Definitions: Chapter IV of LODR

Regulation 2 of the Securities and Exchange Board of India (Listing Obligation and Disclosure Requirements) Regulations, 2015 define terms used in these regulations. We have discussed some of these definitions earlier. Some terms may not have same legal meaning always and require defining as per context and purpose. Regulation 16 of these Regulations defines four terms for the purpose of Chapter IV. As me mentioned in last post, Chapter VI deals with obligation of listed entity which has listed its specified securities on any recognised stock exchange either on main board or on SME Exchange or on institutional platform.

Control
“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. [Regulation 16(1)(a)]
“Control” includes the right to appoint majority of the directors or to control the management or policy decisions exercisable by a person or persons acting individually or in concert, directly or indirectly, including by virtue of their shareholding or management rights or shareholders agreements or voting agreements or in any other manner. [Regulation 2(1)(e) of the SEBI Takeover Code, 2011 as it is popularly called or SEBI (SAST) Regulation, 2011]
A director or officer of a target company shall not be considered to be in control over such target company, merely by virtue of holding such position. [Proviso to Regulation 2(1)(e) of the SEBI Takeover Code, 2011 as it is popularly called or SEBI (SAST) Regulation, 2011]
Control had inclusive definition under these Regulations. Control includes-

the right to appoint majority of directors,
to control the management,

to control policy decisions exercisable by a person or persons acting individually or in concert, directly or indirectly, including

by virtue of their shareholding or
management rights or
shareholders agreements or
voting agreements or
in any other manner.

This definition is different from the definition of Control under the Companies Act, 2013 discussed earlier here.
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Independent Director
“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;
(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 two immediately preceding financial years or during the current financial year;
(v) none of whose relatives 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;
(vi) who, neither himself, 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 in any of the three financial years immediately preceding the financial year in which he is proposed to be appointed;
(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. [Regulation 16(1)(b)]
This definition of independent director is different from the definition of Independent director discussed earlier.
Material Subsidiary
“Material Subsidiary” shall mean a subsidiary, whose income or net worth exceeds twenty percent of the consolidated income or net worth respectively, of the listed entity and its subsidiaries in the immediately preceding accounting year. [Regulation 16(1)(c)]
Interestingly, term used in this definition is accounting year against normal practice of financial year. This has significant bearing. Accounting year and financial year may be different in certain circumstances. This definition has two major trigger points:

Consolidated income or net worth of the listed company, or
Consolidated income or net worth of its subsidiaries.

For the purpose of determining consolidated position in its subsidiaries; combine position in all subsidiaries should be taken into account.
Explanation.- The listed entity shall formulate a policy for determining ‘material’ subsidiary. [Explanation to Regulation 16(1)(c)]
Senior Management
“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 executive directors, including all functional heads. [Regulation 16(1)(d)]