Quick Summary
SEBI compliance ensures capital market integrity through LODR regulations, insider trading controls, corporate governance norms, and disclosure requirements. Listed companies must maintain compliance officers, file quarterly reports, implement trading restrictions, and ensure transparency. Non-compliance attracts penalties up to ₹25 crore and trading bans.
What is SEBI Compliance?
SEBI compliance refers to adherence to regulations and guidelines issued by the Securities and Exchange Board of India (SEBI), the primary regulator of India's capital markets. SEBI compliance encompasses a comprehensive framework of rules governing listed companies, intermediaries, and market participants to ensure transparency, investor protection, and market integrity.
SEBI compliance is mandatory for all entities operating in India's capital markets including listed companies, mutual funds, stock brokers, investment advisors, and other market intermediaries. The regulatory framework covers areas such as corporate governance, disclosure obligations, insider trading prevention, and investor protection.
Key Objectives of SEBI Compliance:
- • Investor Protection: Safeguard interests of retail and institutional investors
- • Market Integrity: Prevent fraud, manipulation, and unfair practices
- • Transparency: Ensure timely and accurate disclosure of material information
- • Corporate Governance: Promote ethical business practices and accountability
- • Market Development: Foster growth and efficiency of capital markets
- • Systemic Stability: Maintain stability and confidence in financial markets
SEBI Regulatory Framework
SEBI's regulatory framework is built on the Securities and Exchange Board of India Act, 1992, and comprises various regulations, circulars, and guidelines that govern different aspects of capital market operations. The framework is designed to be comprehensive yet flexible to adapt to evolving market conditions.
Primary Regulations
- • SEBI LODR Regulations 2015
- • SEBI PIT Regulations 2015
- • SEBI SAST Regulations 2011
- • SEBI MF Regulations 1996
- • SEBI ICDR Regulations 2018
- • SEBI Intermediaries Regulations
Regulatory Instruments
- • Regulations (legally binding)
- • Circulars (operational guidance)
- • Guidelines (best practices)
- • Clarifications (interpretative)
- • Consultation papers (proposals)
- • Master circulars (consolidated guidance)
LODR Regulations 2015
The SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, form the cornerstone of compliance for listed companies. These regulations consolidate and streamline listing conditions and disclosure requirements across all stock exchanges in India.
Mandatory Disclosure Requirements
Listed companies must make various disclosures to ensure transparency and enable informed investment decisions. The disclosure framework covers financial information, material events, and corporate actions.
Key Disclosure Categories:
- • Financial Results: Quarterly and annual financial statements
- • Material Events: Price-sensitive information affecting company
- • Corporate Actions: Dividends, stock splits, rights issues
- • Related Party Transactions: Material transactions with related entities
- • Shareholding Patterns: Changes in promoter and public shareholding
- • Board Matters: Appointments, resignations, meeting outcomes
Corporate Governance Norms
LODR regulations prescribe comprehensive corporate governance requirements including board composition, committee structures, and governance processes to ensure effective oversight and decision-making.
Board Requirements
- • Minimum 50% independent directors (top 500 companies)
- • At least one woman director
- • Maximum 8 directorships per person
- • Quarterly board meetings mandatory
- • Board evaluation and succession planning
Committee Requirements
- • Audit Committee (3 members, 2/3 independent)
- • Nomination & Remuneration Committee
- • Stakeholders Relationship Committee
- • Risk Management Committee (top 500)
- • Corporate Social Responsibility Committee
Compliance Officer Role
Every listed company must appoint a qualified compliance officer responsible for ensuring adherence to SEBI regulations and acting as the primary interface with stock exchanges and regulatory authorities.
Insider Trading Compliance
Insider trading compliance is critical for maintaining market integrity and preventing unfair use of unpublished price-sensitive information. SEBI's PIT Regulations provide a comprehensive framework for preventing insider trading and ensuring fair market practices.
PIT Regulations 2015
The SEBI (Prohibition of Insider Trading) Regulations, 2015, define insider trading, prescribe disclosure requirements, and establish compliance mechanisms for preventing misuse of material information.
Key Definitions:
- • Insider: Person having access to or in possession of UPSI
- • UPSI: Unpublished Price Sensitive Information affecting securities
- • Designated Persons: Senior management and persons with routine access
- • Immediate Relative: Spouse, parent, children, siblings
- • Connected Person: Person having access through professional/business relationship
Code of Conduct & Policies
Listed companies must adopt and implement a comprehensive code of conduct for prevention of insider trading, including policies for handling UPSI and monitoring compliance.
Code of Conduct
Comprehensive framework covering insider trading prevention, disclosures, and penalties
Policy for Handling UPSI
Procedures for identification, handling, and disclosure of price-sensitive information
Policy for Inquiry
Framework for investigating suspected violations and taking appropriate action
Trading Window & Closure Periods
Companies must specify trading windows during which designated persons can trade in company securities, with mandatory closure periods around important corporate announcements.
Public Issue Compliance
Companies raising capital through public issues must comply with SEBI's ICDR Regulations, which govern the entire process from filing to listing, ensuring investor protection and market integrity.
IPO Disclosure Requirements
Initial Public Offering compliance involves extensive disclosure requirements, due diligence procedures, and regulatory approvals to ensure that investors receive accurate and comprehensive information.
Rights Issue Compliance
Rights issues require compliance with specific regulations regarding offer terms, disclosures, and procedural requirements to protect existing shareholders' interests.
Takeover Regulations
SEBI's Substantial Acquisition of Shares and Takeovers (SAST) Regulations govern acquisitions and takeovers to ensure transparency and fair treatment of all shareholders.
Substantial Acquisition Rules
Acquisitions exceeding specified thresholds trigger disclosure and open offer requirements to protect minority shareholders and ensure market transparency.
Key Thresholds:
- • 5% threshold: Disclosure requirement within 2 working days
- • 25% threshold: Mandatory open offer to public shareholders
- • Creeping acquisition: Maximum 5% per financial year beyond 25%
- • Indirect acquisition: Through subsidiary, associate, or group companies
Open Offer Requirements
Mandatory open offers must be made to acquire at least 26% of public shareholding at a fair price determined according to SEBI regulations, providing exit opportunity to minority shareholders.
Mutual Fund Compliance
Mutual fund operations in India are governed by comprehensive SEBI regulations covering fund management, scheme operations, disclosures, and investor protection measures.
AMC Regulatory Requirements
Asset Management Companies must maintain specified capital adequacy, governance standards, risk management systems, and compliance frameworks as prescribed by SEBI.
Scheme Launch & Operations
Mutual fund schemes require SEBI approval for launch and must comply with investment restrictions, valuation norms, and operational guidelines throughout their lifecycle.
Portfolio Disclosure Norms
Mutual funds must disclose portfolio holdings, performance data, and expense ratios in prescribed formats and frequencies to ensure transparency for investors.
Intermediary Compliance
SEBI regulates various market intermediaries including stock brokers, investment advisors, and credit rating agencies to ensure professional conduct and investor protection.
Stock Broker Compliance
Stock brokers must comply with capital adequacy norms, client protection measures, risk management systems, and operational guidelines prescribed by SEBI.
Investment Advisor Compliance
Registered Investment Advisors must adhere to fiduciary duties, disclosure requirements, and professional conduct standards while providing investment advice to clients.
Credit Rating Agency Compliance
Credit rating agencies must maintain independence, follow prescribed methodologies, and ensure accurate and timely rating opinions for debt securities.
Foreign Investment Compliance
Foreign investment in Indian capital markets is subject to SEBI regulations governing Foreign Portfolio Investors (FPI) and foreign direct investment routes.
FPI Registration & Compliance
Foreign Portfolio Investors must register with SEBI and comply with investment limits, reporting requirements, and operational guidelines for portfolio investments.
FDI Route Compliance
Foreign direct investments through the FDI route must comply with sectoral caps, pricing guidelines, and approval requirements as specified by SEBI and government policies.
SEBI Enforcement & Penalties
SEBI has comprehensive enforcement powers including investigation, adjudication, and penalty imposition to ensure compliance with capital market regulations and protect investor interests.
Penalty Framework
SEBI's penalty framework provides for monetary penalties, disgorgement of illegal gains, and prohibitory orders based on the nature and severity of violations.
SEBI Penalty Structure:
- • Disclosure violations: ₹1 lakh to ₹1 crore per day of default
- • Insider trading: Up to ₹25 crore or 3 times profit/loss avoided
- • Market manipulation: ₹1 crore to ₹25 crore plus disgorgement
- • Corporate governance lapses: ₹5 lakh to ₹25 lakh
- • Takeover violations: ₹10 lakh to ₹5 crore
- • Mutual fund violations: ₹1 lakh to ₹10 crore
Adjudication Process
SEBI follows a structured adjudication process including show cause notices, hearings, and reasoned orders, with provisions for settlement and appeal to Securities Appellate Tribunal.
SEBI Compliance Calendar
Listed companies must maintain a comprehensive compliance calendar to track various periodic filings, disclosures, and compliance requirements throughout the year.
Key Compliance Deadlines:
- • Financial results (within 45 days)
- • Shareholding patterns (within 21 days)
- • Corporate governance report
- • Investor presentation
- • Annual report (within 21 days of AGM)
- • Board evaluation report
- • Secretarial audit report
- • Business responsibility report
Technology & Cybersecurity Compliance
SEBI has introduced comprehensive cybersecurity and system audit requirements for market infrastructure institutions and intermediaries to ensure operational resilience and data protection.
Cybersecurity Framework
- • Information security policies
- • Incident response procedures
- • Data protection and privacy measures
- • Business continuity planning
- • Third-party risk management
System Audit Requirements
- • Annual system audit by SEBI empaneled auditors
- • Vulnerability assessment and penetration testing
- • System capacity and performance evaluation
- • Compliance with technical standards
- • Audit report submission to SEBI
ESG Disclosure Requirements
SEBI has mandated comprehensive Environmental, Social, and Governance (ESG) disclosures for large listed companies to promote sustainable business practices and informed investing.
ESG Disclosure Framework:
- • Environmental: Climate change, resource usage, waste management
- • Social: Employee welfare, community development, customer satisfaction
- • Governance: Board effectiveness, ethics, compliance, risk management
- • Business Responsibility Report: Annual sustainability reporting
- • ESG Ratings: External ESG assessment and scoring
Professional SEBI Compliance Services
Professional SEBI compliance services help organizations navigate complex regulatory requirements, maintain ongoing compliance, and minimize regulatory risks while focusing on business growth.
Return Filer SEBI Compliance Services:
- ✓ LODR compliance and periodic filings
- ✓ Insider trading compliance framework
- ✓ Corporate governance advisory
- ✓ IPO and public issue compliance
- ✓ Takeover and acquisition compliance
- ✓ ESG disclosure and reporting
- ✓ Regulatory liaison and representation
- ✓ Compliance training and capacity building
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