Word Level and Reporting in SEBI (LODR and PIT) PDF

**Use of words 'level' and 'reporting' in SEBI LODR and other regulations** +-----------------------+-----------------------+-----------------------+ | **Sr. No.** | **Regulation number** | **Wording of | | | | Regulation** | +...

**Use of words 'level' and 'reporting' in SEBI LODR and other regulations** +-----------------------+-----------------------+-----------------------+ | **Sr. No.** | **Regulation number** | **Wording of | | | | Regulation** | +=======================+=======================+=======================+ | 1 | 16 (d) | \(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.\] | +-----------------------+-----------------------+-----------------------+ | 2 | 17 (b) | where the chairperson | | | | of the board of | | | | directors is a | | | | non-executive | | | | director, at least | | | | one-third of the | | | | board of directors | | | | shall comprise of | | | | independent directors | | | | and where the listed | | | | entity does not have | | | | a regular | | | | non-executive | | | | chairperson, at least | | | | half of the board of | | | | directors shall | | | | comprise of | | | | independent | | | | directors: | | | | | | | | Provided that where | | | | the regular | | | | non-executive | | | | chairperson is a | | | | promoter of the | | | | listed entity or is | | | | related to any | | | | promoter or person | | | | occupying management | | | | positions at the | | | | level of board of | | | | director or at one | | | | level below the board | | | | of directors, at | | | | least half of the | | | | board of directors of | | | | the listed entity | | | | shall consist of | | | | independent | | | | directors. | +-----------------------+-----------------------+-----------------------+ | 3 | Schedule II Part A | The information on | | | (E) | recruitment and | | | | remuneration of | | | | senior officers just | | | | below the level of | | | | board of directors, | | | | including appointment | | | | or removal of Chief | | | | Financial Officer and | | | | the Company | | | | Secretary. | +-----------------------+-----------------------+-----------------------+ Word "Reporting": Occurrence in LODR +-----------------------+-----------------------+-----------------------+ | Sr. No. | Regulation number | Wording of Regulation | +=======================+=======================+=======================+ | 1 | 6 (2)(b) | co-ordination with | | | | and reporting to the | | | | Board, recognised | | | | stock exchange(s) and | | | | depositories with | | | | respect to compliance | | | | with rules, | | | | regulations and other | | | | directives of these | | | | authorities in manner | | | | as specified from | | | | time to time. | +-----------------------+-----------------------+-----------------------+ | 2 | 30 (4) (ii) | The listed entity | | | | shall frame a policy | | | | for determination of | | | | materiality, based on | | | | criteria specified in | | | | this sub-regulation, | | | | duly approved by its | | | | board of directors, | | | | which shall be | | | | disclosed on its | | | | website. | | | | | | | | Provided that such a | | | | policy for | | | | determination of | | | | materiality shall not | | | | dilute any | | | | requirement specified | | | | under the provisions | | | | of these regulations: | | | | | | | | Provided further that | | | | such a policy for | | | | determination of | | | | materiality shall | | | | assist the relevant | | | | employees of the | | | | listed entity in | | | | identifying any | | | | potential material | | | | event or information | | | | and reporting the | | | | same to the | | | | authorized Key | | | | Managerial Personnel, | | | | in terms of | | | | sub-regulation (5), | | | | for determining the | | | | materiality of the | | | | said event or | | | | information and for | | | | making the necessary | | | | disclosures to the | | | | stock exchange(s).\] | +-----------------------+-----------------------+-----------------------+ | 3 | Schedule II Part E | **Reporting of | | | (E) | internal auditor** | | | | | | | | The internal auditor | | | | may report directly | | | | to the audit | | | | committee. | +-----------------------+-----------------------+-----------------------+ Word "Level": Occurrence in PIT Sr. No. Regulation number Wording of Regulation --------- ------------------- ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 1 9 (4))(iv) Chief Executive Officer and employees upto two levels below Chief Executive Officer of such listed company, intermediary, fiduciary and its material subsidiaries irrespective of their functional role in the company or ability to have access to unpublished price sensitive information; Word "Reporting": Occurrence in PIT +-----------------------+-----------------------+-----------------------+ | Sr. No. | Regulation number | Wording of Regulation | +=======================+=======================+=======================+ | 1 | 2 (c) | "compliance officer" | | | | means any senior | | | | officer, designated | | | | so and reporting to | | | | the board of | | | | directors or head of | | | | the organization in | | | | case board is not | | | | there, who is | | | | financially literate | | | | and is capable of | | | | appreciating | | | | requirements for | | | | legal and regulatory | | | | compliance under | | | | these regulations and | | | | who shall be | | | | responsible for | | | | compliance of | | | | policies, procedures, | | | | maintenance of | | | | records, monitoring | | | | adherence to the | | | | rules for the | | | | preservation of | | | | unpublished price | | | | sensitive | | | | information, | | | | monitoring of trades | | | | and the | | | | implementation of the | | | | codes specified in | | | | these regulations | | | | under the overall | | | | supervision of the | | | | board of directors of | | | | the listed company or | | | | the head of an | | | | organization, as the | | | | case may be. | | | | | | | | \[Explanation -- For | | | | the purpose of this | | | | regulation, | | | | "financially | | | | literate" shall mean | | | | a person who has the | | | | ability to read and | | | | understand basic | | | | financial statements | | | | i.e. balance sheet, | | | | profit and loss | | | | account, and | | | | statement of cash | | | | flows\] | +-----------------------+-----------------------+-----------------------+ Words 'Level' and 'Reporting' are used consciously in SEBI (LODR) and SEBI (PIT) regulations.. It is true that when the same Statute uses two different words then prima facie one has to construe that these different words must have been used to mean differently. But then it is to be considered in the context in which it is used. \[*Kanhailyalal Vishindas Gidwani 2000 AIR SCW 4289\]* When the Legislature has taken care to use different phrases in different sections, normally a different meaning is required to be assigned to the language used by the Legislature unless the context otherwise requires. However in relation to the same subject matter, if different words of different import are used in the same statute, there is a presumption that they are not used in the same sense. \[ *Oriental Insurance Co. Ltd. v. Hansrajbhai v. Kodala \[2000\] 105 Comp Cas 743 (SC); 001 AIR SCW\].* *Hence it can be seen that when two different words are used at two different places (viz. 'reporting to' and 'one level below') they have different meanings. When word level is used it means a person occupying position exactly one level below in hierarchy.* 1. ***SEBI's view on persons occupying position 'one level below':** SEBI in its adjudication order dt: February 11, 2022 in the matter of Chitra Ramkrishna has held as follows, "As per the organizational chart depicting the reportees of Noticee no. 6, as submitted by NSE vide email dated April 10, 2018, [various functional heads viz.] Chief People Officer, Chief Marketing Officer & CSR, Strategic Business Head-C&D, CBO-Curr & Derivatives, CTO-Projects, CTO-Operations, CEOs-subsidiaries, Business Head-Int. & FII Interface, etc. [were reporting to Noticee no. 6.] [This made it obvious that the position of Noticee no. 6 was a senior executive position standing higher in hierarchy to the head(s) of department(s) and also just one level below the MD & CEO]. As Group Operating Officer and advisor to MD, Noticee no. 6 was reporting directly to MD & CEO"* 2. ***SAT's view on 'persons occupying position one level below':** SAT has stated that this violation of excessive authority to Group operating officer and he being designated as one level below was not part of the show cause notice. Hence SAT has not commented on this point*