Sebi sets up new expert group of 22 members on listing obligations

Committee headed by former RBI deputy governor will advice regulator on corporate governance, harmonisation of listing and post-listing obligations

The Securities and Exchange Board of India (Sebi) has set up a 22-member advisory committee to streamline the rules for listing obligations and disclosures. The expert group will be chaired by R Gandhi, former deputy governor of the Reserve Bank of India (RBI). The committee, formed on August 28, will advise Sebi on corporate governance, harmonisation of listing and post-listing obligations, and disclosure requirements.

Other members include NK Dua (joint director in ministry of corporate affairs), Keki Mistry (HDFC Bank's non-executive director), stock exchange heads, proxy advisory firm managing directors, and representatives from industry bodies, corporates, and legal experts.

In June, Sebi proposed 50 changes to simplify disclosure and listing obligations, based on recommendations from a separate expert group comprising 21 members and chaired by SK Mohanty, former Sebi whole-time member.

The Mohanty committee had submitted a 200-page report proposing changes to related party transactions, promoter reclassification, director appointments, IPO eligibility, and disclosure timelines. These proposals aim to bridge gaps and address overlaps in Sebi’s Listing Obligations and Disclosure Requirements and Issue of Capital and Disclosure Requirements regulations.

These two regulations are key to upholding corporate governance and preventing information asymmetry.

Sources said Sebi is likely to take up the recommendations submitted by the Mohanty committee at its next board meeting scheduled for the last week of September.

The expert group proposed a longer promoter lock-in period if funds raised via an IPO were used to repay loans utilised for capital expenditure. It also suggested increasing the timeline for disclosure of litigation or disputes from the existing 24 hours to 72 hours. The regulator has also sought more disclosure of pre-IPO transactions.

To overhaul norms for related party transactions (RPTs), Sebi has suggested several exemptions in the definition, approvals, and half-yearly disclosures. For instance, remuneration and sitting fees paid to directors or senior management could be exempted from disclosures. The panel also suggested that transactions between two public sector enterprises (PSEs) or between a PSE and the state or central government could be exempted from approval under RPTs.