SEBI has changed the rules of M-cap of companies. Now the M-cap of the companies will be determined over a period of 6 months. However, this new rule will come into effect from December 31, 2024. SEBI has changed the rules of Listing Obligations and Disclosure Requirements (LODR). The change came following the recommendation of an expert committee headed by former whole-time member of SEBI SK Mohanty.
The Securities and Exchange Board of India ( SEBI ) has issued a notification for companies listed in the stock market. According to this notification, SEBI has changed the rules of Listing Obligations and Disclosure Requirements (LODR).
According to the new rule, now the M-cap of companies will not be calculated daily but over a period of six months. The market fluctuates daily. In such a situation, M-caps of companies change every day.
Market experts believe that the market capitalization of a listed entity fluctuates on a daily basis depending on the market dynamics and hence, the average of the market capitalization figures over a reasonable period (six months) of the listed entity. Will reflect market size more accurately.
The changes came following the recommendation of an expert committee headed by former whole-time member of SEBI SK Mohanty to boost ease of doing business. The purpose of this amendment of SEBI is to specify a defined period for calculating the average market capitalization.
The Securities and Exchange Board of India had issued a notification regarding this on May 17. According to this notification, the new rule will come into effect from December 31, 2024. Now the compliance ranking will be based on average market capitalization from July 1 to December 31, with December 31 as the cut-off date.
SEBI said regarding amendment in LODR norms
Every stock exchange will prepare a list at the end of this year i.e. 31 December 2024. Those companies will be included in this list, in which the institutions will be ranked on the basis of average market capitalization from July 1 to December 31. If the ranking of a company changes every three years, then the new provision will not apply to that company. This will provide relief to institutions experiencing fluctuations in market capitalization.
Further, SEBI has given relaxation in respect of filling of vacancies of Key Managerial Personnel (KMP) and has extended the time limit from the existing three months to six months in some cases.
In cases where the listed entity is required to obtain approval of regulatory, government or statutory authorities for filling up such vacancies, these should be filled by the listed entity as soon as possible and in any case not later than six months from the date of vacancy. Should not be filled first.
As per current LODR rules a listed company is required to inform the stock exchanges about financial results, board meetings for certain resolutions like share buyback, fundraising etc. within 2-11 working days.
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