Here is a comparison chart for Companies Act vs Sebi Laws:
| TOPIC | COMPANIES ACT, 2013 | SEBI LAWS |
| Minimum number of directors on the board. | Public Company: 3 Private Company: 2 | Regulation 17(1)(c): From 1st April 2020, for top 1000 listed entities : Minimum 6 directors on the board |
| Quorum | 1/3 of the total strength or 2 directors } whichever is higher | Regulation 17(2)(2A): From 1st April 2020, for top 2000 listed entities : Quorum must be 1/3 total board strength or 3 directors } whichever is higher (important note that on at least independent director to be present in the meeting) It is clarified that the participation of the directors by video conferencing or by other audio-visual means shall also be counted for the purposes of such quorum. |
| Directorship (Max) | Public Company: not more than 10 companies Private Company: not more than 20 companies | Regulation 17A(1): From 1st April 2020, for all listed entities : Person must not be a director in more than 7 listed entities. 17A(2): (Except where a person who is serving as a whole time director/managing director in any listed entity shall serve as an independent director in not more than 3 listed entities Counting of no. of listed entities shall be only those whose equity shares are listed on a recognized STx.) |
| Gender diversity of board | At-least one woman director on the board (may be either independent or non -independent) | Regulation 17(1)(a): From 1st April 2020, for top 1000 listed entities : At-least one independent woman director on the board |
| Approval for non-executive director on attaining a certain age | No such section or clause for non-executive director However the same is for Managing director, whole time director or manager on attaining the age of 70 years. | Regulation 17(1)(1A): Pass SR for non-executive director on attaining the age of 75 years. |
| Chairperson | No such section or clause | Regulation 17(1)(1B): From 1st April 2019, for top 500 listed entities : Chairperson of the board shall be:- a non-executive directornot be related to the managing director or CEO as per the definition of the term “relative” as per Companies Act, 2013. (Provided that this sub-regulation shall not be applicable to the listed entities which do not have any identifiable promoters as per the shareholding pattern filed with stock exchanges.) |
| Remuneration payable to a single non-executive director | Sec-197 of the Companies Act 2013, deals with the remuneration terms and conditions. | Regulation 17(6)(ca): The approval of shareholders by special resolution shall be obtained every year, in which the annual remuneration payable to a single non-executive director exceeds fifty per cent of the total annual remuneration payable to all non-executive directors, giving details of the remuneration thereof. |
| Annual remuneration payable to executive director | Sec-197 of the Companies Act 2013, deals with the remuneration terms and conditions The Companies (Amendment) Act, 2017 requires that the remuneration policy for directors, key managerial personnel and other employees should be placed on the website of the company, if any. The salient features of the policy and any changes, therein along with the web address of the policy, if any, will be disclosed in the board’s report. These amendments imply that the remuneration policy for directors, key managerial personnel and other employees would also cover the increased scope of the senior management’s remuneration, which should be disclosed on the website and also be disclosed as a part of the board’s report. | Regulation 17(e): The fees or compensation payable to executive directors who are promoters or members of the promoter group, shall be subject to the approval of the shareholders by special resolution in general meeting, if- the annual remuneration payable to such executive director exceeds rupees 5 crore or 2.5 per cent of the net profits of the listed entity, whichever is higher; or (ii) where there is more than one such director, the aggregate annual remuneration to such directors exceeds 5 per cent of the net profits of the listed entity: Provided that the approval of the shareholders under this provision shall be valid only till the expiry of the term of such director. (Net profits shall be calculated as per section 198 of the Companies Act, 2013). |
| Explanatory statement | —- | Regulation 17(11): The statement to be annexed to the notice as referred to in sub-section (1) of section102 of the Companies Act, 2013 for each item of special business to be transacted at a general meeting shall also set forth clearly the recommendation of the board to the shareholders on each of the specific items. |
| Quorum for audit committee | Not such mentioned in section 177 of Companies Act, 2013 | Regulation 18(2)(b): The quorum for audit committee meeting shall either be two members or one third of the members of the audit committee, whichever is greater, with at least two independent directors. |
| Quorum for a meeting of the nomination and remuneration | No such clause | Regulation 19(2A): The quorum for a meeting of the nomination and remuneration committee shall be either two members or 1/3 of the members of the committee} whichever is greater, including at least one independent director in attendance. |
| Meeting of Nomination and remuneration committee. | No such clause | Regulation 19(3A): The nomination and remuneration committee shall meet at least once in a year. |
| Minimum no. of members in Stakeholders Relationship Committee | No such clause | Regulation 20(2A): At least three directors, with at least one being an independent director, shall be members of the Committee. |
| Meeting of stakeholder’s relationship committee. | No such clause | Regulation 20(3A): The stakeholder’s relationship committee shall meet at least once in a year. The current role of the SRC comprises considering and resolving the grievances of the security holders of the listed entity including complaints related to transfer of shares, non-receipt of annual report and non-receipt of declared dividends. |
| Meeting of Risk Management Committee. | Nowhere mentioned | Regulation 21(3A): The risk management committee shall meet at least once in a year. (applicable to only top 500 listed entities) |
| Board interlock situation | No such section or clause | Definition of Independent director exclude persons constitute the “promoter group” means to exclude the persons who are the members of the promoter group of a listed entity. The definition would now exclude those persons who are non-independent directors of another company on the board of which any non-independent director of the listed entity is an independent director. For example: If Mr. A is an executive director of company A and is also an independent director on the board of company B, then No non-independent director of company B can become the independent director of company A. |
| Corporate governance requirements with respect to subsidiary of listed entity. | No such clause | Regulation 24(1): At least one independent director on the board of directors of the listed entity shall be a director on the board of directors of an unlisted material subsidiary, whether incorporated in India or not. *Explanation – For the purposes of this provision, notwithstanding anything to the contrary contained in Regulation 16 (deals with definition of material subsidiary it states that shall mean a subsidiary, whose income or net worth exceeds ten percent of the consolidated income or net worth respectively, of the listed entity and its subsidiaries in the immediately preceding accounting year), the term “material subsidiary” shall mean a subsidiary, whose income or net worth exceeds twenty percent of the consolidated income or net worth respectively, of the listed entity and its subsidiaries in the immediately preceding accounting year. |
| Secretarial Audit | Section 204 of the companies Act, 2013 deals with along with Rules made thereunder. (same as SEBI (LODR), 2015) | Regulation 24(A): Last date for filing for the year ended is May 30, 2020 but due to covid-19 the time period for filing has being extended to July 31,2020. |
| Declaration by Independent director | Section 149(7) of Companies Act, 2013 Same as SEBI (LODR), 2015 | Regulation 25(8): Every independent director shall, at the first meeting of the board in which he participates as a director and thereafter at the first meeting of the board in every financial year or whenever there is any change in the circumstances which may affect his status as an independent director, submit a declaration that he meets the criteria of independence asprovided in clause (b) of sub-regulation (1) of regulation 16 and that he is not aware of any circumstance or situation, which exist or may be reasonably anticipated, that could impair or impact his ability to discharge his duties with an objective independent judgment and without any external influence. |
| Obligations with respect to independent directors | No such section or clause | Regulation 25(1): No person shall be appointed or continue as an alternate director for an independent director of a listed entity with effect from October 1, 2018. This amendment prohibits an alternative director from being appointed or continues as an independent director of a listed entity. |
| Insurance(New concept introduced) | No such section or clause | Regulation 25(10): With effect from October 1, 2018, the top 500 listed entities by market capitalization calculated as on March 31 of the preceding financial year, shall undertake Directors and Officers insurance (‘D and O insurance’) for all their independent directors of such quantum and for such risks as may be determined by its board of directors. |
| Disclosure on resignation of Independent director | Section 168 of Companies Act, 2013 describes the general procedure for resignation of director. | Regulation 25(6): The Amendments introduce a new requirement for the listed entities to disclose to the stock exchanges and also as a part of the Corporate Governance Report, the detailed reasons for resignation of the Independent Directors before the expiry of their tenure along with a confirmation given by such director(s) that there are no other material reasons other than thoseprovided. An independent director who resigns or is removed from the board of directors of the listed entity shall be replaced by a new independent director by listed entity at the earliest but not later than the immediate next meeting of the board of directors or three months from the date of such vacancy} whichever is later. –Important note: -Provided that where the listed entity fulfills the requirement of independent directors in its board of directors without filling the vacancy created by such resignation or removal, the requirement of replacement by a new independent director shall not apply. |
| Obligations with respect to employees including senior management, key managerial persons, directors and promoters. | No such section or clause | Regulation 26(1): A director shall not be a member in more than ten committees or act as chairperson of more than five committees across all listed entities in which he is a director which shall be determined as follows: (a) the limit of the committees on which a director may serve in all public limited companies, whether listed or not, shall be included and all other companies including private limited companies, foreign companies and companies under Section 8 of the Companies Act, 2013 shall be excluded; (b) for the purpose of determination of limit, chairpersonship and membership of the audit committee and the Stakeholders’ Relationship Committee alone shall be considered. |
| Prior Intimations | Companies Act, not dealing with any kind of Prior Intimations of board meeting except the notice of board meeting to be sent to all the directors as 173(3) of Companies Act, 2013. | Regulation 29: It deals with the Prior Intimations to the stock exchange regarding the meeting of board of directors in which the proposals mentioned in the above clause. |
| Holding of specified securities and shareholding pattern. | Section 92 annual return (form MGT-9 prescribes the shareholding pattern) Form MGT-7 deals with shareholders list. | Regulation 31(4): All entities falling under promoter and promoter group shall be disclosed separately in the shareholding pattern appearing on the website of all stock exchanges having nationwide trading terminals where the specified securities of the entity are listed, in accordance with the formats specified by the Board. |
| Statement of deviation(s) or variation(s) | No provision relating this. | Regulation 32: (1) The listed entity shall submit to the stock exchange the following statement(s) on a quarterly basis for public issue, rights issue, preferential issue etc. ,- (a) Indicating deviations, if any, in the use of proceeds from the objects stated in the offer document or explanatory statement to the notice for the general meeting, asApplicable. The statement(s) specified in sub-regulation (1), shall be placed before the audit committee for review and after such review, shall be submitted to the stock exchange(s).The listed entity shall furnish an explanation for the variation specified in sub-regulation (1), in the directors’ report in the annual report |
| Funds rose through preferential allotment or qualified institutions placement. | Companies Act does not provide such requirement in annual filing of the company regarding the utilization of funds. | Regulation 32(7A): Where an entity has raised funds through preferential allotment or qualified institutions placement, the listed entity shall disclose every year, the utilization of such funds during that year in its Annual Report until such funds are fully utilized. |
| Financial results | Depends upon 60 days (MGT-7) and 30 days (AOC-4) calculating from the date of AGM. | Regulation 33: Financial results unaudited 45 days from the end of financial year and audited 60days from the end of financial year. (Not related with date of AGM) |
| Annual Report | Regulation 34(1): The Amendments, aiming to reduce the above time-gap between disclosures to the shareholders and submission to stock exchange, requires the listed entity to submit to the stock exchange and publish on the website:- (a) a copy of the annual report sent to the shareholders along with the notice of the annual general meeting not later than the day of commencement of dispatch to its shareholders; (b) in the event of any changes to the annual report, the revised copy along with the details of and explanation for the changes shall be sent not later than 48 hours after the annual general meeting. | |
| Send the soft copies of Annual Report to shareholders. | Not mentioned any such type of clause. | Regulation 36(1): The listed entity shall send the annual report in the following manner to the shareholders: Soft copies of full annual report to all those shareholder(s) who have registered their email address(es) either with the listed entity or with any depository.Hard copy of statement containing the salient features of all the documents, asprescribed in Section 136 of Companies Act, 2013 or rules made thereunder tothose shareholder(s) who have not so registered. The listed entity shall send the annual report to the holders of securities not less than 21 days before the date of annual general meeting. |
| Proposed fee payable to auditors | No such mentioned clause | Regulation 36(5): The notice being sent to shareholders for an annual general meeting, where the statutory auditor(s) is/are proposed to be appointed/re-appointed shall include the following disclosures as a part of the explanatory statement to the notice: (a) Proposed fees payable to the statutory auditor(s) along with terms of appointment and in case of a new auditor, any material change in the fee payable to such auditor from that paid to the outgoing auditor along with the rationale for such change; (b) Basis of recommendation for appointment including the details in relation to and credentials of the statutory auditor(s) proposed to be appointed. |
| Dividend Distribution Policy | Nowhere mentioned | Regulation 43A: The top five hundred listed entities based on market capitalization (calculated as on March 31 of every financial year) shall formulate a dividend distribution policy which shall be disclosed in their annual reports and on their websites. |
| Meetings of shareholders and voting | e-voting facility shall beprovided in compliance with the conditions specified under the Companies (Management and Administration) Rules, 2014, or amendments made thereto. | Regulation 44(5): The top 100 listed entities by market capitalization, determined as on March 31st of every financial year, shall hold their annual general meetings within a period of five months from the date of closing of the financial year.But the date of annual general meeting for the financial year ended on 31st March 2020 it has been extended to 30th September due to covid-19. |
| Change in name of the listed entity | Section 13 and rules doesn’t prescribe the conditions as prescribed under SEBI (LODR). | Regulation 45 (1): The listed entity shall be allowed to change its name subject to compliance with the following conditions: (a)a time period of at least one year has elapsed from the last name change; (b)at least fifty percent. of the total revenue in the preceding one year period has been accounted for by the new activity suggested by the new name; or (c)the amount invested in the new activity/project is at-least fifty percent. of the assets of the listed entity Provided that if any listed entity has changed its activities which are not reflected in its name, it shall change its name in line with its activities within a period of six months from the change of activities in compliance of provisions as applicable to change of name prescribed under Companies Act, 2013. |
| Disclosure requirement (generally) | Not such mentioned in Companies Act | In case of resignation of the auditor of the listed entity, detailed reasons for resignation of auditor, as given by the said auditor, shall be disclosed by the listed entities to the stock exchanges as soon as possible but not later than twenty four hours of receipt of such reasons from the auditor. Resignation of auditor including reasons for resignation: In case of resignation of an independent director of the listed entity, within seven days from the date of resignation, the following disclosures shall be made to the stock exchanges by the listed entities: Detailed reasons for the resignation of independent directors as given by the said director shall be disclosed by the listed entities to the stock exchanges. The independent director shall, along with the detailed reasons, also provide a confirmation that there are no other material reasons other than those provided. The confirmation as provided by the independent director above shall also be disclosed by the listed entities to the stock exchanges along with the detailed reasons as specified in sub-clause (i) above. |
| Related Party | Defined under section 2(76) of Companies Act, 2013 | “related party” means a related party as defined under sub-section (76) of section 2 of the Companies Act, 2013 or under the applicable accounting standards: Provided that any person or entity belonging to the promoter or promoter group of the listed entity and holding 20% or more of shareholding in the listed entity shall be deemed to be a related party |
Link for Companies Act, 2013- http://ebook.mca.gov.in/default.aspx
