The Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“Listing Regulations”) provide for the various compliance actions and reporting requirements for entities who have listed equity shares or other specified securities and/or non-convertible securities on the stock exchange. The Securities and Exchange Board of India (“SEBI”) recently amended the Listing Regulations by way of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2025 which has become effective as of March 28, 2025 (“Listing Amendment Regulations”).

The changes introduced by the Listing Amendment Regulations primarily provide for additional reporting and compliance requirements for companies that have listed only non-convertible securities and qualify as a “high value debt listed entity” under the Listing Regulations. Previously, all high value debt listed entities needed to comply with Chapter V of the Listing Regulations, regardless of whether they had listed equity shares or other specified securities. Pursuant to the Listing Amendment Regulations, a new Chapter VA has been introduced that prescribes additional requirements for those high value debt listed entities that have only listed non-convertible debt securities. Such entities are now required to comply with the provisions of both Chapter V and Chapter VA of the Listing Regulations.

Analysis of the Key Changes Introduced by Way of the Listing Amendment Regulations

Revised thresholds for classification as a “high value debt listed entity”

Regulation 15 of the Listing Regulations previously classified a listed entity which had listed its non-convertible securities with an outstanding value higher than INR 5 billion as a high value debt listed entity. Such threshold for classification as a high value debt listed entity has been relaxed and entities with listed non-convertible securities with an outstanding value higher than INR 10 billion shall now be classified as high value debt listed entities (“HVDLE”).

Any entity which meets the requirements for a HVDLE (due to the revised thresholds highlighted above), has been mandated to comply with the relevant provisions of the Listing Regulations within six months of the date of such trigger. Further, compliance with this requirement is required to be disclosed in the corporate governance compliance report on and from the third quarter following the date of the trigger.

The erstwhile Listing Regulations did not provide for any enabling provision for an entity once classified as HVDLE to exit such classification. An important revision incorporated by way of the Listing Amendment Regulations is the inclusion of a sunset clause pursuant to which entities which were earlier classified as HVDLE will cease to be classified as HVDLE in case the value of the outstanding listed debt securities, as of March 31, reduces and remains below the specified threshold of INR 10 billion for a period of three consecutive financial years.

Corporate governance norms for listed entities which have only listed non-convertible securities

The Listing Amendment Regulations have introduced a new Chapter VA which provides for the corporate governance norms for HVDLEs which have only listed non-convertible securities and have not listed equity shares or other specified securities. A specific explanation has also been inserted under Regulation 15(1A) providing that if a HVDLE lists “specified securities” (which includes equity shares), the provisions of Regulation 15 to 27 of the Listing Regulations shall apply to such entity.

The corporate governance norms specified under Chapter VA are largely similar to those previously prescribed for HVDLEs that have listed equity shares and other specified securities. However, Chapter VA recognizes the distinction in compliance requirements for HVDLEs that have only listed debt securities vis-à-vis HVDLEs that have both listed debt securities as well as equity shares or other specified securities. Some of the key changes are: (i) pursuant to Regulations 62G, 62H and 62I of Chapter VA of the Listing Regulations, HVDLEs which have only listed debt securities have been given the discretion to either constitute a Nomination and Remuneration Committee, Stakeholders Relationship Committee and a Risk Management Committee, respectively, or to entrust the functions of such committees to the Board of Directors; and (ii) Regulation 62K mandates HVDLEs which have only listed debt securities to obtain prior approval of audit committee for all related party transactions (“RPTs”) and the approval of shareholders for all material RPTs, along with an additional obligation on such HVDLEs to obtain no-objection certificates from the debenture trustee and debenture holders. Specifically, before entering into a material RPT or effecting any material modification to an existing RPT, and before obtaining the approval of the shareholders, such HVDLEs must obtain no-objection certificates from the debenture trustee of listed NCDs and, through the trustee, from the holders of such listed NCDs who: (a) are not related parties of the HVDLE; and (b) collectively hold at least 50% in value of the outstanding listed NCDs (on the basis of voting/e-voting).

Revised limits on number of directorships

Regulation 17A of the Listing Regulations sets out the provisions governing the maximum number of directorships that can be held by directors of listed entities. The erstwhile provision only accounted for listed entities whose equity shares are listed on a stock exchange and where such person is a director. The Listing Amendment Regulations provides for inclusion of HVDLEs for the purpose of such calculation.

However, it has been clarified that directorships 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 for the purpose of calculation of the number of directorships.

Further, these provisions shall come into effect within a period of six months of the date of publication of the Listing Amendment Regulations in the official gazette or the date of the annual general meeting of the HVDLE, whichever is later.

Extension of related party compliances to SME listed entities

Prior to the Listing Amendment Regulations, entities listed on the SME Exchange were exempt from compliance with certain corporate governance regulations prescribed under the Listing Regulations. However, under the amended regulations, entities listed on the SME exchange who have either a paid-up equity share capital exceeding INR 100 million or net worth exceeding INR 250 million as on the last day of the previous financial year, are now required to comply with related-party provisions stipulated under Regulation 23 of the Listing Regulations, with effect from April 1, 2025. Further, if the provisions of Regulation 23 become applicable to an SME listed entity at a later date, such entity shall ensure compliance within a period of six months from such date.

These provisions for SME listed entities shall continue to remain applicable until such time that the equity share capital and the net worth of such entity reduces and remains below the specified threshold for a period of three consecutive financial years.

Conclusion

The Listing Amendment Regulations aim to provide for distinct compliance requirements and mechanisms for HVDLEs who have only listed non-convertible securities and not equity shares or other specified securities as against entities who have listed non-convertible securities as well as equity shares or other specified securities. The threshold for classification as a HVDLE has been revised from INR 5 billion to INR 10 billion, aligning it with the criteria prescribed by SEBI for “Large Corporates”. While the amendments impose additional compliance and reporting obligations on HVDLEs that do not have listed equity shares or other specified securities, the increase in threshold has effectively narrowed the scope of entities subject to these enhanced requirements.

For HVDLEs that already have listed equity shares/other specified securities, the amendments do not necessitate any material changes to their existing compliance frameworks. However, HVDLEs that do not have listed equity shares/other specified securities must carefully assess the revised requirements to ensure adherence to the new regulatory regime.

This insight has been authored by Aparna Ravi, Kinnari Sanghvi and Manan Sheth from S&R Associates. They can be reached at [email protected], [email protected] and [email protected], respectively, for any questions. This insight is intended only as a general discussion of issues and is not intended for any solicitation of work. It should not be regarded as legal advice and no legal or business decision should be based on its content.