Presentation on listing agreement for SMEs

January 5, 2018 | Author: Anonymous | Category: Business, Finance, Corporate Finance
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Compliance with Listing Agreement by Small and Medium Enterprises. Neelam Bhardwaj

Introduction  How SMEs are defined ?

 What provisions to comply ?  Penal Provisions

An issuer is considered a SME

• whose post issue face value capital does not exceed ten crore rupees • whose post issue face value capital is between ten crore rupees and twenty five crore rupees

Chapter X- B of SEBI (ICDR) regulations

Model Equity Listing Agreement of SMEs

Penal Provisions Contained in section 23(2), 23A and 23 E of SCRA and section 15 of SEBI Act SCRA For any non compliances – on conviction be punishable with imprisonment for a term which may extend to 10 years or with fine which may extend to 25 cr or with both. For failure to furnish information within specified time or to maintain books : Penalty of up to Rs 1 lakh for each day or 1 cr whichever is less, for each such failure. Suspension or withdrawal of admission to dealing in securities or delisting for non compliance with Listing conditions

Penal Provisions SEBI Act 1992

Section 15 A©For failure to furnish information within specified time or maintain books of accounts : Penalty of 1 lakh for each day or 1 cr whichever is less for each failure.

ICDR Regulations • Procedure– Offer doc to SEBI/ Ses. No observations from SEBI. Offer doc on websites of SEs, SEBI

• • • •

Mandatory 100% underwriting of the issue Min application value of Rs 1 lakh Minimum no. of allottees – 50 Migration to SME Exchange– If Post issue FV capital of a listed company is between Rs 10-25 cr, can migrate to SME exchange subject to its shareholders’ approval where consent in favor is at least 2 times that of votes against the proposal.

ICDR Regulations • Migration to Main Board o If post issue face value capital is between Rs 10- 25 cr, it is optional for the issuer to migrate to Main Board subject to its shareholders’ approval where consent in favor is at least 2 times that of votes against the proposal o If post issue face value capital of the Issuer exceeds Rs 25 crmandatory to migrate to Main Board

• Market Making • Compulsory market making for min 3 years from the date of listing, to be ensured by Merchant Banker.

Compliances under Listing Agreement • Appointment of Company Secretary as a compliance Officer – Clause 50(a) • Issue letters of allotment, regret, certificate etc as soon as possible • Unclaimed shares to be put in suspense account. • Give details of these unclaimed shares in annual report.

Compliances under Listing Agreement • No charging of fees exceeding those agreed by SEs- issue of new certificate, consolidation , split etc • Register transfer of securities if documents in order. • Notify SEs promptly about prohibition / attachment order.

Compliances under Listing Agreement • Declare and disclose dividend on per share basis. • Notify SEs, at least 21 days in advance about the date on which dividend, interest , redemption etc is payable. • Within 15 minutes of the closure for Board mtg, inform SEs about any decisions affecting the capital of the company.

Compliances under Listing Agreement • In case of rights issue-offer shares to all shareholders on pro rata basis , fix the record date, supply renunciation form, to give at least 4 weeks to shareholders to record their interest and exercise their rights • To obtain in- principle approval for further issue of capital

Compliances under Listing Agreement • Compulsory migration to main board if post issue face value capital exceeds Rs 25 cr. • True and fair disclosures in all documents • Filing of scheme of arrangements at least 30 days in advance, to SEs – Disclosure of pre and post scheme capital and shareholding pattern in the notice and the “fairness opinion” – File an auditors’ certificate certifying compliance with Accounting Standards

Compliances under Listing Agreement • Promptly inform change in general nature of character of business • Promptly inform change in Board of directors • Promptly submit to SEs and display on websites: • Annual report, complete balance sheets, Profit and loss account • Notices and resolutions circulars , call letters etc. • Proceedings at AGM or EGM

• Maintain a website.

Compliances under Listing Agreement

• Promptly inform any price sensitive information • Maintain at least 25% of total number of shares with public • Deposit 1% of the issue amt with SE while making an issue • At least once in a year at the time of AGM, transfer books shall be closed. • Inform at least 2 working days in advance of the board mtg where decisions regarding dividend or redemption or conversion of debentures will be taken.

Compliances under Listing Agreement • Disclosures in Annual report • If delisted or suspension from trading- reasons • Names of SEs where shares are listed

• Filing on half yearly basis: Shareholding pattern. Financial results – unaudited subject to limited review or audited, Unaudited within 45 days and audited within 60 days.

Compliances under Listing Agreement • Intimation of board mtg at least 7 days in advance where financial results are being considered . • Where there is variation more than 10% in Net Profit or loss or in extraordinary items or Rs 10 lakhs whichever is higher, explanation to Ses, after approval from the Board. • If there are qualifications, disclose its impact on profit or loss and also include a note as to how the same has been resolved and if not , why not.

Compliances under Listing Agreement • Half yearly and annual results shall be prepared in accordance with principles laid down in AS. • Disclose change in accounting policy, if any • Disclose any material event which can impact the financials of the issuer. • Disclose details of investor complaints in half yearly disclosure • Display Financial results in website

Compliances under Listing Agreement • Disclose variation between projected and actual utilization of issue proceeds on half yearly basis. • Ensure Board composition with at least 1/3 independent directors if chairman is non executive and at least ½ if chairman is executive • Board to have code of conduct which shall be conformed by every director

Compliances under Listing Agreement • Set up a audit committee to be chaired by independent director . CS to act as a secretary of the committee, at least 4 mtgs in a year with a gap of not more than 4 months between 2 mtgs. • If issuer has a subsidiary, at least one independent director of holding company shall be a director in board of Material non listed Indian subsidiary company. • Financial statements of sub co to be reviewed by Board of holding co esp investments by unlisted subsidiary.

Compliances under Listing Agreement • Disclosures in Annual report - Basis of related Party disclosures - Accounting treatment - Risk Management - Proceeds from public issue - Remuneration of directors - shareholders

Compliances under Listing Agreement • Report on Corporate Governance- within 15 days of each quarter to SEs • Certificate about compliance with CG conditions to be annexed with Directors report and to be sent to SEs. • If the issuer has not commenced operations, disclose amt raised, spent, status of project etc. • If the issuer’s business is seasonal , disclosure seasonal nature of its activities

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