Capital markets regulator SEBI on Tuesday floated a consultation paper seeking comments from public on proposals to strengthen corporate governance in listed entities by empowering shareholders on the issues of a) Agreements binding listed entities, b) Special rights granted to certain shareholders, c) Sale, disposal or lease of assets of a listed entity outside the 'Scheme of Arrangement' framework and d) 'Board Permanency' at listed entities. 

The LODR Regulations require disclosure of material events or information to the Stock Exchanges by listed entities. Shareholder agreements are one of the common types of agreements entered into and disclosed by listed entities. A shareholder agreement (SHA) is an arrangement that regulates the relationship between the shareholders, the management of the company, ownership of the shares, rights, obligations, and protection of the shareholders. As per the proposal, Agreements which, either directly or indirectly or whose purpose and effect is to, impact the management or control of the listed entity or impose any restriction or create any liability upon listed entity shall be disclosed to the Stock Exchanges, whether or not the listed entity is a party to such agreements. From April 1, 2023, the details of the aforesaid agreements entered during the financial year shall be disclosed in the Annual Report of the listed entity (i.e. from FY 2023-24 onwards). This is only one among many proposals.

Public comments may be submitted by March 7, 2023.

Click the icon to read the Consultation Paper