On 2 September 2015, SEBI notified the Listing Obligations and Disclosure Requirements Regulations, 2015 (”2015 Regulations”) with two objectives: first, to adapt the clauses of the listing agreement to the Companies Act and, second, to consolidate the conditions into a single regulation under different securities listing agreements. The 2015 rules apply to any company (whether or not it is a company) that has access to the stock exchange, stock listing (on the board of directors, on the SME Exchange, on institutional trading platforms), bonds, preferred shares, share-type shares, securitised debt securities, investment fund securities and other securities that can be declared by SEBI. The 2015 rules take effect after 90 days from the date of notification, i.e. from 1 December 2015, in force, with the exception of the provisions relating to the authorisation of transactions with relatives and the disclosure of the class of shareholders, as well as the conditions of redistribution effective from the date of registration. In addition, SEBI will notify in due course an abridged and revised version of the listed agreement in accordance with the 2015 rules. In August 2015, SEBI amended the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009, to allow the listing of certain categories of start-ups8 without an IPO. The underlying objective was to liberalise stricter listing rules and advise start-ups against opting for listing on foreign stock markets. These start-ups must change their structure before listing in listed companies. In addition, they can only raise capital through a preferential rights issue and a private placement (which were otherwise available under the Companies Act) and cannot invite private investments from individuals or propose a public offer. SEBI`s standard agreement for listing on the institutional trading platform does not discourage start-ups from complying with the corporate governance requirements of the Company Act. For example, a listed start-up must necessarily appoint 1/3 of its board of directors with independent directors, appoint a director, form management committees, set up order payment mechanisms and put in place various internal controls and systems. Compliance with corporate governance rules entails structural and compliance costs, considerable time for a start-up and, despite the float of the alternative mechanism, it continues to have a deterrent effect on the listing.
The main reason for the introduction of the Listing Regulation was to streamline all the rules relating to all securities, so that it becomes convenient for companies to follow one set of rules instead of following two regulatory rules, and also to avoid the confusion that occurs when two regulations overlap. The introduction of a new regulatory framework has also improved the disclosure process at SEBI, as more and more companies are under strict control of the regulatory mechanism and, as a result, the process of companies complying with the rules of the Securities and Exchange Administration Board (SEBI) has improved. With the introduction of the list settlement, contractual obligations have been transformed into a legal requirement that confers legal recognition on the provisions. First, decisions of the Board of Directors relating to dividends, Barboni, redemption, financing, issuance of free shares, delivery of dilapidated shares, changes in capital, financial results and voluntary delisting are considered ”essential”. . . .