TERMS USE IN THE LISTING REGULATIONS

I.            “DESIGNATED SECURITIES”

Means ¹specified securities, ²non-convertible debt securities, ³non-convertible redeemable preference shares, ⁴perpetual debt instrument, ⁵perpetual non-cumulative preference shares, ⁶Indian depository receipts, ⁷securitized debt instruments, ⁸units issued by mutual funds and any other securities as may be specified by the Board.

 ¹Specified securities,

Non-convertible debt securities, non-convertible redeemable preference shares, perpetual debt instrument, perpetual non-cumulative preference shares, Indian depository receipts, securitized debt instruments, units issued by mutual funds and any other securities as may be specified by the Board. [Regulation 2(1) (h) of SEBI (LODR) Regulations, 2015]

²Non-convertible debt securities:

‘Non – Convertible Debt Securities’ which is ‘debt securities’ as defined under regulation 2(1)(e) of the Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008. [Regulation 2(1)(t) of SEBI (LODR) Regulation 2015]

Debt Securities

“Debt Securities” means a non-convertible debt securities which create or acknowledge indebtedness, and include debenture, bonds and such other securities of a body corporate or any statutory body constituted by virtue of a legislation, whether constituting a charge on the assets of the body corporate or not, but excludes bonds issued by Government or such other bodies as may be specified by the Board, security receipts and securitized debt instruments. [Regulation 2(1)(e) of SEBI(ILDS) Regulations 2008]

Debt securities include debentures and bonds. Bond issued by government companies and statutory bodies also included in the definition but sovereign bonds issued by government are not included.

³Non – Convertible Redeemable Preference Shares

 means a preference share which is redeemable in accordance with the provisions of the Companies Act, 1956 (or the Companies Act, 2013) and does not include a preference share which is convertible into or exchangeable with equity shares of the issuer at a later date, with or without the option of the holder. [Regulation 2(1)(k) of SEBI (Issue and Listing of Non-Convertible Redeemable Preference Shares) Regulations 2013].

⁴perpetual debt instrument

 “Perpetual Debt Instrument” means an innovative perpetual debt instrument issued by a bank in accordance with the guidelines framed by the Reserve Bank of India. [Regulation 2(1)(h) of SEBI (Issue and Listing of Non-Convertible Redeemable Preference Shares) Regulations 2013].

⁵perpetual non-cumulative preference shares

 “Perpetual Non – Cumulative Preference Share” means a perpetual noncumulative preference share issued by a bank in accordance with the guidelines framed by the Reserve Bank of India. [Regulation 2(1)(l) of SEBI (Issue and Listing of Non-Convertible Redeemable Preference Shares) Regulations 2013]

⁶Indian depository receipts

Indian depository receipts’ means Indian depository receipts as defined in sub-section (48) of section 2 of the Companies Act, 2013 securitised debt instruments. [Regulation 2(1)(n) of SEBI (LODR) Regulations, 2015.

“Indian Depository Receipt” means any instrument in the form of a depository receipt created by a domestic depository in India and authorised by a company incorporated outside India making an issue of such depository receipts. [Section 2(48) of the Companies Act, 2013]

⁷Securitized debt instruments:

‘Securitised Debt Instruments’ as defined in the Securities and Exchange Board of India (Public Offer and Listing of Securitised Debt Instruments) Regulations, 2008. [Regulation 2(1)(zg) of SEBI (LODR) Regulations 2015]

“Securitised Debt Instrument” means any certificate or instrument, by whatever name called, of the nature referred to in sub-clause (ie) of clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 issued by a special purpose distinct entity. [Regulation 2(1)(s) of SEBI (Public Offer and Listing of Securitised Debt Instruments) Regulations, 2008].

⁸units issued by mutual funds

 “Unit” means the interest of the unit holders in a scheme, which consists of each unit representing one undivided share in the assets of a scheme. [Regulation 2(z) of the SEBI (Mutual Funds) Regulations, 1996].

II.         Recognized stock exchange:

 As per “The Securities Contracts (Regulation) Act, 1956, “Recognized Stock Exchange [Section 2(f)] means a stock exchange which is for the time being recognized by the Central Government under Section 4 of the Act.

III.        Key managerial personnel:2(o)

 Section 2(51) of Companies Act, 2013“key managerial personnel”, in relation to a company, means—

(i)                 the Chief Executive Officer or the managing director or the manager;

(ii)               the company secretary;

(iii)             the whole-time director;

(iv)             the Chief Financial Officer; and

(v)               such other officer as may be prescribed

 IV.         "Listed entity"2(P)

Listed entity means an entity which has listed, on a recognized stock exchange(s), the designated securities issued by it or designated securities issued under schemes managed by it, in accordance with the listing agreement entered into between the entity and the recognized stock exchange(s);

V.        “Listing agreement” 2(q)

Listing Agreement shall mean an agreement that is entered into between a recognized stock exchange and an entity, on the application of that entity to the recognized stock exchange, undertaking to comply with conditions for listing of designated securities;

VI.        “main board” 2(R)

Main board as defined in *clause (a) of sub-regulation (1) of regulation 106N of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009;

*“Main Board” means a recognized stock exchange having nationwide trading terminals, other than SME exchange;

VII.        "Promoter" and "promoter group" 2(w)

It shall have the same meaning as assigned to them respectively in clauses (za) and (zb) of sub-regulation (1) of regulation 2 of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009.

Promoter:

“Promoter” includes:

(i)       the person or persons who are in control of the issuer;

(ii)  the person or persons who are instrumental in the formulation of a plan or programme pursuant to which specified securities are offered to public;

(iii)    the person or persons named in the offer document as promoters:

A director or officer of the issuer or a person shall not be deemed as a promoter, if such director or officer or person is acting as such merely in his professional capacity. A financial institution, scheduled bank, foreign portfolio investor other than Category III foreign portfolio investor, and mutual fund shall not be deemed to be a promoter merely by virtue of the fact that ten percent or more of the equity share capacity of the issuer is held by such person. A financial institution, scheduled bank and foreign portfolio investor other than Category III foreign portfolio investor shall be treated as promoter for the subsidiaries or companies promoted by them or for mutual fund sponsored by them.

  

VIII.        "PUBLIC" 2(x)

Public as defined under clause (d) of rule 2 of the Securities Contracts (Regulation) Rules, 1957;

Clause (d) of rule 2 of the Securities Contracts (Regulation) Rules, 1957 “Public” means Persons Other Than –

(i)                 The promoter and promoter group;

(ii)               Subsidiaries and associates of the company.

Explanation: For the purpose of this clause the words „promoter‟ and „promoter group‟ shall have the same meaning as assigned to them under the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009.

IX.        "Public shareholding" 2(y)

Public Shareholding as defined under clause (e) of rule 2 of the Securities Contracts (Regulation) Rules, 1957.

Clause (e) of rule 2 of the Securities Contracts (Regulation) Rules, 1957. “Public Shareholding” means equity shares of the company held by public and shall exclude shares which are held by custodian against depository receipts issued overseas.‟

X.        "Securities laws" 2(zf)

Securities Law means the Act,

        i.            The Securities Contracts (Regulation) Act, 1956,

      ii.            The Depositories Act, 1996, and

    iii.            the Companies Act, 1956 the rules, regulations, circulars or guidelines

    iv.            Companies Act, 2013, and the rules, regulations, circulars or guidelines made there under.

 XI.            “SME Exchange” 2(zi)

SME Exchange means an SME exchange as defined under clause (c) of sub-regulation (1) of regulation 106N of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009;

“SME exchange” means a trading platform of a recognised stock exchange having nationwide trading terminals permitted by the Board to list the specified securities issued in accordance with this Chapter and includes a stock exchange granted recognition for this purpose but does not include the Main Board;

NOTE:

If any words and expressions is not defined under these regulations then that word shall have the same meaning as respectively assigned to them in below mentioned Acts or rules or regulations or any statutory modification or re-enactment thereto, as the case may be

·         The Companies Act, 2013,

·         The Securities Contracts (Regulation) Act, 1956,

·         The Depositories Act, 1996

and/or the rules and regulations made thereunder.

 XII.        "Control"                                                                   Regulation 16(1)(a)

Control shall have the same meaning as assigned to it under the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011;

SEBI (Substantial Acquisition of Shares and Takeovers) Regulation, 2015:

“Control” Includes; below mentioned exercisable by a person or persons acting individually or in concert, directly or indirectly, including by virtue of their shareholding or management rights or shareholders agreements or voting agreements or in any other manner:

·         The right to appoint majority of the directors or

·         To control the Management Decision or

·         To control Policy Decisions

Condition: A director or officer of a target company shall not be considered to be in control over such target company, merely by virtue of holding such position;

XIII.        “Material subsidiary”                                                      Regulation 16(1)(C)

Material Subsidiary shall mean a subsidiary ^{defined below}, whose income or net worth exceeds 20% (Twenty Percent) of the consolidated income or net worth respectively, of the listed entity and its subsidiaries in the immediately preceding accounting year.

Explanation: - The listed entity shall formulate a policy for determining ‘material’ subsidiary.

Example: If Net worth of Subsidiary (A) is Rs. 25,00,000/- and Consolidated net worth of listed entity(B) along with all subsidiaries is Rs. 10,000,000-.

Therefore, percentage of net worth of subsidiary (A) is 25% of total consolidated net worth of listed entity (B).

Subsidiary (A) is Material Subsidiary for the listed entity (B)

Subsidiary:

“Subsidiary” means a subsidiary as defined under sub-section (87) of section 2 of the Companies Act, 2013;

As per Companies Act, 2013:- 2(87) “subsidiary company” or “subsidiary”, in relation to any other company (that is to say the holding company), means a company in which the holding company—

(i)  Controls the composition of the Board of Directors; or

(ii) Exercises or controls more than one-half of the total share capital either at its own or together with one or more of its subsidiary companies:

Provided that such class or classes of holding companies as may be prescribed shall not have layers of subsidiaries beyond such numbers as may be prescribed.

Explanation: - For the purposes of this clause,—

(a) A company shall be deemed to be a subsidiary company of the holding company even if the control referred to in sub-clause (i) or sub-clause (ii) is of another subsidiary company of the holding company;

(b) The composition of a company’s Board of Directors shall be deemed to be controlled by another company if that other company by exercise of some power exercisable by it at its discretion can appoint or remove all or a majority of the directors;

(c)  The expression “company” includes any body corporate;

(d) “Layer” in relation to a holding company means its subsidiary or subsidiaries;

XIV.      “senior management”                                                      Regulation 16(1)(d)

 Senior Management shall mean officers/personnel of the listed entity

·         who are members of its core management team; excluding board of directors and

·         Normally this shall comprise all members of management one level below the executive directors, including all functional heads.

XV.      “RELATED PARTY” means a related party as defined under sub-section (76) of section 2 of the [1]Companies Act, 2013 or under the applicable accounting standards:

Not Applicable: This definition shall not be applicable for the units issued by mutual funds which are listed on a recognized stock exchange(s);

XVI.    “RELATED PARTY [2]TRANSACTION” means

Condition-1

·         A transfer of Resources,

·         A transfer of Services or

·         A transfer of obligations

Condition-2: Between a Listed Entity and a Related Party.

Condition-3: Regardless of whether a price is charged and

Non Applicability: This definition shall not be applicable for the units issued by mutual funds which are listed on a recognised stock exchange(s);

XVII.    Materiality of Related Party Transaction:

A transaction with a related party shall be considered material,

o   if the transaction(s) to be entered into individually or taken together with previous transactions during a financial year,

o   exceeds 10% of the annual consolidated turnover of the listed entity

o   As per the latest Audited Financial Statements.

XVIII.    Definition of Significant Transactions and Arrangements:

Any individual transaction or arrangement that exceeds or is likely to exceed below given limits of the unlisted material subsidiary for the immediately preceding accounting year.

·         10% (ten percent) of the total revenues OR

·         10% (ten percent) of the total expenses OR

·         10% (ten percent) of the total assets OR

·         10% (ten percent) of the total liabilities,

XIX.    professionally managed entity:

 §  No person or group along with persons acting in concert taken together shall hold more than one per cent paid-up equity capital of the entity including any holding of convertibles/outstanding warrants/ Depository Receipts.

§  Any mutual fund, bank, insurance company, financial institution, foreign portfolio investor may individually hold up to ten per cent paid-up equity capital of the entity including any holding of convertibles/outstanding warrants/Depository Receipts.

§  Such promoter shall not continue to have any special rights through formal or informal arrangements.

§  All shareholding agreements granting special rights to such entities shall be terminated.

§  Such promoters and their relatives shall not act as key managerial person for a period of more than three years from the date of shareholders’ approval.

 XX.    Monitoring agency

If the issue size exceeds five hundred crore rupees, the issuer shall make arrangements for the use of proceeds of the issue to be monitored by a public financial institution or by one of the scheduled commercial banks named in the offer document as bankers of the issuer: Provided that nothing contained in this clause shall apply to an offer for sale or an issue of specified securities made by a bank or public financial institution 47[or an insurance company].

(Author – CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in Practice from Delhi and can be contacted at csdiveshgoyal@gmail.com)

Disclaimer: The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. The observations of the author are personal view and the authors do not take responsibility of the same and this cannot be quoted before any authority without the written