On May 9, 2018, the Securities and Exchange Board of India (“SEBI”) published the SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018 (“Regulations”) to amend the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR”). The Regulations shall come into force with effect from April 1, 2019 (unless otherwise specified in the Regulations).

We have listed down some of the key amendments made to the LODR: 

1. Any person or entity belonging to the promoter or promoter group of the listed entity and holding 20% (twenty percent) or more of the shareholding in the listed entity shall be deemed to be a related party.
2. The definition of ‘material subsidiary’ has been modified to state that a subsidiary whose income or net worth exceeds 10% (ten percent) of the consolidated income or net worth of the listed entity and its subsidiaries in the immediately preceding financial year, shall be considered to be a material subsidiary. The threshold was previously 20% (twenty percent).
3. The following changes have been made to regulation 17 relating to the board of directors:

(i) The board of directors of the top 500 (five hundred) listed entities shall have at least 1 (one) independent woman director by April 1, 2019 and the board of directors of the top 1,000 listed entities shall have at least 1 (one) independent woman director by April 1, 2020. The top 500 (five hundred) entities and 1000 (one thousand) entities shall be determined on the basis  of  market capitalization,  as  at  the  end  of  the immediate  previous financial year.

(ii) The board of directors of the top 1,000 (one thousand) listed entities and the top 2,000 listed (two thousand) entities shall be required to have a minimum of 6 (six) directors by April 1, 2019 and April 1, 2020 respectively.

(iii) A new sub-regulation 1A shall be inserted that shall state that a person cannot be appointed as a non-executive director or cannot continue to be a non-executive director if such person has attained the age of 75 (seventy five) years, except by passing a special resolution accompanied by an explanatory statement justifying the appointment of such person.

(iv) A new sub-regulation 1B shall be inserted that shall state that with effect from April 1, 2020, the top 500 (five hundred) listed entities shall ensure that the chairperson of the listed entity shall be a non-executive director, and not be related to the managing director or the chief executive officer as per the definition of ‘relative’ under the Companies Act, 2013. However, this will not apply to listed entities which do not have any identifiable promoters as per the shareholding pattern filed with the stock exchanges.

(v) A new sub-regulation 2A shall be inserted that shall state that the quorum for every meeting of the board of directors of the top 1,000 (one thousand) listed entities with effect from April 1, 2019 and of the top 2,000 (two thousand) listed entities with effect from April 1, 2020 shall be 1/3rd (one-third) of its total strength or 3 (three) directors, whichever is higher, including at least 1 (one) independent director.

(vi) The approval of shareholders by special resolution shall be obtained every year, in which the annual remuneration payable to a single non-executive director exceeds 50% (fifty percent) of the total annual remuneration payable to all non-executive directors, giving details of the remuneration thereof.

(vii) The fees or compensation payable to executive directors who are promoters or members of the promoter group shall be subject to approval of shareholders by special resolution if the annual remuneration payable to such executive director exceeds Rs. 5,00,00,000 (Rupees five crore) or 2.5% (two point five percent) of the net profits of the listed entity, whichever is higher; or where there is more than 1 (one) such director, the aggregate annual remuneration to such directors exceeds 5% of the net profits of the listed entity.

4. At least 1 (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. “Material subsidiary” for this provision, shall mean a subsidiary, whose income or net worth exceeds 20% (twenty percent) of the consolidated income or net worth respectively, of the listed entity and its subsidiaries in the immediately preceding accounting year.
5. Secretarial audit is required to be undertaken for every listed company and its material unlisted subsidiaries incorporated in India which shall be annexed with the listed company’s annual report.
6. The performance evaluation of independent directors done by the entire board of directors has been clarified to include the performance of the directors and fulfilment of the independence criteria as specified in LODR and their independence from the management.
7. A person shall not be a director in more than 8 (eight) listed entities with effect from April 1, 2019 and in not more than 7 (seven) listed entities with effect from April 1, 2020. Furthermore, the maximum number of independent directorships in listed entities shall be 7(seven). For any person who is serving as a whole time director/ managing director in any entity having its equity shares listed on a stock exchange, the maximum number of independent directorships in entities having their equity shares listed on a stock exchange shall be 3 (three).
8. The information required to be disseminated shall be under a separate section on the website of the company.
9. Additional disclosures are required to be made in the corporate governance reports.
10. Several changes have been made to regulation 33 relating to financial results.
11. Top 100 (one hundred) listed entities by market capitalization shall hold their annual general meetings within a period of 5 (five) months from the date of closing of the financial year.
12. The top 100 listed entities shall provide one-way live webcast of the proceedings of the annual general meetings. 
13. Where an entity has raised funds through preferential allotment or qualified institutions placement, the listed entity shall disclose every year, the utilization of such funds.
14. 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.
15. With effect from October 1, 2018, the top 500 (five hundred) listed entities by market capitalization calculated as on March 31 of the preceding financial year, 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.