Compliance with Structural Digital Database Requirements: A Guide for Listed Entities
Background:
In accordance with the Securities and Exchange Board of India (SEBI) regulations, all listed and proposed-to-be-listed entities are now mandated to maintain a Structural Digital Database (SDD). Its primary objective is to ensure transparency, traceability, and accountability in trading practices.
Amendments:
Listed entities subject to Regulation 24A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 must confirm their compliance with the SDD in their Annual Secretarial Compliance Report. This ensures ongoing adherence to regulatory requirements.
For entities not bound by Regulation 24A, a compliance status must be reported through an SDD Compliance Certificate. This certificate, certified by a Practicing Company Secretary (PCS), must be submitted within 60 days from the end of the financial year. If a company is found non-compliant, it is required to submit quarterly compliance certificates until full compliance is achieved. The submission can be made via the BSE Listing Centre under the Compliance Module.
For companies seeking to be listed or newly listed entities, compliance certification with Regulations 3(5) and 3(6) of the SEBI regulations is required at the time of filing the offer document. This must also be certified by a PCS, ensuring that all new entrants adhere to the required standards from the outset.
Consequences of Non-Compliance:
Entities that fail to comply with the SDD requirements will face specific actions within 30 days of the report’s due date:
A public disclosure on the “Get Quote” page of the Exchange Website, indicating non-compliance and the name of the compliance officer.
A halt on further listing approvals, except for actions like bonus issues or stock splits.
A requirement for the company to present the matter to its Board of Directors and provide their comments on the situation.
SW Point of View: By reinforcing the importance of maintaining a Structural Digital Database, SEBI aims to enhance transparency and integrity within the securities market. Compliance not only safeguards companies against regulatory penalties but also bolsters investor confidence in the integrity of the market.
