Compliance of Listed Company
Compliance of listed is prescribed under the provisions of SEBI (LODR) regulations 2015 and Companies Act, 2013. The listed companies must adhere to all the monthly, quarterly, half-yearly, and annual compliances
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How to Start a Compliance of Listed Company
Public Company whose shares are listed & traded on the stock exchange refers to as a listed company. Listed companies are the public limited joint-stock company whose shares get traded on the central stock market. Companies often go for public issues as one of the vital sources of raising funds.
Advantages of Listed Company
Following are the benefits of listing the company apart from the prestigious position the company gets when its shares are listed and traded on the stock exchange:
- The company can raise additional fund through the issue of more stock
- Companies offer to give their securities in exchange for acquisition.
- Employee stock options can be offered to the employees of a listed company that leads to making the right track image in the market.
- Listed companies get finance easily as compared to an unlisted company.
- By listing the company's stock in the market, it gets the attention of mutual funds, hedge funds, institutional traders, and market makers.
- By listing their shares on the stock exchange, the company increases its credibility with the public by making its brand image.
Statutory Provisions for Regulating Listed Companies
The following provisions govern these companies:
- Companies Act, 2013
- SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015
Compliance of Listed Company as Per Companies Act 2013
The listed company has to comply with the provisions of SEBI as well as companies act, 2013. Following are the provisions needs to have met:
- Sec 91: Close Register of Members
a company can close the register of members, debenture holders, or any other security holder during the year for not more than 45 days. Register can’t be closed for more than 30 days at one time.
- Sec 92: Annual Return
Annual return has to be certified by Company Secretary in practice stating that annual return discloses the facts are correct & the company has fulfilled all the provisions applicable to the company. This is required to be done by the following companies:
- Listed Company;
- Company having paid-up share capital exceeding INR 10 Crore;
- A company having a turnover of more than INR 25 Crore;
- Sec 93: Change in Shareholding Pattern
Every listed company has to file a return in form MGT-10 for every change in shareholding pattern of 2% or more in value or volume. Such change has to be filed within 15 days of the date of the change.
- Sec 108: E-Voting
every listed company shall provide the facility to its shareholders to exercise their voting rights in the general meeting by electronic means if it has 1000 or more shareholders.
- Sec 120: Maintenance of Record In Electronic Means
Every listed company with 1000 or more shareholders, debenture holders, or any security holders shall maintain its records in an electronic mode in a readable format, and it can’t be tampered or changed after affixing the DSC of an authorized person.Record includes:
- Registers
- Index agreement
- Memorandum of association & article of association
- Minutes of the meetings
- Sec 121: Report on Annual General Meeting
Every listed company is required to prepare a report on its annual general meeting stating that the meeting is held, conducted &convened in proper order and as per the provisions of this act. A report has to be filed to ROC within 30 days of AGM in form MGT-15.
- Sec 131: Director’s Report
A listed company needs to disclose in its director report about the:
- The formal annual evaluation made by the board of directors. The evaluation has to be conducted on the performance of boards, committees, and that of individual directors.
- Evaluation of the performance ofinternal financial controlthat it has laid and that they are adequate & operating efficiently.
- The ratio of the director's remuneration to the median remuneration of the employees of the company.
- Sec 136: Mode of Sending Financial Statements
Every company can dispatch its financial statements in the following ways:
- By electronic mode
financial statement has to be sent through electronic mail to those members whose shareholding is in dematerialized form as their email id is registered with the depositary.
- By physical mode
such as speed post/ courier/ or hand delivery.
- On the website
It is also mandatory for the company to place its financial statement online on its website.
- By electronic mode
- Sec 138: Internal Auditor
Every listed company must have an internal auditor in its place who shall be a qualified Chartered Accountant, Cost Accountant, or Company Secretary. Audit committee fixes their remuneration, scope of work, roles & responsibilities, and periodic and timelines for conducting an internal audit.
- Sec 139: Rotation of Auditors
every listed company shall have an individual auditor for only one term of 5 successive years and audit firm as its auditor for two terms of five consecutive years.
See AlsoPayment | Definition & Examples - Sec 149(1): Woman Director
following class of companies has to mandatorily appoint at least one women director:
- Every listed company
- Every public company having paid-up share capital exceeding INR 10 Crore.
- Every public company having a turnover exceeding INR 100 Crore.
- Every public company having aggregate outstanding loans, debentures & deposit exceeding INR 50 Crore.
- Sec 149(7): Certificate of Independence
The independent director has to give the declaration about his independence on the very first board meeting he attends as an independent director. If any change in its independence throughout the year, he has to declare the same on the very first board meeting he attends after such change.
- Sec 151: Small Shareholder’s Director
A listed company has to compulsorily appoint the small shareholder’s director when it receives the notice from lower of these two:
- 1000 shareholders
- 1/10thof the total number of shareholders.
- Sec 177: Audit Committee
following classes of companies has to constitute an audit committee:
- Every listed company
- Every public company having paid-up share capital exceeding INR 10 Crore.
- Every public company having a turnover exceeding INR 100 Crore.
- Every public company having aggregate outstanding loans, debentures & deposit exceeding INR 50 Crore.
- Sec 178(1): Nomination & Remuneration Committee
Every listed company has to constitute a nomination & remuneration committee with at least 3 non-executive directors out of which there shall be the majority of independent directors.
- Sec 178(2): STAKEHOLDERS RELATIONSHIP COMMITTEE
Every listed company that has more than 1000 shareholders has to appoint this committee necessarily with non-executive directors & chairperson.
- Sec 203: KMP
Every listed company and public company with paid-up share capital of INR 10 Crore has to appoint mandatorily whole-time key managerial personnel.
- Sec 204: Secretarial Audit
Every listed company shall get it done secretarial audit by a whole-time company secretary in practice. PCS gives it report in form MR-3, which has to be annexed with board report. Following classes of companies shall have to comply with this audit provision:
- Every listed company
- Every public company having paid-up share capital of INR 50 Crore
- Every public company having a turnover of INR 250 Crore.
COMPLIANCE OF LISTED COMPANY AS PER SEBI (LODR) REGULATION 2015
There are certain monthly/quarterly/half-yearly/annual compliances of a listed company as per SEBI (LODR) regulations 2015.
- REGULATION 7- APPOINTMENT OF NEW SHARE TRANSFER AGENT
WITHIN 7 DAYS OF APPOINTMENT
- REGULATION 7(2)
CONTINUAL DISCLOSURE
- REGULATION 7(3) - COMPLIANCE CERTIFICATE
WITHIN ONE MONTH OF END OF HALF-YEAR
- REGULATION 13(3)- STATEMENT OF INVESTORS COMPLAINT
WITHIN 21 DAYS FROM THE END OF QUARTER
- REGULATION 14
LISTING CHARGES
- REGULATION 27(2)- CORPORATE GOVERNANCE
WITHIN 15 DAYS FROM THE END OF QUARTER
- Having paid-up capital exceeding INR 10 Crore.
- Net worth exceeding INR 25 Crore.
- REGULATION 29- NOTICE
WITHIN DUE DATE AS PER THE CASE
- 5 days for Financial Result
- 11 days for the maters of securities & redemption of debentures.
- 2 working days for every other mater
- REGULATION 30- PRICE SENSITIVE INFORMATION
- REGULATION 31- SHAREHOLDING PATTERN- WITHIN 21 DAYS FROM THE END OF QUARTER
- One day before the listing of its share on the stock exchange
- 21 days from the end of the quarter
- Within 10 days of capital change exceeding 2% of the paid-up share capital.
- REGULATION 33- FINANCIAL RESULTS- WITHIN DUE DATE DEPENDING UPON CASE TO CASE
- REGULATION 34- ANNUAL REPORT-WITHIN 21 DAYS OF AGM
- REGULATION 40(9)- CERTIFICATE FROM PCS- WITHIN ONE MONTH FROM THE END OF HALF-YEAR
- REGULATION 42- NOTICE FOR RECORD DATE
- REGULATION 43A- DIVIDEND DISTRIBUTION POLICY
- REGULATION 44- VOTING RESULT- WITHIN 48 HOURS OF RESULTS
- REGULATION 46- COMPANY WEBSITE
Every listed entity shall maintain its official website with all the basic details on it. And it has to update within 2 days of any change on such a website.
Frequently Asked Questions
What do you mean by Listed Company?
Listed companies are defined as those public companies whose shares are listed as well as traded on the stock exchange market. These companies are the public limited joint-stock company whose shares are traded on the central stock market.
What are the statutory provisions regulating listed companies?
The statutory provisions regulating the Listed Companies are The Companies Act, 2013 along with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
Which stock market can list any company in India?
In India, a company can be listed by either by the Bombay Stock Exchange (BSE) or by the National Stock Exchange (NSE). Thus, any company with listed equities under any of these stock exchange markets in India will be defined as a listed company.
What is the meaning of Unlisted Company?
The Companies Act, 2013 has not explained the term Unlisted Companies. However, an unlisted Company can either be a Public Limited Company or even a Private Limited Company.
What is the maximum numbers of shareholders for an unlisted company?
An unlisted Company has an unlimited number of shareholders for the purpose of raising capital for any commercial venture.
When can a listed company file for periodical compliance?
The listed companies can file for periodical compliance under the guidance laid down by SEBI (Listing Obligation and Disclosure Requirements) on the basis of quarterly, half yearly and annually.
What provisions are required to be followed for the compliance of the listed companies?
A listed company follows various provisions as per law. Some of the provisions as listed under Companies Act, 2013 are Section 91, section92, section 108, section 120, section 121, Section 131, section 136, section 138, section 139, section149(1), section 149(7), section 151, section 177, section 178(1), section 178(2), section 203 and section 204.
When can quarterly compliances be filed?
Quarterly compliances can be filed at the end of each quarter within the time period mentioned for each regulation.
Which Form must be filed by the listed companies for any change in shareholding patterns?
For every change to be made in shareholding pattern either of 2% or more in value or volume, the listed company must file a return regarding the same in Form MGT-10.
What are the ways by which a Company can dispatch their financial statements?
The ways by which a Company can dispatch their financial statements are either by electronic mode, physical mode or on the website.
Who is appointed as Internal Auditor of a listed company?
Every listed company must appoint an internal auditor who shall be a qualified Chartered Accountant, Cost Accountant, or a Company Secretary.
What is the duty of audit committee in a listed company?
The audit committee of a listed company fixes the remuneration, scope of work roles and responsibilities of the internal auditor of the company. It also decides the timelines for the Internal Audit process.
What is the tenure for Internal Auditor in a listed company?
Every listed company can have an Internal Auditor for a tenure not exceeding five years.
Is it necessary to appoint the small shareholder’s director for the listed company?
Yes it is considered mandatory for any listed company to appoint directors having small shareholders in a company.
What is the composition of Nomination and Remuneration Committee in a listed company?
Every listed company must constitute a nomination & remuneration committee having a minimum of three non-executive directors. However, there shall be the majority of independent directors in this committee.
Who is authorised to do Secretarial Audit for a Listed Company?
Every listed company must get its secretarial audit done by a whole time company secretary.
What is the due date for filing of annual return of a Listed Public Limited Company?
Annual return of a Listed Public Limited Company must be filed within the sixty days of the Annual General Meeting (AGM) of the company.
Which form is required to fill for the return of Income Tax of a Listed Public Limited Company?
Form ITR-6 needs to be filled for the Income Tax Return of a Listed Public Limited Company.
Is there any event based compliances for the listed companies?
Yes, there can be event based compliance for the listed Companies.
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