one full-time key managerial personnel managing its day-to-day affairs.”

4) Annual return under regulation 7(2) has been deleted by omission of regulation 7(3). One less compliance for the listed entity.

5) A new sub regulation has been added in regulation 10 which ensures that SEBI will provide an integrated system for companies to file their returns, forms, statements, documents etc. within the timelines and in the format specified.

6) The statement of investor grievances in regulation 13(3) is likely to be amended to provide for more details than is currently stipulated.

7) In Regulation 15, which provides for exemption to small listed companies, clause 26A has been added to the list of clauses that need not be complied by such small companies.

8) In case of companies under resolution plan under IBC they have to comply with Reg 17 within 3 months of the approval of the resolution plan under IBC. Similar provisions for reg 18 to 21 of LODR.

9) Regulation 16 - definition of "material subsidiary" - income has been replaced with turnover.

"material subsidiary shall mean a subsidiary, whose turnover or net worth exceeds 83[ten] percent of the consolidated income or net worth respectively, of the listed entity and its subsidiaries in the immediately preceding accounting year."

10) Definition of "senior management" in Reg 16(1) has been amended to include “persons identified and designated as key managerial personnel, other than the board of directors, by the listed entity" The words Company Secretary and Chief Financial Officer has been deleted. This expands the scope of KMP to whatever has been decided by the BOD.

11) Regulation 17 in case of NEDs attaining the age of 75 years, now the special resolution for appointment/ re-appointment of NEDs has to be done before he attains the age of 75 years.

12) Regulation 17(1C) has been amended to provide that where appointment or re-appointment is subject to regulatory approvals then the time taken for regulatory approvals will not be considered for the purpose of three months or next general meeting after appointment.

This is basically to give relief to public sector companies which face delays in securing approvals of the ministries to the appointment of directors on their Board.

13) Regulation 17(1E) has been amended to provide that where vacancy in the office of not only director but also the committees, then such vacancy shall be filled in within 3 months from the date of such vacancy. Earlier the committees were not included in its ambit, hence the change.

14) Regulation 17(2) has been amended to provide that Board of Directors shall meet at least four times each financial year (earlier it was year, not financial year) and the gap between two consecutive meetings shall not exceed 120 days.

15) Regulation 17(6) has been amended as follows:

17(6)(ca) The approval of shareholders by special resolution shall be obtained every financial year, in which the annual remuneration payable to a single non-executive director exceeds fifty per cent of the total annual remuneration payable to all non-executive directors, giving details of the remuneration thereof.]

The word financial has been added.

16) Regulation 17(11) has been amended to provide that Board shall give rationale for each of the items of special business in the explanatory statement u/s 102 of the Companies Act, 2013

17) Regulation 18, 19, 20 & 21 for meetings of the committees, the word “financial” has been inserted before the word “year”.

18) New clause added in Regulation 23 pertaining to related party transactions:

“(e) remuneration and sitting fees paid by the listed entity or its subsidiary to its director, key managerial personnel or senior management, except who is part of promoter or promoter group, shall not require approval of the audit committee provided that the same is not material in terms of the provisions of sub-regulation (1) of this regulation.

(f) The members of the audit committee, who are independent directors, may ratify related party transactions within three months from the date of the transaction or in the immediate next meeting of the audit committee, whichever is earlier, subject to the following conditions:

(i) the value of the ratified transaction(s) with a related party, whether entered into individually or taken together, during a financial year shall not exceed rupees one crore;

(ii) the transaction is not material in terms of the provisions of sub-regulation (1) of this regulation;

(iii) rationale for inability to seek prior approval for the transaction shall be placed before the audit committee at the time of seeking ratification;

(iv) the details of ratification shall be disclosed along with the disclosures of related party transactions in terms of the provisions of sub-regulation (9) of this regulation;

(v) any other condition as specified by the audit committee:

Provided that failure to seek ratification of the audit committee shall render the transaction voidable at the option of the audit committee and if the transaction is with a related party to any director, or is authorised by any other director, the director(s) concerned shall indemnify the listed entity against any loss incurred by it.”

Sub regulation 9 is pertaining to disclosure to stock exchanges.

19) Regulation 23(3) provides that omnibus approval of RPT may be given by Audit Committee not only for the listed entity, but for its subsidiary also. The audit committee shall review on a quarterly basis the RPTs not only of the listed entity but also its subsidiary.

20) Regulation 23(5) has two clauses added to it, expanding the scope of transactions which does not come under the purview of related party transactions, they are

“(d) transactions which are in the nature of payment of statutory dues, statutory fees or statutory charges entered into between an entity on one hand and the Central Government or any State Government or any combination thereof on the other hand.

(e) transactions entered into between a public sector company on one hand and the Central Government or any State Government or any combination thereof on the other hand.”

21) A new proviso has been added in Reg 23(9) which requires disclosure of remuneration paid to directors, KMP, senior management if the said remuneration is material in terms of Reg 23(1). Remuneration of directors belonging to the promoter/ promoter group has to be disclosed nevertheless. The proviso reads as under:

“Provided further that the remuneration and sitting fees paid by the listed entity or its

subsidiary to its director, key managerial personnel or senior management, except who is part of promoter or promoter group, shall not require disclosure under this sub-regulation provided that the same is not material in terms of the provisions of sub-regulation (1) of this regulation.”

22) The definition of material subsidiary in Reg 24 is on the basis of turnover and not income.

23) Reg 24 – Selling/ disposing/ leasing of assets between two wholly owned subsidiaries of a listed entity does not require the prior approval of the shareholders.

24) Reg 24A – (a) Secretarial Auditor is defined as someone who Is Peer Reviewed Company Secretary

(b) Individual as Secretarial Auditor cannot be appointed for more than one term of 5 years;

(c ) Secretarial Audit firm for not more than two consecutive term of 5 years;

(d) Secretarial auditor has to be appointed through approval by the shareholders in the annual general meeting;(similar to statutory auditors)

(e ) Re-appointment of an individual Company Secretary or a Company Secretary firm after his term of 5 years can be done only after a gap of 5 years from the completion of such term.

(f) Secretarial Auditor firm which is being appointed should not have any common partner in the firm of Company Secretaries that has just completed its term. They cannot be appointed for another 5 years;

(g) Casual vacancy arising out of death, resignation or removal of a Secretarial Auditor shall be filled in by the Board of Directors within 3 months thereof and they shall hold office until the conclusion of the annual general meeting;

(h) Secretarial Auditor should not render any such other services which are not approved by the Board of Directors and should render only such other services that are approved by the BOD;

(I) This provision comes into effect from 1^st April, 2025 and any association of a company Secretary with a listed company shall not be counted for the purpose of tenure as per the above provisions;

25) Regulation 25(6) pertaining to appointment of independent director in the casual vacancy caused due to resignation or removal of independent director within 3 months thereof has been omitted.

26) Regulation 26(6) provides that any employee including KMP, directors, or promoter shall enter into any agreement for himself with any shareholder or third party with regard to compensation or profit sharing in connection with dealings in securities of such company unless prior approval by way of ordinary resolution is taken in the general meeting.

A proviso has been added that such persons shall abstain from voting on the resolution in the general meeting.

27) Further the 3^rd proviso in regulation 26(6) has been amended to provide for obtaining approval of shareholders in the first general meeting after listing of the securities.

28) Regulation 27 – Report of corporate governance, the time limit of 21 days from the end of the quarter has been omitted, a new time line will be notified by SEBI in this regard.

29) New provisos have been added in Reg 30 as follows

“Provided that in case the meeting of the board of directors closes after normal trading hours of that day but more than three hours before the beginning of the normal trading hours of the next trading day, the listed entity shall disclose the decision pertaining to the event or information, within three hours from the closure of the board meeting:

Provided further that in case the meeting of the board of directors is being held for more than one day, the financial results shall be disclosed within thirty minutes or three hours, as applicable, from closure of such meeting for the day on which it has been considered.”

30) New proviso has been added in Reg 30(6) with respect to timelines within which the disclosures should be made:

“Provided that if all the relevant information, in respect of claims which are made against the listed entity under any litigation or dispute, other than tax litigation or dispute, in terms of sub-paragraph 8 of paragraph B of Part A of Schedule III, is maintained in the structured digital database of the listed entity in terms of provisions of the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015, the disclosure with respect to such claims shall be made to the stock exchange(s) within seventy-two hours of receipt of the notice by the listed entity:”

31) Reg 30A – “complete” details of agreements are not required to be posted on the webpage of the entity.

31) Reg 31A(2) has been omitted – it provided for reclassification of status of a person as a promoter or a public and that it shall be approved by the stock exchanges.

32) Conditions for reclassification of promoters/ promoter group is as follows

(a) Fulfilment of the following requirements:

(i) the promoter(s) seeking reclassification shall make a request for reclassification

to the listed entity along with a rationale for the request and a description as to

how the conditions specified in clause (b) of this sub-regulation (3) are satisfied;

(ii) the board of directors of the listed entity shall analyze such request which is

compliant with the conditions specified in clause (b) of sub-regulation (3) and

provide their views in the immediate next board meeting or within two months

from the date of receipt of the request from its promoter(s), whichever is earlier;

(iii) the listed entity shall submit an application seeking no-objection of the

recognized stock exchange for such reclassification request along with the views

of the board of directors within five days of consideration of the request by the

board of directors;

(iv) the recognized stock exchange shall decide on such application(s) within a

period of thirty days, excluding the time taken, if any, by the listed entity to

respond to queries of stock exchanges, from the date of receipt of the application:

Provided further that in case of entities that are listed on more than one recognized

stock exchange, the concerned stock exchanges shall jointly decide on the

application.

(v) the listed entity shall place the reclassification request before the shareholders

in a general meeting for approval, within sixty days of receipt of no-objection

letter from the recognized stock exchange, along with the views of the board of

directors on the request and the no-objection letter received from the recognized

stock exchanges;

vi) the request of the promoter(s) seeking reclassification shall be approved in the

general meeting by an ordinary resolution in which the promoter(s) seeking

reclassification and the persons related to him/her/it shall not vote to approve such

reclassification request:

Provided further that the provisions of this sub-clause shall not apply in

cases:

(a) where the promoter(s) seeking reclassification and persons related to

the promoter(s) seeking reclassification, together, do not hold more than

one percent of the total voting rights in the listed entity;

(b) where reclassification is pursuant to a divorce.

vii) the listed entity shall notify the stock exchanges within five days of obtaining

shareholder approval and effect the reclassification:

Provided that the listed entity shall seek approval of the recognized stock

exchange for effecting reclassification if there are changes in the facts and

circumstances of the case after receipt of no-objection from the recognized stock

exchanges.”

33) Approval of the shareholders on the request of promoters for reclassification as public shall be considered as a key event requiring disclosure within 24 hours.

34) Reg 34 – the listed company shall submit to the stock exchanges and publish on its website, a copy of annual report on or before the commencement of dispatch to the shareholders.

35) Reg 36 – Hard copy of the annual report need not be sent to the shareholders who have not registered for obtaining soft copy. “A letter providing the web-link, including the exact path, where complete details of the Annual Report is available” is enough to be sent to them.

36) Reg 36(2) which provides that the listed entity shall send the annual report to the shareholders not less than 21 days before the annual general meeting – has been omitted.

37) Amendment to Reg 36(5) – notice to include details of fees payable to not only statutory auditors, but secretarial auditors also.

38) Regulation 37 which pertains to scheme of arrangement exempts the following

a) solely provide for merger of a wholly owned subsidiary with its holding company; or

b) solely provide for writing off the accumulated losses against the share capital of the listed entity applied uniformly across all shareholders on a pro rata basis or against the reserves of the listed entity:

Provided that such draft schemes shall be filed with recognized stock exchanges for the purpose of disclosures.”

39) Amendment in Reg 39 to provide for issue of Letter of Confirmation as against share certificates in the case of duplicate/ sub division/ consolidation/ name change, etc.

This practice is already been carried on by the RTAs.

40) Reg 39(3) which provided that listed entity shall submit information regarding loss of share certificates and issue of duplicate share certificates to the stock exchanges has been omitted. Therefore company need not make this disclosure to the stock exchanges.

41) Reg 40 (2), (3), (6), (8), (9) & (10) has been omitted, which means that the annual 40(9) certification is not required any more.

42) Reg 42 pertaining to record date – companies now have to give notice in advance of at least 3 (as against 7) working days of record date, specifying purpose of record date. However in case of corporate action through schemes of arrangement as per Reg 37, seven (as against 3) days advance notice is required to be given.

43) Reg 42(3) which pertained to recommendation or declaration of dividend at least 5 working days before the record date – has ben deleted.

44) Reg 42(4) which provided for a time gap of at least 30 days between two record dates has been reduced to 5 working days.

45) Reg 42(5) which pertained to securities held in physical form has been omitted.

46) A proviso has been added in Reg 44 to provide that requirement to send proxy forms shall not be applicable to general meetings held through electronic mode only.

47) In Reg 46 regarding website, the companies have to additionally post MOA/ AOA and brief profile of board of directors including directorship and full time position held in body corporates.

Presentations prepared for analysts or institutional investors meet post earnings or quarterly calls, should be posted on the website, before the beginning of such events.

Video recordings of post earnings or quarterly calls should be made available on the website within 48 hours of the event.

New addition to the web site.

“(za) Employee Benefit Scheme Documents, excluding commercial secrets and such other information that would affect competitive position of the listed entity, framed in terms of the provisions of Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations,

Provided that redaction of information under clause (za) above from the Employee Benefit Scheme document shall be approved by the board of directors of the listed entity and shall be in compliance with guidelines as may be specified by the Board:”

48) Reg 47 pertaining to advertisement of financial results in newspapers has been amended as follows:

“(1) The listed entity shall publish an advertisement in the newspaper, within forty eight hours of conclusion of the meeting of board of directors at which the financial results were approved, containing a Quick Response code and the details of the webpage where complete financial results of the listed entity, as specified in regulation 33, along-with the modified opinion(s) or reservation(s), if any, expressed by the auditor, is accessible to the investors:

Nothing provided under this regulation shall preclude a listed entity from publishing, if it so chooses, the financial results in terms of regulation 33 along-with the modified opinion(s) or reservation(s), if any, expressed by the auditor in the newspaper as per the format specified within 48 hours of conclusion of the meeting of the board of directors at which the financial results were approved.”

This will result in tremendous cost savings for companies.

49) Reg 50 provides that disclosures to stock exchanges shall be made in XBRL format in accordance with the guidelines issued by the stock exchanges from time to time.

50) Reg 52(2) has been amended to provide that the financial results are approved by the Board of Directors. Hitherto, it stated that the quarterly results shall be taken on record by the BOD and signed by the MD/ED.

The signing of the financial results shall be signed by the chairperson or managing director, or a whole time director or in the absence of all of them, it shall be signed by any other director of the listed entity who is duly authorized by the board of directors to sign the financial results.

A new sub regulation (2a) has been added in reg 52(2).

51) Reg 60 record date for payment of dividend, interest, redemption – notice of 3 (as against 7) working days.

52) Schedule II, Part E – listed entities ranked from 1001 to 2000 shall endeavour to have at least one woman independent director on its Board of Directors.

Two more clauses added in Part E

“F. Independent Directors

The independent directors of top 2000 listed entities as per market capitalization shall endeavour to hold at least two meetings in a financial year, without the presence of non-independent directors and members of the management and all the independent directors shall endeavour to be present at such meetings.

G. Risk Management

Listed entities ranked from 1001 to 2000 in the list prepared by recognized stock exchanges in terms of sub-regulation (2) of regulation 3 may constitute a risk management committee with the composition, roles and responsibilities specified in regulation 21.”

53) Schedule III – Part A – disclosure of acquiring control over including amalgamation, merger, demerger or restructuring if the control exceeds 20% (5% at present) over the said company.

Change in holding of 5% (presently 2%)

New proviso added:

“Provided that acquisition of shares or voting rights aggregating to five percent or more of the shares or voting rights in an unlisted company and any change in holding from the last disclosure made under this proviso exceeding two per cent of the total shareholding or voting rights in the said unlisted company shall be disclosed on a quarterly basis in the format as may be specified.

54) Disclosure within 30 minutes from closure of meeting has been replaced with 30 minutes from outcome of the meetings.

55) Regarding disclosure on frauds new clause added

Explanation 3 – Fraud by senior management, other than who is promoter, director or key managerial personnel, shall be required to be disclosed only if it is in relation

to the listed entity.”

56) Regarding analysts and institutional investors, disclosure of names in the schedule of analysts and institutional investors shall be optional at the behest of the listed company.

57) Regarding forensic audits disclosure, definition of forensic audit given

Explanation – For the purpose of this sub-paragraph, forensic audit refers to the audits, by whatever name called, which are initiated with the objective of detecting any mis-statement in financial statements, mis-appropriation, siphoning or diversion of funds and does not include audit of matters such as product quality control practices, manufacturing practices, recruitment practices, supply chain process including procurement or other similar matters that would not require any revision to the financial statements disclosed by the listed entity.”

58) Disclosure of fine or penalty – following clause added

“Explanation – Imposition of fine or penalty shall be disclosed in the following manner along with the details pertaining to the action(s) taken or orders passed as mentioned in the sub-paragraph:

(i) disclosure of fine or penalty of rupees one lakh or more imposed by sectoral regulator or enforcement agency and fine or penalty of rupees ten lakhs or more imposed by other authority or judicial body shall be disclosed within twenty four hours.

(ii) disclosure of fine or penalty imposed which are lower than the monetary thresholds specified in the clause (i) above on a quarterly basis in the format as may be specified.”

Thursday, 6 February 2020

Alternative Investment Funds

SEBI circular dated 5th February, 2020 on streamlining disclosure standards for Alternative Investment Funds (AIFs)

· The said circular is based on disclosure standards for AIF which is required to be followed by all AIF.

· Since there is a significant growth in AIF in current scenario, SEBI has taken an initiative through a Consultation Paper dated on 04^th December 2019 for inviting public opinion on “Introduction of Performance Benchmarking” and “Standardization of Private Placement Memorandum (PPM) for AIF’s”.

· After invitation of public opinion and also after consultation and deliberation with Alternate Investment Policy Advisory Committee (AIPAC) the SEBI has finally decided to introduce templates for PPM but it shall be subject to certain exemptions and also mandatory performance benchmarking for AIF’s.

· PPM is a primary document in which all the necessary information about the AIF is disclosed to the investors for making investment decisions. Also in order to ensure that a minimum standard of disclosure is made available in the PPM, now it has been made mandatory to provide certain minimum level of information in a simple and comparable format in accordance with the template provided.

· Such template consists of 2 parts namely:

o Party A- Section for minimum disclosure and

o Part B- Supplementary section to allow full flexibility to the Fund in order to provide any additional information, which it deems fit.

· The template for PPM of AIFs raising funds under Category I and Category II is provided at Annexure 1.The template for PPM of AIFs raising funds under Category III is provided at Annexure 2.

· SEBI has also specified that in order to ensure compliance with the terms of PPM, it will be mandatory for AIFs to carry out an annual audit of such compliance. The audit shall be carried out by either internal or external auditor/legal professional. However, audit of sections of PPM relating to ‘Risk Factors’, ‘Legal, Regulatory and Tax Considerations’ and ‘Track Record of First Time Managers’ shall be optional.

· In case any defect or query arises during the findings of the audit then the same shall be communicated with the Trustee or Board or Designated Partners of the AIF and SEBI.

· It is to be noted that the terms and conditions pertaining to contribution and subscription agreement shall be in accordance with the terms and conditions of the PPM and it shall not contradict the same.

· The requirements as mentioned above shall not be applicable to Angel Fund as defined in SEBI (AIF) Regulations 2012 and to AIF’s/Schemes in which each investor commits to a minimum capital contribution of Rs70 crores and also provides a waiver to the fund from the requirement of PPM in the SEBI prescribed template and annual audit of terms of PPM, in the manner provided at Annexure 3.

· All the above specified requirements shall come into force with effect from 01^stMarch 2020.

· Secondly the SEBI on receipt of industry request a proposal for performance benchmarking of AIF’s was incorporated in the above mentioned Consultation Paper.

· Also the industry demands flexibility to showcase the performance of AIF’s based on different criteria so it has been finally decided to introduce:

o Mandatory benchmarking of the performance of AIFs (including Venture Capital Funds) and the AIF industry.

o A framework for facilitating the use of data collected by Benchmarking Agencies to provide customized performance reports.

· As a result of this the following things is mandated:

o Any association of AIFs(“Association”),which in terms of membership, represent at least 51% of the number of AIFs, may notify one or more Benchmarking Agencies, with whom each AIF shall enter into an agreement for carrying out the benchmarking process.

o The agreement entered between the Benchmarking Agencies and AIF’s shall cover the mode and manner of data reporting and other confidential information and etc.

o AIFs, for all their schemes which have completed at least one year from the date of ‘First Close’, shall report all the necessary information including scheme-wise valuation and cash flow data to the Benchmarking Agencies in a timely manner.

o Also the form and format of reporting shall be mutually decided by the Association and the Benchmarking Agencies.

o If an applicant claims a track-record on the basis of India performance of funds incorporated overseas, it shall also provide the data of the investments of the said funds in Indian companies to the Benchmarking Agencies, when they seek registration as AIF.

o In the PPM, as well as in any marketing or promotional or other material, where past performance of the AIF is mentioned, the performance versus benchmark report provided by the benchmarking agencies for such AIF/Scheme shall also be provided.

o In any reporting to the existing investors, if performance of the AIF/Scheme is compared to any benchmark, a copy of the performance versus benchmark report provided by the Benchmarking Agency shall also be provided for such AIF/scheme.

o In the first step Association will appoint Benchmarking Agencies and thereafter will set timeline for reporting of requisite data to Benchmarking Agencies by all the registered AIFs. In this regard, Association and Benchmarking Agencies will ensure that the first industry benchmark and AIF level performance versus Benchmark Reports are available latest by July 01, 2020, for the performance up to September 30, 2019. Further the Association shall submit a progress report in this regard to SEBI on a monthly basis till the creation of first industry benchmark.

· It is to be noted that all the operational guidelines in respect of performance benchmarking are provided in Annexure 4 which is divided into 2 parts i.e. Part A and Part B.

· In case any AIF seeks customized performance report in a particular manner other than as it was decided earlier then the same may be generated by the Benchmarking Agencies and it shall be subject to the following:

o Consent of the AIFs, whose data needs to be considered for generation of the customized performance report.

o Terms and conditions, including fees, decided mutually between the Benchmarking Agencies and the AIF.

· It is to be noted that the above mentioned requirements is not applicable in case of Angel Funds registered under sub category of Venture Capital Fund under Category I-AIF.

· The said circular is been issued in exercise of powers mentioned under section 11(1) of SEBI Act , 1992 and also the main object behind this is to protect the interest of investors in securities and to promote and developed the securities market.