SEBI LODR Amendment Regulations 2026: What Every Listed Company Must Now Do

The Securities and Exchange Board of India notified the SEBI (Listing Obligations and Disclosure Requirements) Amendment Regulations, 2026, which introduce several changes to corporate governance and disclosure requirements for listed entities. These amendments take effect immediately and cover capital raising, appointment of independent directors, and more. Companies must act now to ensure compliance. Here's what you need to know.

Changes to Independent Director Eligibility

The amendment tightens the definition of "independent" for board members. Directors with material transactions with the company (individually or through family) are now ineligible, even if those transactions occurred in prior financial years. This affects many listed companies that have relied on the previous three-year lookback period. Boards must conduct a comprehensive audit of all director relationships and seek shareholder approval for any affected board members within 30 days of the regulation taking effect.

Enhanced Disclosure Requirements for Related Party Transactions

SEBI has mandated that all related party transactions above a threshold of 5 percent of annual revenue (down from 10 percent) must be disclosed in the quarterly report and accompanied by audit committee certification. This change significantly increases disclosure obligations for companies with complex corporate structures or significant transactions with promoters or group entities. The regulation also requires disclosure of guarantees or indemnities provided to any related party.

Stricter Rules on Preferential Share Issuance

Companies looking to issue preferential shares must now place the proposal before the general shareholders' meeting and secure the approval of shareholders representing at least 65 percent of votes cast (up from 50 percent). Additionally, SEBI mandates that preference share terms must be registered with the stock exchange and must not contain any anti-dilution or acceleration clauses. This has significant implications for promoter-friendly capital raises and investment rounds.

What Companies Should Do Now

Listed companies should immediately commission a legal audit to assess their current board composition, director relationships, and ongoing related party transactions. Companies with affected board members should consider seeking waiver or exemption from the stock exchange, though this is unlikely to be granted in most cases. Those planning capital raises should revisit their deal structures and preference share terms. Consider engaging with corporate counsel to ensure compliance across all these dimensions. The compliance timeline is tight and non-compliance can result in stock exchange penalties and investor litigation.