In this modern era, people and companies are on the internet for exchanging of information and communication. Website becomes an essential source to carry out the business smoothly. I will talk about the compliance point of view. Regulators may visit your website for the information as and when required by them. The disclosures on the website not only fulfill compliance requirements but also encourage the investors to be with the Company with keen interest and also attract new investors to associate with the Company. The Compliance with respect to website should be in true letter and spirit. In true letter sense, it may confer that the disclosures as required under applicable laws to the Company while the spirit confers that disclosures as per the Company’s policy for proper Corporate Governance.
One of the pillars of the Corporate Governance is “Transparency” which clearly signifies the Company to ensure that timely and accurate disclosure is made on all material matters regarding the corporation, including the financial situation, performance, ownership, and governance of the company.
I tried to gather various disclosures/information required to be published on the Website of the Company (including but not limited to Listed Company), if any, under various laws applicable to the Company:
UNDER COMPANIES ACT, 2013:
Applicable to Company registered under this Act or under any previous company law:
In purview of Section 13(8)(i): A Company, which has raised money from public through prospectus and still has any unutilized amount out of the money so raised, shall not change its objects for which it raised the money through prospectus unless a special resolution is passed by the company and—
(i) the details, as may be prescribed, in respect of such resolution shall also be published in the newspapers (one in English and one in vernacular language) which is in circulation at the place where the registered office of the company is situated and shall also be placed on the website of the company, if any, indicating therein the justification for such change;
(ii) the dissenting shareholders shall be given an opportunity to exit by the promoters and shareholders having control in accordance with regulations to be specified by the Securities and Exchange Board.
Penalty for Non- Compliance: The Company and every officer of the company who is in default or such other person shall be punishable with fine which may extend to ten thousand rupees and where the contravention is continuing one with a further fine which may extend to one thousand rupees for every day after the first during which the contravention continues.
In purview of Section 73 read with Rule 4(3) of Companies (Acceptance of Deposits) Rules, 2014: Every Company inviting deposits from the public shall upload a copy of the circular on its website, if any.
Penalty for Non- Compliance: The Company and every officer of the company who is in default or such other person shall be punishable with fine which may extend to ten thousand rupees and where the contravention is continuing one with a further fine which may extend to one thousand rupees for every day after the first during which the contravention continues.
In purview of Section 91 read with Rule 10(1) of the Companies (Management & Administration) Rules, 2014: The Company to post the notice of closure of the register of members/debenture holders/other security holders on its website.
Penalty for Non- Compliance: The Company and every officer of the company who is in default or such other person shall be punishable with fine which may extend to ten thousand rupees and where the contravention is continuing one with a further fine which may extend to one thousand rupees for every day after the first during which the contravention continues.
In purview of Section 101: The Company to post the notice of general meeting on its website.
Penalty for Non- Compliance: The Company and every officer of the company who is in default or such other person shall be punishable with fine which may extend to ten thousand rupees and where the contravention is continuing one with a further fine which may extend to one thousand rupees for every day after the first during which the contravention continues.
In purview of Section 108 read with Rule 20(3)(ii) of the Companies (Management & Administration) Rules, 2014: The Company to post the notice of general meeting where electronic Voting facility is provided, on its website.
Penalty for Non- Compliance: The Company and every officer of the company who is in default or such other person shall be punishable with fine which may extend to ten thousand rupees and where the contravention is continuing one with a further fine which may extend to one thousand rupees for every day after the first during which the contravention continues.
In purview of Section 108 read with Rule 20(3)(ii) of the Companies (Management & Administration) Rules, 2014: The Company to post the results declared along with the scrutinizer’s report shall be placed on its website within 2 days of passing the resolution at the relevant general meeting of the members.
Penalty for Non- Compliance: The Company and every officer of the company who is in default or such other person shall be punishable with fine which may extend to ten thousand rupees and where the contravention is continuing one with a further fine which may extend to one thousand rupees for every day after the first during which the contravention continues.
In purview of Section 110 read with Rule 22(4) of Companies (Management and Administration) Rules, 2014: The Company to post the Notice of Postal Ballot forthwith on its website.
Penalty for Non- Compliance: The Company and every officer of the company who is in default or such other person shall be punishable with fine which may extend to ten thousand rupees and where the contravention is continuing one with a further fine which may extend to one thousand rupees for every day after the first during which the contravention continues.
In purview of Section 135(4)(i) read with Rule 9 of Companies (Corporate Social Responsibility Policy) Rules, 2014: The approved CSR policy shall be placed on the website of the Company as per the particulars specified in the Annexure in the rules.
Penalty for Non- Compliance: The Company and every officer of the company who is in default or such other person shall be punishable with fine which may extend to ten thousand rupees and where the contravention is continuing one with a further fine which may extend to one thousand rupees for every day after the first during which the contravention continues.
In purview of third proviso to Section 136(1): A Listed Company shall also place its financial statements including consolidated financial statements, if any, and all other documents required to be attached thereto, on its website, which is maintained by or on behalf of the company.
In purview of fourth proviso to Section 136(1): Every Company having a subsidiary or subsidiaries shall place separate audited accounts in respect of each of its subsidiary on its website.
Note: Fourth proviso states every Holding Company SHALL discloses the audited financial statements of each of its subsidiary on the website, if any.
Penalty for Non- Compliance: The Company shall be liable to a penalty of twenty five thousand rupees and every officer of the Company who is in default shall be liable to a penalty of five thousand rupees.
Please Note: The Companies Amendment Bill, 2016 which was introduced in Lok Sabha, states an amendment in Section 136 which omits the requirement of publishing the audited accounts on the website of Company
In purview of Section 168 read with Rule 15 of Companies (Appointment and Qualification of Directors) Rules, 2014: The Company to post the information related to resignation of director on its website, if any.
Penalty for Non- Compliance: The Company and every officer of the Company who is in default shall be punishable with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees.
In purview of first proviso to Section 177(10): The details of establishment of vigil mechanism shall be disclosed by the company on its website, if any, and in the Board's report.
Penalty for Non- Compliance: The Company and every officer of the company who is in default or such other person shall be punishable with fine which may extend to ten thousand rupees and where the contravention is continuing one with a further fine which may extend to one thousand rupees for every day after the first during which the contravention continues.
Schedule IV(4)(6)- The terms and conditions of appointment of independent directors shall also be posted on the company's website.
Penalty for Non- Compliance: The Company and every officer of the company who is in default or such other person shall be punishable with fine which may extend to ten thousand rupees and where the contravention is continuing one with a further fine which may extend to one thousand rupees for every day after the first during which the contravention continues.
UNDER SEBI (PROHIBITION OF INSIDER TRADING) REGULATIONS, 2015:
Applicable to every company whose securities are listed on stock exchanges:
Regulation 8 mandates the board of directors of every company, whose securities are listed on a stock exchange, to formulate and publish on its official website, a code of practices and procedures for fair disclosure of unpublished price sensitive information.
PENAL PROVISIONS: Although no separate penalties have been prescribed under the Regulations. For non-compliance of Regulation 8, reference can be made to Section 15 HB of SEBI Act, 1992 prescribes the penalty which shall not be less than one lakh rupees but which may extend to one crore rupees.
UNDER SEBI (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2015:
Regulation 3- Applicability of the regulations: Unless otherwise provided, these regulations shall apply to the listed entity who has listed any of the following designated securities on recognised stock exchange(s):
(a) specified securities listed on main board or SME Exchange or institutional trading platform;
(b) non-convertible debt securities, non-convertible redeemable preference shares, perpetual debt instrument, perpetual non-cumulative preference shares;
(c) Indian depository receipts;
(d) securitised debt instruments;
(e) units issued by mutual funds;
(f) any other securities as may be specified by the Board.
UNDER CHAPTER III AND IV OF THE SEBI (LODR) REGULATIONS, 2015:
The following are the required disclosures which are to be placed on the official website of the listed entity which has listed its specified securities:
In purview of Regulation 30(4)(ii): The listed entity shall frame a policy for determination of materiality, based on criteria specified in this sub-regulation, duly approved by its board of directors, which shall be disclosed on its website.
In purview of Regulation 30(5): The board of directors of the listed entity shall authorize one or more Key Managerial Personnel for the purpose of determining materiality of an event or information and for the purpose of making disclosures to stock exchange(s) under this regulation and the contact details of such personnel shall be also disclosed to the stock exchange(s) and as well as on the listed entity's website.
In purview of Regulation 30(8): The listed entity shall disclose on its website all such events or information which has been disclosed to stock exchange(s) under this regulation, and such disclosures shall be hosted on the website of the listed entity for a minimum period of five years and thereafter as per the archival policy of the listed entity, as disclosed on its website.
In purview of Regulation 46:
1. The listed entity shall maintain a functional website containing the basic information about the listed entity.
2. The listed entity shall disseminate the following information on its website:
(a) Details of its business;
(b) Terms and conditions of appointment of independent directors;
(c) Composition of various committees of board of directors;
(d) Code of conduct of board of directors and senior management personnel;
(e) Details of establishment of vigil mechanism/ Whistle Blower policy;
(f) Criteria of making payments to non-executive directors, if the same has not been disclosed in annual report;
(g) Policy on dealing with related party transactions;
(h) Policy for determining ‘material’ subsidiaries;
(i) Details of familiarization programmes imparted to independent directors including the following details:-
(i) Number of programmes attended by independent directors (during the year and on a cumulative basis till date),
(ii) Number of hours spent by independent directors in such programmes (during the year and on cumulative basis till date), and
(iii) Other relevant details
(j) The email address for grievance redressal and other relevant details;
(k) Contact information of the designated officials of the listed entity who are responsible for assisting and handling investor grievances;
(l) Financial information including:
(i) Notice of meeting of the board of directors where financial results shall be discussed;
(ii) Financial results, on conclusion of the meeting of the board of directors where the financial results were approved;
(iii) Complete copy of the annual report including balance sheet, profit and loss account, directors’ report, corporate governance report etc;
(m) Shareholding pattern;
(n) Details of agreements entered into with the media companies and/or their associates, etc;
(o) Schedule of analyst or institutional investor meet and presentations made by the listed entity to analysts or institutional investors simultaneously with submission to stock exchange;
(p) New name and the old name of the listed entity for a continuous period of one year, from the date of the last name change;
(q) Items in sub-regulation (1) of regulation 47- (mentioned below).
3. (a) The listed entity shall ensure that the contents of the website are correct.
(b) The listed entity shall update any change in the content of its website within two working days from the date of such change in content.
In purview of Regulation 46:
A. Notice of meeting of the board of directors where financial results shall be discussed
B. Financial results, as specified in regulation 33, along-with the modified opinion(s) or reservation(s), if any, expressed by the auditor:
Provided that if the listed entity has submitted both standalone and consolidated financial results, the listed entity shall publish consolidated financial results along-with (1) Turnover, (2) Profit before tax and (3) Profit after tax, on a stand-alone basis, as a foot note; and a reference to the places, such as the website of listed entity and stock exchange(s), where the standalone results of the listed entity are available.
C. Statements of deviation(s) or variation(s) as specified in sub-regulation (1) of regulation 32 on quarterly basis, after review by audit committee and its explanation in directors report in annual report;
D. Notices given to shareholders by advertisement.
PROCEDURE FOR ACTION IN CASE OF DEFAULT:
Chapter XI contains the provisions relating to actions in case of non-compliance of these regulations:
In purview of Regulation 98: Liability for contravention of the Act, rules or the regulations:
1. The listed entity or any other person thereof who contravenes any of the provisions of these regulations, shall, in addition to liability for action in terms of the securities laws, be liable for the following actions by the respective stock exchange(s), in the manner specified in circulars or guidelines issued by the Board:
(a) Imposition of fines;
(b) Suspension of trading;
(c) Freezing of promoter/promoter group holding of designated securities, as may be applicable, in coordination with depositories.
(d) any other action as may be specified by the Board from time to time
2. The manner of revocation of actions specified in clauses (b) and (c) of sub-regulation (1), shall be as specified in circulars or guidelines issued by the Board.
In purview of Regulation 99: Failure to pay fine:
If listed entity fails to pay any fine imposed on it within such period as specified from time to time, by the recognised stock exchange(s), after a notice in writing has been served on it, the stock exchange may initiate action.
The intention of the Chapter XI clearly indicates the disclosure requirements on website as mentioned in the regulations are not to be treated lightly. These are to be followed strictly as mandated by the legislature.
Source: Companies Act, 2013 and rules made and latest amendments thereunder, SEBI Act, 1992, SEBI (Prohibition Of Insider Trading) Regulations, 2015and SEBI (Prohibition Of Insider Trading) Regulations, 2015
Disclaimer: This article contains interpretation of the Act, Rules, Regulations and personal views of the author are based on such interpretation. Readers are advised either to cross check the views of the author with the Act or seek the expert’s views if they want to rely on contents of this article.
The author is an Associate member of ICSI. His interest include Companies Act 2013, SEBI Act, Listing and Insider Trading Regulations. He can also be reached at csvarukapoor@gmail.com.
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