The global outbreak of coronavirus (COVID-19) is an unprecedented event and it has led to lockdowns and unexpected restrictions on the public as well as the corporate sector across the world. Regulatory authorities have granted several relaxations to assist businesses to cope with the compliance burden and economic distress. Let’s discuss herein below a few relaxations granted by the Securities and Exchange Board of India (SEBI)
1. Extension for Disclosure Filings under the SEBI Takeover Regulations:
Under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 the Shareholders are required to compile, collate and disseminate information of their consolidated shareholding, as on March 31, 2020, to the Company as well as to the stock exchange. In view of the Covid-19 pandemic, SEBI has relaxed the timelines for disclosure filings up to June 1, 2020 vide circular dated March 27, 2020.
2. Extension of Timelines under the Alternative Investment Fund (“AIF”) Regulations:
SEBI vide circular dated March 30, 2020 has extended the due date for regulatory filings for AIFs and venture capital funds, for the period ending March 31, 2020 and April 30, 2020, by two months over and above the timelines prescribed under the SEBI (Alternative Investment Fund) Regulations, 2012.
Due to unprecedented events on account of COVID-19, SEBI vide circular dated June 4, 2020 has decided to further extend the timeline for filing returns for the months ending March, April, May and June 2020, as applicable, on or before August 7, 2020.
3. Extension of Timelines for Portfolio Managers:
SEBI vide circular dated March 30, 2020 has extended the timelines by two months for monthly reporting by Portfolio Managers to SEBI, for the period ending March 31, 2020 and April 30, 2020 and applicability of Guidelines for Portfolio Managers issued vide SEBI circular dated February 13, 2020.
4. Temporary relaxation in processing of documents pertaining to FPIs
SEBI vide circular dated March 30, 2020 has granted temporary relaxation till June 30, 2020 in situation where Foreign Portfolio Investors (FPIs) are not in a position to submit original and/or certified documents as specified under the Act. FPIs required to submit the original and/or certified documents within 30 days from the aforesaid deadline, if not, then such FPIs will be blocked for any fresh purchase.
5. Extension of Implementation of the Stewardship Code:
Stewardship Code introduced by SEBI for all mutual funds and all categories of AIFs, in relation to their investment in liquid entities was due to come into effect from April 1, 2020. On account of the Covid-19 pandemic, SEBI vide circular dated March 30, 2020, extended the timeline for implementation of the Stewardship Code from April 1, 2020 to July 1, 2020.
6. Relaxation under LODR Regulations:
SEBI vide circulars dated March 19, 2020, March 23, 2020 and March 26, 2020 has provided relaxation in various compliances including periodic filing requirements, conduct of meetings, various quarterly, half yearly, and annual submissions to be made to the stock exchanges for listed entities under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR), as listed below:
|S. No.||Required Actions||Applicable Regulations||Original Due Date||Revised Due Date|
Conduct of Meetings
|1.||Meeting of Committees (Once in FY 2019-20)||Regulations 19(3A)/ 20(3A)/ 21(3A) of the LODR||March 31, 2020||June 30, 2020|
|2.||Annual General Meeting by top 100 Listed Entities by Market Capitalization||Regulation 44(5) of the LODR||August 31, 2020||September 30, 2020|
Periodic Filings/ Disclosures
|3.||Compliance Certificate on share transfer facility (Half Yearly)||Regulation 7(3) of the LODR||April 30, 2020||May 31, 2020|
|4.||Statement of Investor Complaints (Quarterly)||Regulation 13(3) of the LODR||April 21, 2020||May 15, 2020|
|5.||Secretarial Compliance Report (Yearly)||Regulation 24A of the LODR read with circular dated February 08, 2019||May 30, 2020||June 30, 2020|
|6.||Corporate Governance Report (Quarterly)||Regulation 27(2) of the LODR||April 15, 2020||May 15, 2020|
|7.||Shareholding Pattern (Quarterly)||Regulation 31 of the LODR||April 21, 2020||May 15, 2020|
|8.||Financial Results (Quarterly)||Regulation 33 of the LODR||May 15, 2020||June 30, 2020|
|9.||Financial Results (Annual)||Regulation 33 of the LODR||May 30, 2020||June 30, 2020|
|10.||Certificate from Practising Company Secretary (Half Yearly)||Regulation 40(9) of the LODR||April 30, 2020||May 31, 2020|
|11.||AGM by top 100 listed entities by market capitalisation for FY 2019-20 (Annual)||Regulation 44(5) of the LODR||August 31, 2020||September 30, 2020|
|12.||Initial Disclosure by Large Corporate||SEBI Circular dated November 28, 2018||April 30, 2020||June 30, 2020|
|13.||Annual Disclosure by Large Corporate||SEBI Circular dated November 28, 2018||May 15, 2020||June 30, 2020|
|14.||Financial results of entities having listed non-convertible debentures (NCDs)/ non-convertible redeemable preference shares (NCRPSs) (Half Yearly)||Regulations 52(1) and (2) of the LODR||May 15, 2020||June 30, 2020|
|15.||Financial results of entities having listed NCDs/NCRPS (Annually)||Regulations 52(1) and (2) of the LODR||May 30, 2020||June 30, 2020|
|16.||Financial results of entities having listed Commercial Papers (CPs) (Half Yearly)||SEBI Circulars dated October 22, 2019 and dated December 24, 2019||May 15, 2020||June 30, 2020|
|17.||Financial results of entities having listed CPs (Annually)||May 30, 2020||June 30, 2020|
|18.||Standard Operating Procedure on imposition of fines for non-compliance of LODR||SEBI Circular dated January 22, 2020||March 31, 2020||June 30, 2020|
7. Publication of advertisements in the newspapers
To exempt publication of advertisements in newspapers for information such as notice of the board meeting, financial results etc. as required under regulation 47 for all events scheduled till May 15, 2020.
8. One-time relaxation with respect to validity of SEBI Observation
As per regulations, A public issue/rights issue may be opened within twelve months from the date of issuance of observations by SEBI.
SEBI has extended the validity of SEBI Observations where the same have expired/ will expire between March 1, 2020 and September 30, 2020 has been extended by 6 months, from the date of expiry of such observation.
It also permitted an issuer to increase or decrease the fresh issue size by up to 50% of the estimated issue size without requiring to file fresh draft offer document with the Board subject to the conditions vide Circular No. SEBI/HO/CFD/CIR/DIL/CIR/P/2020/66. The above relaxation on change in fresh issue size shall be applicable for issues opening before December 31, 2020.
9. Relaxation relating to Right Issue:
SEBI vide circular dated April 21, 2020 has introduced temporary relaxations in the provisions related to Right issues as contained in the SEBI (Issue of Capital and Disclosure Requirements) Regulations,2018(“ICDR Regulations). These relaxations are applicable for Right Issues that open on or before March 31, 2021 and are not applicable for issuance of warrants.
10. Relaxation in Regulation 24(i)(f) of the SEBI (Buy-back of Securities) Regulations, 2018
Regulation 24(i)(f) imposes restrictions on the Companies to not raise further capital for a period of one year from the expiry of buyback period. To enable relatively quicker access to capital, SEBI vide circular dated April 23, 2020 has temporarily granted relaxation in the period of restriction from the term “one year” to be read as “six months” in the said regulation till December 31, 2020.
11. Extension of implementation date of Circular on ‘Review of Margin Framework for Cash and Derivatives segments’ (except for Commodity Derivatives Segment)
The provisions on ‘Review of Margin Framework for Cash and Derivatives segments’ (except for Commodity Derivatives Segment) were to come into effect from May 01, 2020. Due to outbreak of COVID-19 pandemic, SEBI vide circular dated April 27, 2020 has been decided to extend the implementation date of the provisions of the aforesaid Circular to June 01, 2020.
12. Relaxation in compliance with requirements pertaining to Mutual Funds
Based on the representations received from AMFI, SEBI vide circular dated April 30, 2020 has decided to grant the several relaxations to Mutual Funds as specified in SEBI (Mutual Funds) Regulations, 1996.
13. Relaxation of timeline on non-compliance with the Minimum Public Shareholding (MPS) requirements
Vide circular dated May 14, 2020; SEBI has advised Recognized Stock Exchanges not to take any penal action as envisaged in the October 10, 2017 circular against the entities in case of non-compliance of MPS requirements during the period from March 1, 2020 to August 31, 2020. Penal actions, if any, initiated by Stock Exchanges from March 1, 2020 till date for non-compliance of MPS requirements by such listed entities may be withdrawn.
In current scenario of the lockdown and restrictions imposed, the above relaxations granted by SEBI from a few of the compliance requirements will definitely grant temporary immunity to the management and the concerned/ responsible person of the Companies.