MASTER OF BUSINESS ADMINISTRATION-LAW

Programme: 2022-2024
Legal Aspects of Merger & Acquisition
Project Report
On
SEBI (Listing Obligations and Disclosure Requirements)
Regulations – 29, 30, 37 & 37A
SUBMITTED TO
Prof. SHRIKANT AITHAL

SUBMITTED BY
KAMAL LATH
MBA LAW - 5th Trimester
ROLL NO - A006

SVKM’s Narsee Monjee Institute of Management Studies

V.L Mehta Road, Vile Parle (West), Mumbai- 400056, India
Regulation 29 of the SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015 (LODR Regulations) is an important requirement for listed companies in
India. This regulation primarily deals with the obligation to provide prior intimation to the
stock exchanges about board meetings where certain matters are proposed to be discussed.
According to Regulation 29(1) of the LODR Regulations, listed companies are required to
give at least 5 days' notice to the stock exchanges prior to any board meeting where certain
matters are to be discussed. These matters include the disclosure of financial results,
recommendation of dividends, capital restructuring, mergers, amalgamations, resignations or
appointments of key managerial personnel, substantial acquisition of shares, related party
transactions, and defaults in loan or debenture payments.
One of the key aspects of Regulation 29 is the requirement of intimating the stock exchanges
about any financial results. Listed companies must disclose their quarterly, half-yearly, and
annual financial statements within the stipulated timeframes. This includes audited
consolidated financial results, segment-wise revenue and results, and statements of assets and
liabilities.
Another important area covered by Regulation 29 is the recommendation of dividends. The
board of directors must discuss and decide on the proposal for the payment of dividends, if
any, during the meeting. This is crucial information for shareholders and investors who rely
on such updates for financial decision-making.
Additionally, Regulation 29 focuses on matters such as the issuance of securities, capital
restructuring, mergers, amalgamations, and restructuring proposals. The board of directors
must obtain approval and discuss these matters thoroughly during the board meeting.
Furthermore, any changes in the key managerial personnel, such as appointments,
resignations, removals, or changes in terms of appointment, must be brought to the attention
of the stock exchanges. Likewise, substantial acquisition of shares or changes in control also
require prior intimation.
The regulation also emphasizes the need for disclosure of any related party transactions
during board meetings. Approval or modification of such transactions must be discussed and
communicated to the stock exchanges.
Any defaults in the payment of interest or repayment of principal on loans or debentures must
be intimated to the stock exchanges as well. It is crucial for listed companies to strictly
adhere to the provisions of Regulation 29 and the overall LODR Regulations to ensure
transparency and proper disclosure. Non-compliance may attract penalties imposed by SEBI
or other regulatory actions. The Securities Appellate Tribunal (SAT) has the jurisdiction to
hear appeals against SEBI's rulings, orders, or decisions related to the LODR Regulations.
Additionally, any violations of the LODR Regulations can also lead to adjudication
proceedings initiated by SEBI.
Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015 (LODR Regulations) is a crucial provision that mandates timely
disclosure of material events or information by listed companies in India. This regulation
aims to ensure transparency and fairness in the market by providing investors with timely and
accurate information.
Under Regulation 30, listed companies are required to disclose any material events or
information that could have an impact on their financial condition or share price. These
disclosures must be made to the stock exchanges promptly and in a fair, accurate, and
complete manner.
Material events or information covered under Regulation 30 include but are not limited to:
1. Litigation or legal proceedings: Companies must disclose any material developments in
pending or significant legal proceedings, including disputes, claims, or regulatory actions,
that could have a potential impact on their financial position or business operations.
2. Changes in financial position: Disclosures must be made regarding any material changes in
the financial position of the company, such as the occurrence of a default in repayment of
loans or significant borrowings, debt restructuring, or bankruptcy filings.
3. Defaults in payment: Companies are required to disclose instances of defaults in payment
of interest or repayment of principal amounts on debt securities, loans, or borrowings, which
could adversely affect their financial condition or operations.
4. Acquisitions and mergers: Disclosure is required for any material developments related to
mergers, acquisitions, amalgamations, or restructurings that may impact the company's
shareholders, operations, or financial position.
5. Change in leadership: Companies must disclose any material changes in key managerial
personnel, such as CEO, CFO, or directors, including appointments, resignations, and
terminations, as these changes can have a significant impact on the company's functioning
and market perception.
6. Changes in shareholding patterns: Any material changes in the shareholding pattern of the
company must be promptly disclosed. This includes the acquisition or disposal of shares by
promoters, substantial shareholders, or related parties.
7. Corporate governance issues: Disclosure is required for any material developments relating
to corporate governance issues, such as non-compliance with corporate governance norms,
changes in board composition or structure, or breaches of the LODR Regulations.
8. Any other matter: Any other event or information that is relevant, material, and could
potentially impact the company's financial position, operations, or share price needs to be
promptly disclosed. It is important to note that the obligation to disclose material events or
information under Regulation 30 is a continuous one. Listed companies are required to
promptly update the stock exchanges with any material developments as and when they
occur. Non-compliance with the provisions of Regulation 30 can attract penalties, fines, or
other regulatory actions from SEBI. Therefore, it is essential for listed companies to have
robust systems and procedures in place to identify and disclose material events or information
promptly and accurately.
LODR (Listing Obligations and Disclosure Requirements) Regulation 37 is
a provision under the Securities and Exchange Board of India (SEBI)
It focuses on the composition and functioning of the board of directors of such entities. In this
analysis, we will discuss the key aspects of LODR regulation 37. Regulation 37 states that the
board of directors of a listed entity should have an optimum combination of executive and
non-executive directors, with at least one woman director and not less than fifty percent of
the board comprising of non-executive directors. This provision ensures diversity and
independent representation in the decision-making process.
The regulation emphasizes the need for an independent director on the board, specifically
mandating that at least one-third of the total board strength should comprise independent
directors in the case of a non-executive chairperson. In the case of an executive chairperson,
at least half of the board should consist of independent directors.
LODR regulation 37 requires companies to disclose the expertise and skill set of the directors
in the annual report, along with their attendance at board meetings and various committees.
Such disclosures contribute to transparency and accountability in the functioning of the
board.
The provision also addresses the tenure and retirement of directors. It states that a non-
executive director can hold office for a maximum of two consecutive terms of five years
each, while an independent director can hold office for a maximum of two consecutive terms
of five years each, subject to compliance with the Companies Act and other applicable laws.
Regulation 37A
LODR Regulation 37A represents a significant tightening of regulations surrounding the sale,
lease, or disposal of undertakings by listed companies in India. The regulation aims to
enhance transparency and protect the interests of public shareholders by requiring stricter
approval processes and disclosures.
Key Provisions of Regulation 37A:
• Requirement of Special Resolution: Any listed entity seeking to dispose of its entire
undertaking, or a substantial portion of one, must obtain shareholder approval through
a special resolution. This resolution requires the support of at least 75% of the votes
cast at a general meeting.
• Approval by Public Shareholders: Notably, the regulation mandates approval not only
from shareholders in general but also specifically from a majority of public
shareholders. This ensures that the interests of minority shareholders are not
overlooked in such significant decisions. Importantly, any public shareholder directly
or indirectly involved in the transaction is not entitled to vote on the resolution.
• Enhanced Disclosures: Listed entities are required to disclose detailed information
regarding the proposed transaction, including the object, commercial rationale, and
intended use of the proceeds. This transparency allows shareholders to make informed
decisions based on comprehensive information.
 • Exemption for Certain Transactions: The regulation provides exemptions for certain
situations, such as disposals arising from covenants under agreements with financial
institutions or debenture trustees. This ensures that routine transactions are not unduly
burdened by the additional approvals process.
Impact and Implications of Regulation 37A:
• Increased Protection for Public Shareholders: The regulation undoubtedly strengthens
the voice of public shareholders in major corporate decisions. The requirement for
their explicit approval ensures their interests are not compromised in asset disposals
that could significantly impact the company's future.
• Enhanced Transparency and Disclosure: The mandated disclosures provide valuable
insights into the rationale behind the transaction and its potential ramifications. This
information empowers shareholders to make informed decisions and hold the
management accountable.
• Potential Impact on Deal-Making: The added layer of approvals may make it more
challenging and time-consuming for listed companies to execute transactions
involving the disposal of significant assets. This could potentially impact deal-making
activities, particularly for smaller companies.
• Harmonization with Global Standards: The regulation aligns Indian corporate
governance practices with international standards, promoting greater transparency and
investor confidence in the Indian market.
Case laws in relation to the above LODR regulations discussed:-
Regulation 29:
• Sahara India Real Estate Corporation Ltd. & Ors. vs. SEBI & Ors. (2012): This
case involved the non-compliance of Regulation 29 by Sahara India Real Estate
Corporation Ltd. (SIRECL). The court held that SIRECL had failed to disclose
material information about its option fully convertible debentures (OFCDs), which led
to investor grievances. This case emphasized the importance of timely and accurate
disclosures as mandated by Regulation 29.
Regulation 30:
• Reliance Industries Ltd. vs. SEBI & Ors. (2002): This case dealt with the
interpretation of "materiality" under Regulation 30. The court ruled that any
information that could impact a shareholder's decision-making is considered material
and needs to be disclosed. This case clarified the scope of Regulation 30 and its
application in various situations.
Regulation 37:
• Jindal Power Ltd. vs. SEBI & Ors. (2012): This case involved the approval process
for a Scheme of Arrangement under Regulation 37. The court held that SEBI and
stock exchanges have the right to raise concerns and seek clarifications about the
Scheme before its approval. This case highlighted the role of regulatory bodies in
protecting investor interests during corporate restructuring.