The consultative paper submitted to Securities Exchange Board of India(SEBI) has suggested to amend the SEBI listing Obligations and Disclosure Regulations to increase the restrictions on the guarantees extended by listed companies.
To protect the interests of minority shareholders, in addition to extant provisions of the Companies Act, 2013 and disclosure requirements of SEBI (LODR) Regulations, 2015, it is proposed that guarantee/ security can be extended by a listed entity, provided:
a. Extension of such guarantee/ security to any person / entity (promoter(s)/ promoter group/ director / directors relative / KMP etc) is in the ‘economic interest’ of the listed company.
b. The said listed entity shall obtain prior approval from the shareholders on a “majority of minority” basis, before extending any such loan or any guarantee / security.
Comments on the proposal may be sent on or before March 31, 2020, to guaranteereview@sebi.gov.in.
Click here to read the Notification.
