SEBI recently made certain amendments to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“SEBI Listing Regulations”) and issued a new format for disclosure of promoter and promoter group shareholding. Set out below is a summary of the key changes made by SEBI.


With effect from January 1, 2022, SEBI made the following changes to the SEBI Listing Regulations:

Independent director disqualifications –

  • The look-back period of two financial years for pecuniary relationships (with the listed company, its holding company, subsidiaries, associate company, or their promoters or directors) for determining independence of a director has been extended to three financial years.
  • The disqualification for persons who have relatives that have pecuniary relationships (with the listed company, its holding, subsidiary or associate company, or their promoters, or directors) exceeding prescribed thresholds, has been clarified to cover holding of securities / interest, indebtedness, guarantees and other forms of pecuniary relationships.
  • The disqualification for a person who himself (or whose relatives) has been key managerial personnel (“KMP”) or employee of the listed company or its holding, subsidiary, or associate company in the past three financial years, has been extended to also cover a KMP or employee of any company belonging to the promoter group. In case of a relative, the disqualification will apply only if such relative is a KMP.

B. Changes in board of directors

  • Under the Companies Act, 2013, a company can appoint an additional director to hold office as a director until the next annual general meeting. Listed companies are now required to seek shareholder approval for such appointments at the next general meeting of the company or within three months of appointment, whichever is earlier.
  • Appointment, re-appointment, or removal of independent directors shall be subject to shareholder approval by special resolution.
  • In case of resignation or removal of an independent director, the replacement was to be appointed within the later of the next board meeting or three months from the date of such vacancy. Now such replacement has to be appointed within three months and is no longer linked to the next board meeting.
  • Further, if an independent director resigns from directorship, such person is barred from being appointed as an executive / whole time director on the board of the listed entity, its holding, subsidiary, associate company, or any company belonging to its promoter group, unless a period of one year has elapsed from the date of his resignation.

C. Audit Committee

Previously the audit committee of listed companies (without outstanding SR equity shares) was required to have 2/3rd of its members as independent directors. SEBI has clarified that this is a minimum requirement (i.e., the audit committee must have at least 2/3rd independent directors) and that a listed company may have more than 2/3rd independent directors in their audit committee.

D. Nomination and Remuneration Committee (“NRC”)

  • Previously the NRC of listed companies (without outstanding SR equity shares) was required to have ½ of its members as independent directors. Now the NRC of all listed companies is required to have at least 2/3rd of its members as independent directors.
  • For appointment of independent directors, the NRC is now required to evaluate the balance of skills, knowledge, and experience on the board and based on such evaluation, prepare a description of the role and capabilities required of an independent director. The person recommended to the board for appointment as an independent director shall have the capabilities identified in such description.
  • It has been clarified that for the purposes of identifying suitable candidates, the NRC may: (a) use external agencies; (b) consider candidates from various backgrounds; and (c) consider the time commitments of the candidates.

E. Related Party Transactions (“RPT”)

SEBI has clarified that only independent directors shall be entitled to vote to approve RPTs in audit committee meetings.

F. D&O insurance

With effect from January 1, 2022, the top 1000 listed companies by market capitalization calculated as on March 31st of the preceding financial year shall be required to obtain D&O insurance for their independent directors of such quantum and for such risks as may be determined by its board.

G. Additional disclosures

  • In case of appointment or reappointment of directors, the annual report is required to provide details of listed entities from which the person has resigned in the past three years. In case of independent directors, the shareholders must also be provided details of the skills and capabilities required for the role and the manner in which such person meets such requirements.
  • In case of resignation of independent directors, listed companies are now also required to disclose to the stock exchanges, the letter of resignation along with detailed reasons for the resignation given by the director and details of directorships held by such resigning director in other listed entities.


The SEBI Listing Regulations previously required listed entities to disclose their promoter and promoter group shareholding in their shareholding patterns filed with the stock exchanges, in a single combined category. SEBI has now issued a revised format which requires listed entities to separately identify which persons / entities are promoters and which persons / entities are part of the promoter group (but are not promoters).

Authored by Abhinav Bhalaik, Partner, and Armaan Patkar, Principal Associate

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