Mandatory disclosures for company promoters

In line with a recent amendment, the promoters or members of a promoter group of a listed company are expected to inform the company about their existing interest or holding in that company and any change in their holdings. The Securities and Exchange Board of India (SEBI) amended regulation 13 of the SEBI (Prohibition of Insider Trading) Regulations, 1992, and announced the new rule through its notification on 16 August.

In the case of a listed company, the following mandatory disclosures are required:

1. Anyone holding more than 5% of shares or voting rights must disclose this information to the company. They must also disclose any change in shareholding or voting rights exceeding 2% of the total shareholding or voting rights after the initial disclosure. This disclosure has to be made to the company in the prescribed Form B.
2. A director or officer of a company must inform the company within two working days of being appointed of the number of shares, voting rights and derivatives they and their dependants hold.
3. A director or officer must disclose any change in their shareholding or voting rights (and those of their dependents) that exceeds ₹500,000 in value or 25,000 shares or 1% of their total shareholding or voting rights, whichever is lower after the most recent disclosure made. This disclosure has to be made to the company and the relevant stock exchanges in the prescribed Form D within two working days of the change.

The legislative and regulatory update is compiled by Nishith Desai Associates, a Mumbai-based law firm. The authors can be contacted at nishith@nishithdesai.com. Readers should not act on the basis of this information without seeking professional legal advice.