The Securities and Exchange Board of India (“SEBI”) issued an informal guidance to Shriram Transport Finance Company Limited (“STFCL”), a listed entity, on August 2, 2019 (“Informal Guidance”). The question that arose for consideration was whether STFCL was required to file consolidated financial results with its erstwhile subsidiary company, which was now an associate company, with the stock exchanges, in order to be in compliance with regulation 33(3)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR”). 

SEBI referred to regulation 33(3)(b) of the LODR prior to its amendment on April 1, 2019 and also to the SEBI circular dated July 5, 2016 (“Circular”) that stated that in the event a listed company had subsidiaries/joint ventures/associates, the listed entity could exercise the option under regulation 33(3)(b) of the LODR and to submit quarterly/year to date consolidated financial results. The option under the Circular was in line with regulation 33(3)(b) of the LODR as it stood prior to its amendment i.e. it was a option that was available to the listed entity (regulation 33(3)(b) of the LODR only stated that listed companies with subsidiaries were required to consolidate, and did not specifically cover associate companies). However, post the amendment of regulation 33(3)(b) of the LODR on April 1, 2019, it became mandatory for listed entities to submit quarterly/year to date consolidated financial results in accordance with the format specified in the Circular, which specifies consolidation of financial results of subsidiaries/joint ventures/associates. Further, paragraph 2.1 of the Circular specified that for the period ended on or after March 31, 2017, the format of quarterly financial results which would be as per the formats prescribed in schedule III of the Companies Act, 2013. Schedule III of the Companies Act, 2013 also stipulates that all subsidiaries, associates and joint ventures would be covered under consolidated financial statements.

In light of the above, SEBI stated that the requirement to file consolidated quarterly/year to end financial results with associates stood established and non-submission would become non-compliance of the LODR.