Section 24 in Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015
24. Corporate governance requirements with respect to subsidiary of listed entity.
- [(1) At least one independent director on the board of directors of the listed entity shall be a director on the board of directors of an unlisted material subsidiary, whether incorporated in India or not.Explanation. - For the purposes of this provision, notwithstanding anything to the contrary contained in regulation 16, the term "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.] [Substituted by Notification No. SEBI/LAD-NRO/GN/2018/10, dated 9.5.2018 (w.e.f. 2.9.2015).](2)The audit committee of the listed entity shall also review the financial statements, in particular, the investments made by the unlisted subsidiary.(3)The minutes of the meetings of the board of directors of the unlisted subsidiary shall be placed at the meeting of the board of directors of the listed entity.(4)The management of the unlisted subsidiary shall periodically bring to the notice of the board of directors of the listed entity, a statement of all significant transactions and arrangements entered into by the unlisted subsidiary.Explanation. - For the purpose of this regulation, the term "significant transaction or arrangement" shall mean any individual transaction or arrangement that exceeds or is likely to exceed ten percent of the total revenues or total expenses or total assets or total liabilities, as the case may be, of the unlisted [***] [Omitted 'material' by Notification No. SEBI/LAD-NRO/GN/2018/10, dated 9.5.2018 (w.e.f. 2.9.2015).] subsidiary for the immediately preceding accounting year.(5)A listed entity shall not dispose of shares in its material subsidiary resulting in reduction of its shareholding (either on its own or together with other subsidiaries) to less than fifty percent or cease the exercise of control over the subsidiary without passing a special resolution in its General Meeting except in cases where such divestment is made under a scheme of arrangement duly approved by a Court/Tribunal [, or under a resolution plan duly approved under section 31 of the Insolvency Code and such an event is disclosed to the recognized stock exchanges within one day of the resolution plan being approved] [Added by Notification No. SEBI/LAD-NRO/GN/2018/21, dated 31.5.2018 (w.e.f. 2.9.2015).].(6)Selling, disposing and leasing of assets amounting to more than twenty percent of the assets of the material subsidiary on an aggregate basis during a financial year shall require prior approval of shareholders by way of special resolution, unless the sale/disposal/lease is made under a scheme of arrangement duly approved by a Court/Tribunal [, or under a resolution plan duly approved under section 31 of the Insolvency Code and such an event is disclosed to the recognized stock exchanges within one day of the resolution plan being approved] [Added by Notification No. SEBI/LAD-NRO/GN/2018/21, dated 31.5.2018 (w.e.f. 2.9.2015).].(7)Where a listed entity has a listed subsidiary, which is itself a holding company, the provisions of this regulation shall apply to the listed subsidiary in so far as its subsidiaries are concerned.
