Over the years, the Indian government has been making certain kinds of efforts in order to make doing business in the country easier. One such important step taken in this larger plan for increasing economic growth and attracting more foreign investment is taken by the Securities and Exchange Board of India (SEBI) in the form of making business dealings easier for the listed companies in India. In December 2024, SEBI released a circular implementing the set of recommendations that were put forth by the Expert Committee in order to facilitate the Ease of Doing Business for all the Listed Entities. The recommendations were directed towards easing of the listing process, reducing regulatory burdens, and improving corporate governance.
Key Recommendations And Their Implications
The expert committee that was formed in the year 2023, provided recommendations for certain areas of improvement in the existing regulatory framework:
- Integrated filing: A strong emphasis was placed by the committee for the significant reduction in the amount of documentation that is required for listing procedures. According to regulation 10(1A) of the LODR Regulations, they have implemented an Integrated Filing system for the following Governance and the Financial periodic files needed under the LODR in order to make filing and compliance easier for listed businesses.
- Disclosure of certain information: The circular also provides that certain key events should be disclosed by the listed companies on a quarterly basis, such as obtaining voting rights or shares in unlisted businesses after the holding rises by more than 2% or reaches 5%. Or updating on any ongoing tax-related litigations or disputes and their current status.
- Reduction in regulatory burdens: The recommendations by the committee included the reduction of regulatory burdens on the listed companies by making simpler compliance requirements and rationalising the reporting requirements thus reducing the extensive processes.
- Qualification for Secretarial auditor: The circular specifies that in order to be eligible as a Secretarial Auditor for any listed company in India, a person must be a “Peer Reviewed” Company Secretary and must not have any disqualifications as specified by the company’s board of directors. The services of a secretarial auditor can be only availed by a listed company that has been specifically approved by the board of directors of that company.
- Single filing system: The circular reinforces the importance of the facility of single filing that had already been laid out by the BSE and the NSE on 1 October 2024, in regard to certain matters. Through this step, the companies can save their time and resources by submitting multiple filings through a single platform and step.
- Increased Examination of Related Party Transactions: SEBI also highlighted the requirement for transparency in the transactions involving the related parties through its circular. The main objective is to protect the interests of the minority shareholders via examination and requiring thorough disclosures including details about the nature, conditions and costs of such transactions.
Advantages Of The Circular
Implementation of these recommendations is anticipated to have several significant benefits. Notably, it is anticipated that listed businesses will see a significant decrease in the expenses of compliance related to administrative processes and regulatory filings. Their competitiveness and profitability will both increase as a result of this simplified strategy. Concurrently, the capital market’s efficiency will be greatly increased via simpler procedures and better information flow. The businesses will be able to obtain finance easily as a result of this, resulting in a more lively and dynamic market ecosystem. The confidence of the stakeholders will be enhanced and new players will be drawn to the Indian capital market through these increased corporate governance norms. Ultimately, this will help the nation attract more foreign investment, boost robust economic growth, and improve its standing for ease of doing business.
Challenges And Considerations
The circular by SEBI marks significant progress, but effective implementation of the same is crucial. It will require collaboration among SEBI, listed entities, and market participants that will ensure success, requiring clear guidelines, proper training, and technological upgrades. Regulatory frameworks must stay adaptable to address shifting market dynamics and technological advancements. Continuous monitoring and evaluation are of essential nature for measuring the reforms’ impact so that necessary adjustments can be made to ensure their relevance and also their efficiency. By addressing these challenges, SEBI will strive towards a more streamlined and transparent regulatory environment that will fuel market growth and investor confidence.
Conclusion
SEBI took a big step in the right direction through its latest circular towards improving the efficiency and the friendliness of the regulatory environment for the Indian listed companies. By streamlining processes, cutting expenses, and enhancing corporate governance, the circular aims to optimize the potential of the Indian capital market. Even though there are still issues, SEBI’s proactive effort to resolve listed businesses’ complaints is praiseworthy. To guarantee the effective execution of these policies and the long-term expansion of the Indian capital markets, regulators, investors, and market players must continue their communication and cooperation.
