Compliance Requirements under the Regulations

1. Code of Conduct for Board and Senior Management (Regulation 17(5))

The board of directors shall lay down a code of conduct for all members of board of directors and senior management of the listed entity. The code of conduct shall suitably incorporate the duties of independent directors as laid down in the Companies Act, 2013.

2. Fees/compensation paid to NED to be approved by shareholders in GM (Regulation 17(6) (a)-(d))

The board of directors shall recommend all fees or compensation, if any, paid to non-executive directors, including independent directors and shall require approval of shareholders in general meeting.

i) The requirement of obtaining approval of shareholders in general meeting shall not apply to payment of sitting fees to non-executive directors, if made within the limits prescribed under the Companies Act, 2013 for payment of sitting fees without approval of the Central Government.

ii) The approval of shareholders shall specify the limits for the maximum number of stock options that may be granted to non-executive directors, in any financial year and in aggregate.

iii) The approval of shareholders by special resolution shall be obtained every financial year, in which the annual remuneration payable to a single non-executive director exceeds fifty per cent of the total annual remuneration payable to all non-executive directors, giving details of the remuneration thereof

iv) Independent directors shall not be entitled to any stock option.

3. Fees/compensation paid to Executive Directors (Promoter/Promoter Group) (Regulation 17(6) (e))

The fees or compensation payable to executive directors who are promoters or members of the promoter group, shall be subject to the approval of the shareholders by special resolution in general meeting if certain conditions are met Conditions:

(i) the annual remuneration payable to such executive director exceeds rupees 5 crore or 2.5 per cent of the net profits of the listed entity, whichever is higher; or

(ii) where there is more than one such director, the aggregate annual remuneration to such directors exceeds 5 per cent of the net profits of the listed entity. The approval of the shareholders under this provision shall be valid only till the expiry of the term of such director.

4. Corporate Governance: Minimum information to be placed before the Board (Regulation 17(7))

The information specified in Part A of Schedule II of LODR regulations Corporate Governance: Minimum information to be placed before Board shall be placed before the board of directors of Listed Entity

5. Furnishing of Compliance Certificate (Regulation 17(8))

The chief executive officer and the chief financial officer of the Listed Entity shall provide the compliance certificate to the board of directors as specified in Part B of Schedule II of LODR Regulations

6. Composition of Board of Directors (Regulation 17(1), 17 (1C))

Board of directors shall have at least one woman director and not less than fifty per cent of the board of directors shall comprise of non-executive directors

1. Where chairperson of B.O.D is a non-executive director, at least one-third of Board shall comprise of independent directors(IDs) otherwise else half of board shall comprise of IDs

2. Top 1000 listed entities to have at least One Independent Woman Director on Board.

3. Board of top 2000 listed companies should have at least 6 Directors

4. Where listed company has o/s SR equity shares, at least half of B.O.D shall comprise of IDs

5. Approval of shareholders for appointment/re- appointment on Board to be taken at next GM or within 3 months from date of appointment, w.e. earlier. Time taken for obtaining approval of regulatory/govt authorities shall be excluded. This requirement is N.A. for director nominated by financial sector regulator/Court/Tribunal

6. Where such appointment/re-appointment incl MD/WTD/Manager was rejected by shareholders at GM, they can be appointed only with prior approval of shareholders.Exp. Statement to contain detailed expl by NRC & BOD

7. Special resolution for appoint./continuance of non-executive director who has attained age of 75 yrs (Regulation 17(1A))

No listed entity shall appoint a person or continue the directorship of any person as a non-executive director who has attained the age of seventy five years unless a special resolution is passed to that effect, in which case the explanatory statement annexed to the notice for such motion shall indicate the justification for appointing such a person. The listed entity shall ensure compliance with this at the time of appointment or re-appointment or any time prior to the non-executive director attaining the age of seventy- five years

8. Approval of shareholders for continuation of Directors (Regulation 17(1D))

Where term of Directors has exceeded 5 years as on 31st March 2004, approval of shareholders be taken in first general meeting held after 31.03.24

Approval for continuance not applicable to WTD/Manager/MD/Independent Director/Director retiring u/s 152(6) where shareholders approval is provided elsewhere in regulations/companies act and is compiled with.

Approval not required for Director appointed by Court/tribunal/nominee Director of Govt./Financial sector regulator/financial institution/debenture trustee registered with the Board under a subscription agreement

9. Filling the vacancy in Director’s office (Regulation 17(1E))

Vacancy in the office of Director to be filled within 3 months or by the date of the vacancy’s occurrence, whichever is earlier.

11. Maximum number of Directorships (Regulation 17A)

A person shall be a director/independent director in not more than seven listed entities

Where a person is serving as a whole time director / managing director in any listed entity, he shall serve as an independent director in not more than three listed entities.

For the purpose of counting the number of listed entities on which a person is a director / independent director, all entities whose equity shares are listed on a stock exchange and high value debt listed entities shall be considered

Directorship(s) held by a person on an ex-officio basis due to statute or applicable contractual framework in case of public sector undertakings and entities set up under a public private partnership arrangement shall not be included in calculating the maximum number of directorships

Provisions relating to HVDLE shall come into effect after 6 months from date of publication of SEBI LODR Amendment Regulations 2025 in Official Gazette (viz 27.09.25) or AGM date which ever is later.

10. Minimum number of Board meetings (Regulation 17(2))

The board of directors shall meet at least four times a financial year, with a maximum time gap of one hundred and twenty days between any two consecutive meetings

11. Quorum for top 2000 listed entities (Regulation 17(2A))

Quorum for top 2000 listed entities shall be one-third of its total strength or three directors, whichever is higher, including at least one independent director

11. Audit Committee in a listed entity (Regulation 18)

• Every listed entity shall constitute an Audit committee and it should have minimum 3 directors as members

• 2/3rd members should be independent directors (all members to be independent directors in case of outstanding SR equity shares)

• All members to be financially literate and 1 member to have accounting/financial management expertise

• Chairman of Audit committee should be an independent director & present at AGM

• CS to act as Secretary to the Committee

• 4 meetings in a financial year and gap of max.120 days between 2 consecutive meetings

• Quorum – 2 or 1/3rd of members of committee whichever is more (at least 2 independent directors)

12. Nomination and remuneration committee in a listed entity (Regulation 19)

• Board of Directors to constitute a Nomination and remuneration committee having at least 3 directors (all non -executive)

• At least two-thirds of the directors shall be independent directors

• Chairperson shall be independent director & present at AGM

• Quorum – 2 or 1/3rd of members of committee whichever is more (at least 1 independent director)

• Committee to meet at least once in a financial year

13. Stakeholders Relationship Committee (Regulation 20)

• The listed entity shall constitute a Stakeholders Relationship Committee to specifically look into various aspects of interest of shareholders, debenture holders and other security holders.

• The chairperson of this committee shall be a non-executive director.

• Minimum 3 Directors (out of which 1 should be independent Director) shall be the members of the committee

• In case of o/s SR equity shares, at least two thirds members shall be independent directors

• Chairperson shall be independent director & present at AGM

• Committee to meet at least once in a financial year

14. Risk Management Committee (Regulation 21)

• The board of directors shall constitute a Risk Management Committee with minimum 3 members (out of which at least 1 should be independent director

• In case of a listed entity having outstanding SR equity shares, at least two thirds of the Risk Management Committee shall comprise independent directors

• Majority of members of committee to be member of the Board

• Senior executives of the listed entity may be members of the committee

• Committee to meet at least twice in a financial year

• Quorum – 2 or 1/3rd of members of committee whichever is. more at least 1 member of Board to be present

• Not more than 210 days shall elapse between any two consecutive meetings

15. Vigil mechanism in a listed entity (Regulation 22)

• The listed entity shall formulate a vigil mechanism /whistle blower policy for directors and employees to report genuine concerns

• The vigil mechanism shall provide for adequate safeguards against victimization of director(s) or employee(s) or any other person who avail the mechanism

• It also provides for direct access to the chairperson of the audit committee in exceptional cases.

16. Related party transaction (Regulation 23(1) – (3))

Policy on materiality & RPT dealing, incl. threshold limits must be approved by Board & reviewed every 3 years. W.e.f 1.04.25, Regulation 23 applies to SMEs with PUC > ₹10 cr or Net Worth > ₹25 cr as on last day of previous FY. If Reg 23 becomes applicable later, such SMEs to comply within 6 months

1. 1. Transaction with RP is material if individually or with previous transactions in a year > Sch XII thresholds (For SME Rs.50 cr or 10% of annual consolidated turnover (ACT) of listed entity as per its audited financial statements (F.S) w.e less)

   2. Transaction involving payments made to related party for brand usage/royalty shall be considered material if individually or with prior transactions during a year > 5% of ACT of listed entity as per its last audited F.S

   3. RPTs & material modifications need prior approval of listed entity’s AC with only IDs approving. For RPTs > ₹1 cr where subsidiary is a party & listed co. not, listed entity AC approval is needed if value (alone or with prior FY deals) exceeds lower of: 10% of ACT of subsidiary as per its last audited F.S.or material RPT Sch XII threshold of listed co. If no 1-year audited FS, threshold is lower of 10% of subsidiary paid-up capital + premium (3 months old) or Schedule XII limit.

   4. AC may grant omnibus approval in Regulation 23(3)

17. Corporate governance requirements with respect to subsidiary of listed entity (Regulation 24)

The subsidiary of listed entity to comply with Corporate governance requirements as stated in Regulation 24 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

18. Ratification of Related Party Transactions (Regulation 23(2)(f))

Members of AC, who are independent directors to ratify RPT within 3 months of transaction or in next meeting with effect earlier subject to conditions. With effect from 1.4.25, Reg. 23 applies to SME with PUC > ₹10cr/NW > ₹25cr as on last day of previous FY. If Reg. becomes applicable later, SMEs to comply in 6 months

Conditions:

(i) the value of the ratified transaction(s) with a related party, whether entered into individually or taken together, during a financial year shall not exceed rupees one crore;

(ii) the transaction is not material in terms of the provisions of sub-regulation (1) of regulation 23;

(iii) rationale for inability to seek prior approval for the transaction shall be placed before the audit committee at the time of seeking ratification;

(iv) the details of ratification shall be disclosed along with the disclosures of related party transactions in terms of the provisions of sub-regulation (9) of regulation 23; (Details of ratification of RPTs are required to be disclosed along with the half-yearly disclosures of RPTs. Accordingly, the value of ratified RPTs shall be disclosed in the format specified for disclosure of RPTs as part of the Integrated Filing (Financial))

(v) any other condition as specified by the audit committee

19. Material RPT to require prior approval of shareholders (Regulation 23(4))

All material RPTs and material modifications, as defined by the audit committee (Reg23(2), require prior approval. Such material RPTs also need shareholder approval by resolution, and no related party may vote on the resolution, regardless of its relation to the specific transaction.

a) Shareholder approval of the listed entity is not required for an RPT where only its listed subsidiary is a party, provided Regulation 23 and Regulation 15(2) apply to that listed subsidiary.

b) For RPTs of an unlisted subsidiary of a listed subsidiary, prior approval of the listed subsidiary’s shareholders is sufficient.

c) These requirements do not apply to a resolution plan approved under Section 31 of the Insolvency Code, provided the event is disclosed to the stock exchanges within one day of approval.

d) Exceptions as provided in Reg 23(5)

20. Material RPT to require prior approval of shareholders (Regulation 23(4))

All material RPTs and material modifications, as defined by the audit committee (Regulation 23(2), require prior approval. Such material RPTs also need shareholder approval by resolution, and no related party may vote on the resolution, regardless of its relation to the specific transaction.

a) Shareholder approval of the listed entity is not required for an RPT where only its listed subsidiary is a party, provided Regulation 23 and Regulation 15(2) apply to that listed subsidiary.

b) For RPTs of an unlisted subsidiary of a listed subsidiary, prior approval of the listed subsidiary’s shareholders is sufficient.

c) These requirements do not apply to a resolution plan approved under Section 31 of the Insolvency Code, provided the event is disclosed to the stock exchanges within one day of approval.

d) Exceptions as provided in Reg 23(5) e) Shareholder omnibus approval for material RPTs at the AGM is valid until the next AGM held within the Section 96 timelines. Omnibus approvals given in meetings other than the AGM are valid for a maximum of one year from the date of approval.