The Companies Act, 2013, which came into force in 2014, significantly increased the compliance requirements for all types of companies. This includes Private Limited Companies, Public Limited Companies, Listed Companies, Small Companies, Section-8 Companies, and One-Person Companies (OPCs). The objective of the Act and subsequent amendments is to enhance transparency in reporting and ensure adherence to corporate governance standards.
Regulatory authorities, including the Ministry of Corporate Affairs (MCA) and the Securities and Exchange Board of India (SEBI), frequently issue notifications, circulars, and amendments to ensure companies comply with evolving norms. For listed companies, which have the additional responsibility of protecting investor interests and maintaining market integrity, compliance is crucial.
Non-compliance with the Companies Act or SEBI regulations can lead to severe penalties, including fines and prosecution. Therefore, listed companies need to track their compliance requirements carefully and meet deadlines for various filings and disclosures.
Types of Compliances under the Companies Act
The compliances required under the Companies Act can be broadly categorized into three types. These classifications help companies organize their compliance processes more effectively.
Event-based Compliances
These compliances arise upon the occurrence of specific events. For instance, if a company changes its registered office, it must file a notification within a prescribed timeline. Such filings are not periodic but are triggered by corporate actions or events.
Time-based Compliances
These are periodic filings or disclosures required at regular intervals, such as annually, half-yearly, or quarterly. Examples include the annual filing of financial statements and annual returns. These filings ensure continual transparency and up-to-date reporting.
Specific Criteria-Based Compliances
Certain compliance requirements depend on specific criteria like paid-up share capital, turnover, or other statutory thresholds. For example, a company crossing a certain paid-up capital limit may be required to appoint a company secretary or file additional reports in a prescribed format.
Additional Regulatory Compliances for Listed Companies
Besides complying with the Companies Act, listed companies must adhere to various SEBI regulations designed specifically for listed entities. These include:
- SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, which mandate periodic disclosures and governance requirements.
- SEBI (Depositories and Participants) Regulations, 2018, governing securities depositories and related processes.
- SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, which deal with the acquisition of shares and takeover bids.
- SEBI (Prohibition of Insider Trading) Regulations, 2015, aimed at preventing insider trading activities.
Together, these regulations impose additional quarterly, half-yearly, annual, and event-based compliance requirements, ensuring that listed companies maintain high standards of corporate governance and disclosure.
Overview of Compliance Requirements Related to Meetings
Listed companies are also required to comply with various provisions relating to meetings. These include holding the Annual General Meeting (AGM) within prescribed timelines, maintaining the minimum number of board meetings and committee meetings as mandated by law, and adhering to rules regarding quorum, notice, and agenda.
The Annual General Meeting is a key event where shareholders approve financial statements and elect directors. Companies must ensure the proper conduct of AGMs and the timely filing of related documents.
Significance of Compliance Tracking
Due to the complex nature of statutory requirements and frequent regulatory updates, listed companies need robust systems to monitor compliance deadlines and filing requirements. Timely and accurate compliance not only avoids penalties but also builds investor confidence and strengthens the company’s reputation.
Tracking compliance involves understanding the nature of each requirement, the triggering event or timeline, the appropriate form to be filed, and the authority with which the filing is to be made.
Compliance Calendar for Listed Companies
Listed companies must adhere to a strict calendar of compliance activities mandated by the Companies Act, 2013, and various SEBI regulations. These compliances are essential to ensure regulatory adherence and maintain transparency with shareholders and regulators.
Compliances Under the Companies Act, 2013
The Companies Act lays down multiple compliance obligations with specific timelines and prescribed forms. These are required to be reported to the Registrar of Companies (ROC) and other authorities as applicable.
Declaration of Commencement of Business
Every company incorporated after the commencement of the Companies Act, 2013, must file a declaration stating that it has commenced business within 180 days of incorporation. This filing is mandatory and must be done using the prescribed form to the ROC.
Intimation of Change in Registered Office
Any change in the company’s registered office address must be intimated to the ROC within 30 days of the change. The company is required to file the relevant form reporting the new address details.
Declaration Received Under Sectionss 89 and 90
Companies must maintain and update the register of members and notify the ROC of any declaration regarding beneficial ownership received under Sections 89 and 90 of the Act. Such declarations must be filed within 30 days from receipt using the applicable forms.
Filing of Annual Return
An annual return containing details of the company’s shareholding, directors, and other particulars must be filed within 60 days from the date of the Annual General Meeting. This filing keeps the public record updated about the company’s structure.
Filing of Financial Statements
The company must file its financial statements, including the balance sheet and profit and loss account, with the ROC within 30 days of the AGM. The filing must be done in the prescribed format and include auditor reports where applicable.
Appointment and Resignation of Auditors
Any appointment or resignation of the statutory auditor must be reported to the ROC within the timelines prescribed by the Act, typically within 15 to 30 days of the event.
Board Resolutions and Agreements
Certain resolutions and agreements require filing with the ROC within 30 days of their passing or execution. These typically include special resolutions or contracts affecting company management or share capital.
Directors’ KYC
All directors holding a Director Identification Number (DIN) must file their Know Your Customer (KYC) details annually. This is a mandatory compliance to verify the identity of directors.
Reconciliation of Share Capital Audit Report
Listed companies are required to reconcile their share capital and file a half-yearly report with the ROC. This ensures that shareholding records match the actual securities held.
Statement of Outstanding Payments to Micro or Small Enterprises
Companies must file a return reporting payments due to micro or small enterprises every half year. This compliance supports transparency and protects the interests of small suppliers.
Return of Deposits
Companies accepting deposits or transactions related to deposits must file periodic returns detailing such transactions to the ROC annually by the specified deadline.
Appointment or Resignation of Directors or Key Managerial Personnel
Details of appointments or resignations of directors or key managerial personnel must be filed within 30 days of the event.
Disclosure of Director Disqualifications and Interests
Directors are required to disclose any disqualifications at the time of appointment or reappointment and declare their interests in the first board meeting of every financial year.
Report on Annual General Meeting
Companies must file a report regarding the conduct of the AGM within 30 days of the date of the meeting.
Compliances Under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015
Listed companies must comply with various disclosure and governance requirements prescribed under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. These compliances ensure transparency, timely dissemination of information, and protection of shareholder interests.
Quarterly Compliances
Listed companies are required to submit certain reports every quarter. These reports include corporate governance reports, shareholding patterns, statements of deviation or variation, and financial results.
Corporate Governance Report
The corporate governance report must be filed within 21 days of the end of each quarter. This report covers aspects such as board composition, committee meetings, and other governance practices.
Disclosure of Shareholding Pattern
The shareholding pattern discloses the distribution of share ownership among promoters, institutional investors, public shareholders, and others. It must be filed within 21 days from the end of each quarter.
Statement of Deviations or Variations
If there are deviations or variations in the use of funds from those stated in the prospectus or previous filings, the company must disclose these within 45 to 60 days from the end of the quarter.
Financial Results with Audit Report
Quarterly financial results, along with the auditor’s review report,, must be filed within 45 days from the end of the quarter, except for the final quarter, for which the timeline may differ.
Half-Yearly Compliances
Certain disclosures must be made every six months. These include related party transaction disclosures and reconciliation reports.
Disclosures of Related Party Transactions
Related party transactions must be disclosed within 15 days from the date of publication of the standalone and consolidated financial results every half year.
Annual Compliances
Annual filings form a significant part of SEBI compliance for listed companies. These include compliance certificates, payment of listing fees, secretarial compliance reports, financial results, annual reports, and voting results.
Compliance Certificate by Share Transfer Agent
The share transfer agent must file a compliance certificate within 30 days of the end of the financial year.
Payment of Listing fees
Listing fees and other charges must be paid within one month of the end of the financial year.
Secretarial Compliance Report
A secretarial compliance report must be filed within 60 days after the end of the financial year.
Annual Affirmations on Code of Conduct
Directors and senior management must affirm compliance with the company’s code of conduct at the first board meeting of each financial year.
Financial Results with Auditor’s Report
Annual financial results accompanied by the auditor’s report must be filed within 60 days of the financial year-end.
Annual Report
The annual report, containing financial statements and other disclosures, must be sent to shareholders at least 21 days before the Annual General Meeting.
Initial and Annual Disclosures for Large Entities
Large entities must comply with additional initial and annual disclosure requirements within prescribed timelines.
Certificates and Reporting of Transfer or Transmission of Securities
Certificates from practicing professionals and reports on transfer, transmission, or transposition of securities are required annually.
Submission of Voting Results
Voting results from general meetings must be submitted to the stock exchanges within two working days of the meeting.
Event-Based Compliances
Certain disclosures must be made upon the occurrence of specified events, such as board meetings, share transfers, changes in capital structure, or other corporate actions.
Intimation of Appointment of Share Transfer Agent
Companies must inform stock exchanges within seven days of appointing a share transfer agent.
Prior Intimation of Board Meetings
Board meetings for key decisions like financial results, buybacks, dividends, fundraising, and others must be intimated at least two working days in advance.
Disclosure of Events or Information
Material events or information must be disclosed to stock exchanges as soon as reasonably possible, generally within 30 minutes to 24 hours, depending on the source of information.
Verification of Market Rumours
Top listed entities are required to verify, confirm, deny, or clarify market rumours affecting their securities within 24 hours of a price movement trigger.
Shareholding Pattern Before Listing
Shareholding patterns must be disclosed one day before the listing of securities.
Changes in Share Capital
Any capital restructuring involving a change of more than two percent requires disclosure within 10 days.
Draft Scheme of Arrangement
Companies must obtain stock exchange approval before filing schemes of arrangement with the courts.
Loss of Share Certificates
Duplicate share certificates must be issued within two days of receiving intimation of loss.
Change in Company Name
A certificate confirming compliance with name change regulations must be annexed to shareholder notices seeking approval.
Website Requirements
Listed entities must maintain a functional website containing basic company information.
Compliances Under SEBI (Depositories and Participants) Regulations, 2018
These regulations govern the functioning of depositories and participants, ensuring that the dematerialization and related processes are carried out smoothly and transparently. Listed companies must adhere to the following key requirements.
Processing of Dematerialization Requests
Companies, through their Registrar and Transfer Agents (RTAs), must process all dematerialization requests within prescribed timelines and report compliance to the depositories. A quarterly report confirming the processing of such requests must be submitted within 15 days from the end of each quarter.
Reconciliation of Shares and Capital Audit
Listed companies must conduct a reconciliation of their issued capital and the capital held in depositories to ensure there is no mismatch. The reconciliation report must be submitted to the stock exchanges within 30 days of the end of each quarter.
Compliances Under SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011
These regulations apply when there is an acquisition of shares or voting rights in a listed company. They aim to protect the interests of existing shareholders and ensure transparency in takeover transactions.
Disclosure of Share Encumbrances
Promoters and persons acting in concert must disclose details of shares encumbered, such as pledges or liens, within seven working days from the creation, invocation, or release of such encumbrances. Disclosures must be made to every stock exchange where the company is listed and to the company itself.
Yearly Declaration of Non-Encumbrance
Promoters must annually declare that no encumbrances exist other than those already disclosed. This declaration must be made within seven working days from the end of the financial year and be submitted to the stock exchanges and the company’s audit committee.
Compliances Under SEBI (Prohibition of Insider Trading) Regulations, 2015
These regulations are designed to prevent the misuse of unpublished price-sensitive information (UPSI) by insiders. Listed companies must establish a framework to monitor and regulate the trading activities of designated persons.
Continual Disclosures by Insiders
Promoters, members of the promoter group, designated persons, and directors must disclose to the company any acquisition or disposal of securities if the value traded during a calendar quarter exceeds the prescribed monetary threshold. This disclosure must be made within two trading days of the transaction or becoming aware of such information.
Company’s Obligation to Notify Stock Exchanges
Upon receipt of continual disclosures from insiders, the company must inform the stock exchanges within two trading days. This ensures the timely dissemination of information to the market.
Importance of Timely Compliance
Meeting the statutory timelines for all these compliances is critical for listed companies. Delays or lapses not only attract monetary penalties but can also lead to reputational damage, regulatory scrutiny, and, in severe cases, suspension of trading in the company’s securities.
A well-structured compliance management system helps companies maintain accuracy, avoid duplication of effort, and meet deadlines. This often involves the use of compliance calendars, automated reminders, and dedicated compliance officers.
Building a Strong Compliance Culture
Beyond merely meeting legal requirements, listed companies benefit immensely from embedding a culture of compliance within their operations. Compliance should not be viewed as a one-time activity or a checklist exercise, but rather as an integral part of the company’s ethos and daily functioning. This cultural integration ensures that all levels of the organization—from the boardroom to frontline employees—are aligned in their understanding of, and commitment to, adhering to applicable laws, regulations, and ethical standards.
One of the key components of fostering this culture is regular and comprehensive training programs for directors, officers, and employees. Such training is essential because regulatory landscapes are constantly evolving. Laws and rules under the Companies Act, SEBI regulations, and other relevant frameworks may be amended or supplemented to address emerging risks or market developments. Keeping the entire workforce well-informed about these changes helps reduce the risk of inadvertent non-compliance, which can lead to penalties or damage to the company’s reputation. Training sessions also reinforce the importance of ethical conduct, insider trading laws, data privacy, anti-corruption policies, and other compliance areas critical to the company’s operations.
Periodic internal audits play a complementary role in this compliance culture by providing an independent review of the company’s processes and controls. These audits help identify gaps or weaknesses in compliance mechanisms before they escalate into significant issues. Internal auditors work closely with management to recommend corrective actions, streamline procedures, and ensure adherence to both regulatory requirements and internal policies. A strong internal audit function sends a clear message that compliance is taken seriously and monitored continuously, which can improve operational efficiency and reduce risks.
Another important factor in building a culture of compliance is maintaining open and transparent communication with regulators, stakeholders, and shareholders. Proactive engagement with regulatory authorities not only helps companies stay updated on regulatory expectations but also demonstrates a willingness to cooperate and comply in good faith. Timely disclosures and honest communication during inspections or investigations further strengthen the relationship between companies and regulators.
Equally important is keeping stakeholders and shareholders well-informed about the company’s governance practices, financial performance, and risk management initiatives. Regular updates through shareholder meetings, annual reports, investor presentations, and disclosures build trust and confidence in the company’s management and governance structures. Transparency in reporting and responsiveness to shareholder concerns can reduce misinformation and speculation in the market, which benefits overall market stability.
Embedding transparency, accountability, and proactive compliance into the organizational culture also has tangible benefits for the company’s corporate reputation. A strong reputation attracts long-term investors, lowers the cost of capital, and can even improve employee morale and retention. Conversely, companies associated with compliance failures or ethical lapses often face prolonged scrutiny, legal battles, and loss of business opportunities.
In today’s complex and dynamic regulatory environment, companies that treat compliance as a strategic advantage rather than a burden gain a competitive edge. They are better prepared to manage risks, respond to regulatory changes, and seize growth opportunities with confidence. Ultimately, fostering a robust culture of compliance creates a foundation for sustainable success and resilience in the capital markets.
Conclusion
The compliance framework for listed companies under the Companies Act, 2013, and various SEBI regulations is extensive and requires careful attention to timelines, reporting formats, and procedural requirements. The obligations span annual, quarterly, half-yearly, and event-based filings, covering corporate governance, financial disclosures, shareholding patterns, insider trading prevention, and shareholder protection measures.
One of the key pillars of compliance for listed companies is adherence to the provisions of the Companies Act, 2013, which lays down the foundational requirements for corporate governance, board structure, and financial reporting. For instance, companies must hold at least four board meetings annually, maintain statutory registers, and file annual financial statements and annual returns with the Registrar of Companies (RoC) within prescribed timelines. Failure to comply with these requirements attracts penalties and may invite stricter regulatory scrutiny.
In addition to the Companies Act, the Securities and Exchange Board of India (SEBI) regulations play a crucial role in ensuring transparency and accountability in listed entities. The SEBI Listing Obligations and Disclosure Requirements (LODR) Regulations, 2015, mandate the timely disclosure of material events, financial results, shareholding patterns, and compliance reports to stock exchanges. These regulations also prescribe detailed norms for corporate governance, including the composition and functioning of audit committees, nomination and remuneration committees, and the role of independent directors.
Quarterly financial reporting is a significant compliance requirement under SEBI LODR. Companies must publish their quarterly results within 45 days from the end of the quarter, except for the last quarter, where the timeline is 60 days. These disclosures enable investors and market participants to monitor the company’s financial health regularly and make informed investment decisions.
Shareholding patterns and promoter holdings are also subject to continuous disclosure. Companies must file shareholding pattern reports quarterly, detailing the distribution of equity shares among promoters, institutional investors, non-promoter public shareholders, and others. This transparency helps curb unfair practices and insider trading, protecting the interests of minority shareholders.
Preventing insider trading is another critical aspect governed by SEBI’s Insider Trading Regulations. Listed companies are required to establish and enforce codes of conduct for their directors, officers, and designated employees, restricting the misuse of unpublished price-sensitive information. Regular training and awareness programs are necessary to ensure that all insiders understand their obligations under the law.
Event-based disclosures, such as changes in the board of directors, issuance of shares, mergers, acquisitions, or any significant operational developments, must be promptly reported to stock exchanges. The timeliness and accuracy of these disclosures are paramount, as they impact market perceptions and stock price movements.
Beyond regulatory compliance, companies that effectively manage their obligations demonstrate a commitment to good governance and ethical business practices. This, in turn, fosters long-term investor trust and enhances the company’s reputation in the capital markets. Conversely, lapses in compliance can lead to reputational damage, legal consequences, and financial penalties.
In a dynamic regulatory environment, staying informed and prepared is essential for continued success. Companies often invest in robust compliance management systems and appoint dedicated compliance officers to monitor evolving requirements. Regular training programs for directors and employees, along with periodic internal audits, help ensure that compliance processes remain effective and up to date.
Furthermore, advances in technology, such as digital filing platforms and automated alerts, have facilitated more efficient compliance management. However, the human element, vigilance, ethical standards, and proactive governance, remains indispensable.