Independent director classification now includes institutional directors for government companies under listing agreement amendments, effective immediately.
Amendment to Clause 49 requires that institutional directors be treated as independent directors without exception, removing the prior exclusion for government companies; exchanges must amend their listing agreements so institutional nominees from investing or lending institutions qualify as independent directors for corporate governance assessments.

Rolling settlement: scrips without depository connectivity to remain on trade-for-trade until connectivity enables normal rolling settlement transfer.
Scrips with depository connectivity by September 30, 2001 will trade in normal rolling settlement from December 31, 2001; those with connectivity by October 31 and November 30, 2001 will move from trade-for-trade into normal rolling settlement on January 31, 2002 and February 28, 2002 respectively. Scrips lacking connectivity by the cutoff dates remain in trade-for-trade until they complete the prescribed linkage and procedures, after which they will be migrated into normal rolling settlement.

Model rules for stock exchanges mandate implementation of core governance and bye laws, with exchanges to report compliance promptly.
SEBI's Committee submitted Model Rules divided into four Parts: Part A (rules already effected via SEBI/GOI instruments), Part B (rules to be implemented by exchanges now), Part C (rules to await demutualisation/corporatisation) and Part D (rules requiring statutory/regulatory amendment). Exchanges are advised to implement Part B, may adopt Part A where material differences exist, seek approvals from their governing bodies, notify SEBI of implementation difficulties and submit a compliance report within the prescribed period. Prevailing SEBI/GOI provisions continue to govern overlapping matters.

Independent director eligibility clarified: associate relationships, cooling-off requirement and mandatory SEBI notification on board composition.
SEBI clarifies that relatives of sponsors or sponsor directors, nominees of stakeholder companies, and other persons deemed "associates" are ineligible to serve as independent directors while the association exists. A person who ceases to be an associate must observe a three-year cooling-off period before appointment as an independent director; during that interval they may only serve as associate directors. AMCs and trustee companies must classify directors accordingly, notify SEBI if independent-director composition falls below required levels, and use the revised bio-data format when submitting new director particulars.

Rolling settlement advanced to enable uniform weekend migration of remaining scrips across stock exchanges for system readiness.
SEBI advanced commencement of rolling settlement on a T+5 basis for the remaining scrips to the start of the trading week to permit uniform migration from weekly account-period settlement, allowing exchanges the intervening weekend to complete system migration and resolve technical and operational issues.

Full book building enables public offers via book building with mandatory prospectus disclosures, allocation rules, and underwriting obligations.
The amendments allow public issues to be made entirely or in part through the book building process, require the red herring prospectus to disclose only the floor price, permit listing of multiple book runners with a common investor complaint contact, mandate uniform margin collection for non QIB categories, prohibit bids beyond statutory investment limits, and require real time online display of demand and bid prices with adequate data entry infrastructure.

Printing bank account details on payment instruments now mandatory to prevent fraudulent encashment and secure dividend payments.
Companies must mandatorily print investor bank account details furnished by depositories on payment instruments to prevent fraudulent encashment of dividend and other cash benefit instruments, and depositories and stock exchanges are to instruct companies/issuers to implement this requirement.

Client confidentiality: brokers may share client information only with express client permission, otherwise disclosure limited to legal requirements.
Members must keep client registration details and other client information confidential and not disclose them except as required by law. Brokers may share such client details with parties beyond legal requirements only with the express permission of the client. The prior requirement to give intimation to the regulator has been removed and members are directed to implement this amended clause in the member-client agreement.

Monthly Development Report requirement mandates revised format with detailed settlement, funds and compliance disclosures by exchanges.
SEBI requires stock exchanges to submit a revised Monthly Development Report within seven days after month-end, with detailed disclosures on rolling and account-period settlements (turnover, deliveries, shortages, funds to be settled, shortfalls, and use of SGF/TGF), lists of members with pay-in shortfalls, and actions taken. The MDR also mandates exchange-level statistics, governance and committee composition, specific-purpose fund movements, regulatory actions (margins, suspensions, disciplinary steps), audit and inspection outcomes, investor complaints and arbitration case reporting, member defaults, computerisation status, and implementation of SEBI circulars.

Single stock futures risk framework: cash settlement, portfolio based margining, and multi tier position limits required for market integrity.
Regulatory introduction of Single Stock Futures mandates prior approval, initial cash settlement, and parity of lot size/multiplier with corresponding options. A portfolio based margining regime measures worst scenario loss across a client's combined derivative positions, with specified scan ranges and minimum initial margin floors enforced by adjustment of scan parameters where necessary. Calendar spread charges and multi tier exposure and position limits (client, member, market) must be implemented, alongside staged client identification systems, frequent intraday scenario updates for margin computation, prescribed closing price methodologies, and comprehensive exchange submissions for approval.

Reporting obligation for FIIs: monthly disclosure of issuance, renewal or redemption of derivative instruments to regulator.
FIIs issuing derivative/financial instruments linked to Indian securities must report issuance, renewal, cancellation or redemption monthly to the regulator using the prescribed annexure format, filed within one week of month-end and signed by the compliance officer; only FIIs that issue such instruments and only for months with transactions must file. The report requires issuer identification, instrument and underlying security details, investor nationality/place of incorporation, issue and maturity data, face/maturity values, instrument quantities and underlying securities quantities, and opening/closing balances with movement breakdowns.

Advertisement prohibition for brokers and sub brokers-exchanges must enforce limits and restrict trading terminals to registered locations.
SEBI requires exchanges to enforce prohibitions on broker and sub broker advertisements that breach the Code of Conduct, including internet and affiliated company promotions, and instructs brokers to ensure sub brokers comply. It mandates that trading terminals be granted only at members' registered offices, branch offices and registered sub brokers' offices, with all others withdrawn, and directs exchanges to amend bye laws to penalise misuse of terminals and to prohibit dealing with sub brokers not registered with SEBI.

Segment reporting requirement made voluntary for the transitional quarter, allowing firms extra time to implement systems.
Companies were required to include segment-wise revenue, results and capital employed in quarterly financial results in the prescribed format, but due to representations about implementation difficulties the regulator made segment reporting voluntary for the transitional quarter to allow firms additional time to establish necessary systems.

Mandatory electronic dividend distribution via ECS required where available; companies must use warrants only if ECS unavailable.
Companies must adopt ECS for payment of dividends and other cash benefits wherever available, with warrants to be used only when ECS is not available; depositories and stock exchanges are to instruct companies to comply with this mandatory distribution practice.

Quarterly unaudited financial results: revised disclosure requirements now mandate audit qualifications and segment reporting for applicable periods.
Amendments to Clause 41 allow certain companies using functional expenditure classification to present quarterly unaudited results in an alternative format and require disclosure of any audit qualifications alongside audited results with an explanatory statement on how prior year qualifications have been addressed. Clarifications require segment information under the Segment Reporting standard for quarters on or after the specified quarter, with staged requirements for cumulative year to date segment data depending on the company's accounting year commencement. Exchanges must incorporate and enforce these disclosure requirements.

Delay in transfer of shares: companies must effect transfers after notices and compensate investors for opportunity losses.
Companies must effect share transfers on receipt of proof of purchase acknowledged by the stock exchange/broker or indemnity bond, send registered letters to transferors within ten days seeking confirmation/no-objection with a fifteen-day response period, and effect transfers immediately if no valid prohibitory order from a competent authority is produced; benefits held back must be delivered to the transferee and exchanges shall arbitrate disputed benefit claims, while delays or lost deeds during rectification render the company liable to transfer and compensate for opportunity losses.

AMFI certification requirement mandates certified distributors and disclosure obligations require posting half yearly results and portfolios online.
Mutual funds must ensure agents/distributors obtain AMFI certification, present agent lists to AMC and Trustee Boards, monitor agent conduct, report certification progress in AMC quarterly and Trustee half yearly reports, and encourage sales staff certification. Mutual funds must post unaudited half yearly results and scheme portfolios on their websites and on the industry website within one month of each half year end and file portfolios with the regulator when submitting half yearly results.

Associate definition for stock brokers clarifies control and substantial shareholding thresholds, and empowers exchanges to act against associates.
SEBI defines 'associate' of a stock broker to include persons who directly or indirectly exercise control over the broker or are controlled by the broker, persons holding a substantial shareholding in the broker, and persons whose director or partner is also a director or partner of the broker; the term 'control' is to be read as per clause (c) of Regulation 2 of the relevant substantial acquisition and takeovers regulation, and member exchanges are to decide any action against such associates after examining relevant facts.

Accounting standards compliance required: companies must adopt specified disclosure, consolidated reporting, and tax accounting in periodic financial results.
Companies must include segment reporting and apply the Accounting for Taxes on Income standard in quarterly un audited results, may publish consolidated quarterly results, and must publish annual results in the same format. Consolidated financial statements are mandatory in the annual report, must be audited by the company's statutory auditors and filed with stock exchanges. Related party disclosures must follow the applicable accounting standard, and companies are required to comply with all Accounting Standards issued by the ICAI.

Derivative transaction reporting: standardized daily disclosure to media and newspapers of specified contract and market fields.
The circular requires derivative exchanges and their clearing houses to provide uniform daily media disclosure of specified transaction data: contracts description; number of contracts traded; notional value (for options calculated as [strike + premium] x lot size x number of contracts); open, high, low; value of premium traded for options; and open interest in number of contracts.