Regulation 16 - Definitions - Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015

Definitions. 16. (1) For the purpose of this chapter , unless the context otherwise requires - (a) control shall have the same meaning as assigned to it under the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011; (b) independent director means a non-executive director, other than a nominee director of the listed entity: (i) who, in the opinion of the board of directors, is a person of integrity and possesses relevant expertise and experience; (ii) who is or was not a promoter of the listed entity or its holding, subsidiary or associate company 1 [or member of the promoter group of the listed entity]; (iii) who is not related to promoters or directors in the listed entity, its holding, subsidiary or associate company; (iv) who, apart from receiving director's remuneration, has or had no material pecuniary relationship with the listed entity, its holding, subsidiary or associate company, or their promoters, or directors, during the 5 [ three ] immediately preceding financial years or during the current financial year; (v) none of whose relatives 6 [ (A) is holding securities of or interest in the listed entity, its holding, subsidiary or associate company during the three immediately preceding financial years or during the current financial year of face value in excess of fifty lakh rupees or two percent of the paid-up capital of the listed entity, its holding, subsidiary or associate company, respectively, or such higher sum as may be specified; (B) is indebted to the listed entity, its holding, subsidiary or associate company or their promoters or directors, in excess of such amount as may be specified during the three immediately preceding financial years or during the current financial year; (C) has given a guarantee or provided any security in connection with the indebtedness of any third person to the listed entity, its holding, subsidiary or associate company or their promoters or directors, for such amount as may be specified during the three immediately preceding financial years or during the current financial year; or (D) has any other pecuniary transaction or relationship with the listed entity, its holding, subsidiary or associate company amounting to two percent or more of its gross turnover or total income: Provided that the pecuniary relationship or transaction with the listed entity, its holding, subsidiary or associate company or their promoters, or directors in relation to points (A) to (D) above shall not exceed two percent of its gross turnover or total income or fifty lakh rupees or such higher amount as may be specified from time to time, whichever is lower. ] ; (vi) who, neither himself 7 [ /herself ] , nor whose relative(s) - (A) holds or has held the position of a key managerial personnel or is or has been an employee of the listed entity or its holding, subsidiary or associate company 8 [ or any company belonging to the promoter group of the listed entity, ] in any of the three financial years immediately preceding the financial year in which he is proposed to be appointed; 9 [ Provided that in case of a relative, who is an employee other than key managerial personnel, the restriction under this clause shall not apply for his / her employment. ] (B) is or has been an employee or proprietor or a partner, in any of the three financial years immediately preceding the financial year in which he is proposed to be appointed, of - (1) a firm of auditors or company secretaries in practice or cost auditors of the listed entity or its holding, subsidiary or associate company; or (2) any legal or a consulting firm that has or had any transaction with the listed entity, its holding, subsidiary or associate company amounting to ten per cent or more of the gross turnover of such firm; (C) holds together with his relatives two per cent or more of the total voting power of the listed entity; or (D) is a chief executive or director, by whatever name called, of any non-profit organisation that receives twenty-five per cent or more of its receipts or corpus from the listed entity, any of its promoters, directors or its holding, subsidiary or associate company or that holds two per cent or more of the total voting power of the listed entity; (E) is a material supplier, service provider or customer or a lessor or lessee of the listed entity; (vii) who is not less than 21 years of age. 2 [(viii) who is not a non-independent director of another company on the board of which any non-independent director of the listed entity is an independent director:] 10 [ Explanation- In case of a high value debt listed entity : (a) which is a body corporate, mandated to constitute its board of directors in a specific manner in accordance with the law under which it is established, the non- executive directors on its board shall be treated as independent directors; (b) which is a Trust, mandated to constitute its board of trustees in accordance with the law under which it is established, the non-employee trustees on its board shall be treated as independent directors. ] (c) material subsidiary shall mean a subsidiary, whose income or net worth exceeds 3 [ten] percent of the consolidated income or net worth respectively, of the listed entity and its subsidiaries in the immediately preceding accounting year. Explanation.- The listed entity shall formulate a policy for determining material subsidiary. 11 [ (d) senior management shall mean the officers and personnel of the listed entity who are members of its core management team, excluding the Board of Directors, and shall also comprise all the members of the management one level below the Chief Executive Officer or Managing Director or Whole Time Director or Manager (including Chief Executive Officer and Manager, in case they are not part of the Board of Directors) and shall specifically include the functional heads, by whatever name called and the Company Secretary and the Chief Financial Officer. ] *************** NOTES:- 1 Inserted by the SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018, w.e.f. 1.10.2018. 2 Inserted by the SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018, w.e.f. 1.10.2018. 3 Substituted ibid for the word twenty , w.e.f. 1.4.2019. 4 Substituted for the words executive directors, including all functional heads by the SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018, w.e.f. 1.4.2019. 5. Substituted vide Notification No. SEBI/LAD-NRO/GN/2021/35 dated 03-08-2021 w.e.f. 01-01-2022 before it was read as two 6. Substituted vide Notification No. SEBI/LAD-NRO/GN/2021/35 dated 03-08-2021 w.e.f. 01-01-2022 before it was read as, has or had pecuniary relationship or transaction with the listed entity, its holding, subsidiary or associate company, or their promoters, or directors, amounting to two per cent. or more of its gross turnover or total income or fifty lakh rupees or such higher amount as may be prescribed from time to time, whichever is lower, during the two immediately preceding financial years or during the current financial year 7. Inserted vide Notification No. SEBI/LAD-NRO/GN/2021/35 dated 03-08-2021 w.e.f. 01-01-2022 8. Inserted vide Notification No. SEBI/LAD-NRO/GN/2021/35 dated 03-08-2021 w.e.f. 01-01-2022 9. Inserted vide Notification No. SEBI/LAD-NRO/GN/2021/35 dated 03-08-2021 w.e.f. 01-01-2022 10. Inserted vide Notification No. SEBI/LAD-NRO/GN/2021/47 dated 07-09-2021 11. Substituted vide Notification No. SEBI/LAD-NRO/GN/2023/117 dated 17-01-2023 before it was read as, (d) senior management shall mean officers/personnel of the listed entity who are members of its core management team excluding board of directors and normally this shall comprise all members of management one level below the 4 [ chief executive officer/managing director/whole time director/manager (including chief executive officer/manager, in case they are not part of the board) and shall specifically include company secretary and chief financial officer.]