LEGAL FORMALITIES FOR SME’s TO ABIDE BY POST LISTING
After an SME (Small and Medium enterprises) lists itself on a stock exchange in India, there are certain legal formalities it needs to abide by. Here are some of the key requirements:
Securities and Exchange Board of India (SEBI) Regulations
As a listed entity, the SME must comply with the regulations prescribed by SEBI, the regulatory body for securities markets in India.
These regulations cover various aspects such as listing requirements, continuous disclosure obligations, corporate governance norms, and insider trading regulations.
Corporate Governance
The SME must comply with the corporate governance norms specified by SEBI.
It includes the appointment of independent directors, the constitution of board committees (such as the audit committee, nomination and remuneration committee, etc.), conducting regular board meetings, and ensuring transparency in financial reporting.
Disclosure and Reporting
Listed SMEs are required to make timely and accurate disclosures to the stock exchange and the public.
This includes submitting periodic financial statements (quarterly, half-yearly, and annual) within the prescribed timelines, along with any other disclosures required under SEBI regulations.
The SME should also inform the stock exchange about any material events or information that may impact its operations or financial position.
Shareholder Meetings
The SME needs to conduct annual general meetings (AGMs) and extraordinary general meetings (EGMs) as per the Companies Act, 2013.
It must provide sufficient notice to shareholders and seek their approval for various matters such as financial statements, the appointment of auditors, changes in the board of directors, and other significant decisions.
Compliance with Company Law
The SME must comply with the provisions of the Companies Act, 2013, and other relevant laws applicable to it.
This includes maintaining proper books of accounts, conducting statutory audits, filing annual returns, maintaining registers of members, directors, and debenture holders, and complying with other statutory requirements.
Insider Trading and Code of Conduct
The SME must have a robust insider trading policy in place to prevent insider trading activities.
It should also establish a code of conduct for its directors, employees, and other relevant personnel, outlining ethical standards, conflict of interest policies, and guidelines for fair dealing.
Stock Exchange Rules
The SME must comply with the rules and regulations of the stock exchange where it is listed.
This includes adherence to listing agreement provisions, payment of listing fees, and compliance with the trading, disclosure, and reporting requirements of the exchange.
It is important for an SME to engage with legal and financial professionals experienced in securities laws and corporate governance to ensure proper compliance with all applicable regulations and requirements post-listing.
