How can changes in Materiality Policy under SEBI (LODR) Regulations affect a Listed Company?

Materiality policy was already there under the Act but few changes have been recently introduced. Let us discuss them in pointers:

1. Reg. 30(4): Now, the SEBI has introduced the threshold criteria for determining the materiality of an event/information. The omission of an event or information, whose value or the expected impact in terms of value, exceeds the lower of the following thresholds.
2. 2% of turnover, as per the last audited consolidated financial statements.
3. 2% of net worth, as per the last audited consolidated financial statements.
4. 5% of the average of the absolute value of profit or loss after tax, as per the last 3 audited consolidated financial statements.

Please note that previously, this amount was determined by Board of Directors of the company and they often fixed highest limits.

• Timelines under Regulation 30: Now SEBI has introduced stricter guidelines for disclosures.

Timelines are divided into three parts;

• Within 30 minutes from the closure of meeting
•  Within 12 hours from the occurrence of event
• Within 24 hours from the occurrence of event

Annexures are given in circular for events on which different timelines of disclosure are applicable.

• New provisions added: Various new clauses are added under Schedule III. The same are given below:
• Now, the concept of ‘senior management’ is added alongside KMP, Compliance Officer and Directors (other than Independent Director). So, Head of Marketing, Head of Sales, and Head of any Division can be called senior management. Hence, if there is any change in them, it also has to be reported to the Stock Exchanges.
• The company has to disclose in its website under separate section, the schedule of analysts or institutional investors meet at least 2 working days in advance and presentations made by company to the analysts or institutional investors.
• Directors serving on the board of directors of a listed entity as on March 31, 2024, without the approval of the shareholders for the last 5 years or more shall be subject to the approval of shareholders in the first general meeting to be held after March 31, 2024.
• SEBI Circular No. SEBI/HO/CFD/CFD-PoD-1/P/CIR/2023/123 dated July 13, 2023 can be checked thoroughly for in depth details.