SEBI is set to introduce stricter rules on post-listing obligations and disclosures for SMEs listed on dedicated stock exchanges. The move comes after tightening rules for listing and eligibility of SME public issues, to address instances of irregularities and non-compliances within the SME ecosystem. The regulator is expected to amend the Listing Obligations and Disclosure Requirements (LODR) Regulations by early April to enhance investor protection in the SME segment.
The upcoming changes in the LODR regulations are aimed at reining in SME manipulations and strengthening the ecosystem. The amendments may include stricter norms for related-party transactions (RPTs), enhanced disclosure requirements for board composition and meetings, and a shift to quarterly reporting for SMEs, aligning them more closely with mainboard governance standards.
Under the revised RPT norms, transactions exceeding 10% of annual consolidated turnover or ₹50 crore will require prior shareholder approval to enhance transparency and prevent fund siphoning. SEBI is also considering mandating disclosures on board meetings, composition, and committee proceedings for SME-listed entities.
Additionally, the regulator is looking to align periodic filings such as shareholding patterns, statements of deviations, and financial results with mainboard companies by moving from half-yearly to quarterly reporting. The proposed changes aim to improve transparency, governance, and risk assessment for investors in the SME segment.
With these stricter rules on compliance and disclosures, SEBI aims to enhance investor protection and promote better governance practices in the SME ecosystem. The amendments are expected to be implemented soon to address existing shortcomings and ensure a more robust regulatory framework for SMEs.
