Updated: Jul 29, 2020

[Authored by Anubhuti Sharma, 1st year BA.LLB.(Hons.) student at Vivekananda Institute of Professional Studies, New Delhi.]

The Securities and Exchange Board of India (SEBI) was established on April 12, 1992 in accordance with the provisions of the Securities and Exchange Board of India Act, 1992. The foreword of Securities and Exchange Board of India describes the basic functions of the Securities and Exchange Board of India. Its foremost purpose is to assure the interests of capitalists in securities and to further advance the development or growth and to govern the securities market and for affairs associated therewith. According to its lease, SEBI is expected to be accountable for three foremost groups: The issuers of securities, Venture capitalists or investors, Market intermediaries or entrepreneur.


The comprehensive and bizarre pandemic that is the novel corona virus ("COVID–19") has affected commerce and its functioning globally. These conditions are rare and the future is abstract. In the view of pandemic SEBI has eased various compliances which can benefit the companies during this crucial situation[1]. Due to the epidemic situation, ithas resulted in many stipulations, restrictions, which include liberty, free movement of people, therefore, adversely influencing businesses and day to day working of companies. So, considering this the necessity, for interim relaxations in compliance and requirements for listed entities, is given due acknowledgement by SEBI. “Developments arising due to the spread of the virus warrant the need for temporary relaxation in compliance requirement of listed entities,” SEBI said in a circular.[2]


Capital market regulator[3] Securities & Exchange Board of India on 19 March 2020 permitted companies to submit their March quarter and Financial Year 2020 results by June 30. The regulator also conceded relaxation of one month on half-yearly compliance authorization on share transfer. Under the guidelines[4], firms are obligated to present their monetary or financial results within a period of 45 days from the end of a quarter.


Further easing from compliance with certain means of the Listing Obligations and Disclosure Requirements (LODR) were made by SEBI. The retail manager (SEBI) allowed top 100 listed entities/companies by market capitalization (FY 2019-20) to hold their Annual General Meetings (AGM) in September 2020 rather than in August initially, a postponement of one month. Usually, a firm is required to hold its AGM in a period of five months amid the date of terminating of the financial year[5]. According to the Regulations 19(3A), 20(3A) and 21(3A), nomination and remuneration committee, stakeholders relationship committee, and risk management committee of a company, respectively, have to necessarily meet at least once in a year independently and the deadline for the mentioned meetings is March 31, 2020, but recently SEBI declared that these meetings can be held by 30 June 2020, giving an extension for three months.


On a daily basis, a listed entity is required to ensure that its share transfer agent/in-house share transfer facility produces a, certificate from any Practicing Company Secretary on the timely issue of share certificates half yearly i.e. October-end and April-end [6]. At present SEBI has extended the due date by one month i.e. May 31, 2020, from April 30, 2020 primarily.

LOSS OF SHARE CERTIFICATES: LODR requires listed companies to submit information related to loss of share certificates and issue of duplicate certificates to stock exchange within two days[7], relaxation has also being given to the regulations concerning with intimation to stock exchanges regarding the loss of share certificates and issuing of duplicate certificates. This would provide assistance and benefit to the companies in the current situation of pandemic.


SEBI, in their circular[8] dated January 22 the present year, had notified about the new Standard Operating Procedure (SoP) on the imposition of fines and other execution of actions for non-compliances with assistance of the LODR. "The effective date of operation of the above circular is for compliance periods ending on or after March 31, 2020. Now the said circular shall now come into force with effect from compliance periods ending on or after June 30, 2020," SEBI said, adding to it, may be acclaimed that the SoP circular dated May 03, 2018, would be significant or applicable till such date.[9]

The Securities and Exchange Board of India eased compliances for listed corporations with the consideration of prior announcement, stock exchanges regarding meetings of the board which is- a) at least 5 days before the meeting if financial results are to be considered; b) 2 working days in other cases[10]. Now, SEBI has decided that the above-mentioned Regulation shall be decreased by 2 days, for all the board meetings that will be held till July 31, 2020.[11]


At present, SEBI, Buy-packs Securities Regulation 2018[12] restricts the companies that they shall not escalate any further capital or assets for a period of one year from the termination or expiry of buyback period, except in expulsion of their existing obligations. It has been described that the said period i.e. one year will be reduced to six months.[13]Moreover, the capital, stock markets manager recommences to address the probable compliance matters, issues and give assistance, aid and relief to listed firms, their shareholders, capitalist and other participants affected by COVID-19.


Several relaxations in timeline of depository’s participants and depositories was made by SEBI in view of the pandemic, to comply with the managerial provisions. The submission of Beneficial Ownership (BO) complaints or grievances report to Depositories has been extended by SEBI till May 18, 2020 for March and April reports. Submission of half-yearly Internal Audit Report (IAR) by Depository Participants (DRs) for the half year which ended on March 31, 2020, has now extended and can be submitted till June 30, 2020.


The system audits which were being done on annual basis, SEBI informed in the circular[14] that it can now be completed by July 31, 2020 for the financial year. Furthermore, it was mentioned that the reporting of Artificial Intelligence (AI) and Machine Learning (ML) applications is now allowed till May 31, 2020 for quarter ended March 31, 2020.[15]


PHYSICAL COPIES OF ANNUAL REPORTS AND ADVERTISEMENT IN NEWSPAPERS: Additional or supplementary relaxations were made by SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 (‘SEBI LODR’ / ‘LODR’). Compliances have been eased, as listed entities were required to send physical copies of annual reports to shareholders but now SEBI has allocated/dispensed the criteria. It also mentioned in the circular[16]that exemption given to listed organizations and entities from publishing of advertisement in newspapers and journals regarding their board meetings (AGM), monetary outcomes and other additional events. Also stated that, certain newspapers have stopped issuing printed variants for limited period, the circular absolved, exempts companies from publishing of such details in the newspapers, which has now extended till June 30, 2020.

DISMISSAL OF FINES: Amid the disruption caused due to novel corona virus, the Securities and Exchange Board of India (SEBI) dismissed fines or penalties on listed companies that are incapable to meet the minimum public holding norms as SEBI is continuing its efforts to help businesses navigate the current turmoil, this ease in the above compliance would help and benefit the companies. As the medical calamity intensifies, retail and markets continue to free-fall, regulators such as SEBI are being progressively flexible with it corresponding to conformity, compliance and reporting constraints.

MINIMUM PUBLIC SHAREHOLDING: The market manager said in the circular that SEBI will not impose or enforce any fines on companies that are not able to accomplish a certain Minimum Public Shareholding (MPS) of 25% between 1 March, 2020 and 31 August, 2020. The circular even said that fines imposed by exchanges after 1 March, 2020 will also be withdrawn. The above-mentioned relaxation will benefit companies where organizer holding has exceeded 75%. SEBI also eased measures in order to put constraints for takeover and buy packs.[17]


The conclusion is that relaxations/relief by SEBI is continuing to give much-needed breather to the listed enterprises and act as a bounded protector due to the influence of COVID-19. Further, the above stated provisional/short-term relaxations will enable firms to avoid penalties on account of inevitable delay in meeting their statutory compliances. 

SEBI has continuously been engaged in market deliberation to remove compliance hindrance for companies during the pandemic. It has been giving several reliefs to listed companies and other market intermediaries as part of its endeavor to ease their compliance concern, burden. SEBI through its decisions, to give relaxations, has once again demonstrated that it appropriately holds the authority in assuring the smooth working of the capital merchandise in the Indian economy.

As COVID-19 continues to transmit, all the listed companies should be vigilant, watchful of their compliance necessities under LODR and take relevant steps in order to fulfill such duties in a suitable manner.

[1] SEBI PRESS RELEASE NO.: PR No.: 17/2020 (dated March 19,2020).

[2] SEBI Circular No.: SEBI/HO/CFD/CMD1/CIR/P/2020/38 (dated March 19, 2020). 

[3] Id.

[4] Regulation 33(2) of LODR.

[5] Id., Regulation 44(5). [6] Id.,Regulation 40(9). [7] Id., Regulation 39(3). [8] SEBI Circular No. SEBI/HO/CFD/CMD/CIR/P/2020/12 (dated January 22,2020). [9] SEBI Circular No.: SEBI/HO/CFD/CMD1/CIR/P/2020/48 (dated March 26, 2020). [10] Supra note 4, Regulation 29 (2). [11] SEBI Circular No.: SEBI/HO/CFD/CMD1/CIR/P/2020/63 (dated April 17, 2020). [12] Supra note 4, Regulation 24(i)(f). [13] SEBI Circular No.: SEBI/HO/CFD/DCR2/CIR/P/2020/69 (dated April 23, 2020). [14] SEBI Circular No.: SEBI/HO/MIRSD/CIR/PB/2018/147 (dated December 3, 2018). [15]  SEBI Circular No.: SEBI/HO/MIRSD/DOP/CIR/P/2020/72 (dated April 24, 2020). [16] SEBI Circular No.: SEBI/HO/CFD/CMD1/CIR/P/2020/79 (dated May 12, 2020). [17] SEBI Circular No.: SEBI/HO/CFD/CMD1/CIR/P/2020/81 (dated May 14, 2020).

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