Table of Contents
- Introduction
- Who Are Senior Management Personnel?
- Key Disclosures Required from SMPs (Effective April 1, 2025)
- Conflict Disclosure Under Regulation 26(5) of SEBI LODR
- Annual Disclosures Under SEBI Insider Trading Regulations
- Compliance Checklist: Disclosures from Senior Management Personnel (SMPs)
- FAQs on Senior Management Disclosures
- Conclusion
Introduction
With increasing regulatory scrutiny and stakeholder expectations, Senior Management Personnel (SMP) are now held to higher standards of transparency and accountability. Post the SEBI (LODR) Third Amendment Regulations, 2024, effective December 13, 2024, listed companies must comply with new disclosure norms related to their senior executives.
This blog explains who qualifies as senior management, the mandatory disclosures they must make, and how companies can remain compliant under the Companies Act, SEBI LODR, and Insider Trading Regulations.
Who Are Senior Management Personnel (SMP)?
Under Regulation 16(1)(d) of the SEBI (LODR) Regulations Senior Management means:
- Officers and personnel of the company who are members of its core management team, excluding Board members.
- Individuals one level below the CEO/MD/Manager/Whole-Time Director.
- CEO & Manager in case they are not part of Board
- Functional Heads
- Any person designated as Key Managerial Personnel (KMP) by the company, other than Board of Directors.
2024 Update:
As per the SEBI LODR Third Amendment Regulations, the scope now explicitly includes:
- All KMPs other than Board of Directors
If a Chief Operating Officer (Key Management Personnel) was not previously included in your Senior Management team, they will become a part of your Senior Management team following the update.
Key Disclosures Required from SMPs
Companies must ensure the following disclosures from SMPs are tracked and submitted regularly:
1. Disclosure of Senior Management Details
- Maintain updated information on SMPs: names, titles, and any change in designation.
- Include this in:
- The Corporate Governance Report
- The Annual Report
2. Code of Conduct Affirmation
- All SMPs must confirm annual adherence to the company’s Code of Conduct.
- This declaration is certified by the CEO/MD in the Annual Report.
3. Disclosure of Appointment
- Any appointment of SMP needs to be disclosed to the stock exchange within 12 hours.
4. Disclosure of Resignation and Reasons
- Any resignation by an SMP or KMP must be:
- Disclosed to the stock exchange within 24 hours of effective date.
- Submitted with detailed reasons within 7 days.
Conflict Disclosure Under Regulation 26(5) of SEBI LODR
One of the most critical disclosure from Senior Management Personnel is the mandatory disclosure of personal interests in material, financial and commercial transactions that may have potential conflict with the interest of the Company.
What Regulation 26(5) Says:
“The Senior Management shall make disclosures to the Board of Directors relating to all material, financial and commercial transactions, where they have personal interest that may have a potential conflict with the interest of the listed entity.”
What Needs to Be Disclosed?
- Any personal or family interest in company-related transactions.
- Dealing in Company’s shares
- Commercial dealings with Companies having shareholding of management & their relatives
- Financial/commercial arrangements with:
- Vendors
- Customers
- Consultants
- Related parties
Company’s Role:
- Obtain annual disclosures or disclosures as and when conflict arises.
- Review and maintain conflict disclosures internally.
- Escalate to Board/Audit Committee if needed under RPT norms.
Annual Disclosures Under SEBI Insider Trading Regulations
Under Schedule B clause 14 of the SEBI (Prohibition of Insider Trading) Regulations, 2015, all designated persons (all SMPs are automatically designated persons) must submit:
Annual Disclosures (Due by April 30 Every Year):
- Names and PAN of:
- Immediate relatives
- Persons with whom they share a material financial relationship
- Phone, mobile and cell numbers used by them.
These disclosures support the maintenance of a Structured Digital Database (SDD), which helps prevent and trace any insider trading activities.
Retention Requirement:
- Maintain records for at least 8 years, or till completion of any regulatory proceeding, whichever is later.
Compliance Checklist: Disclosures from Senior Management Personnel (SMPs)
| Disclosure | Regulation | Frequency | Deadline / Timeline | Remarks |
|---|---|---|---|---|
| Personal Details of SMPs (Name, designation, role) | SEBI LODR Sch. V | On Appointment/Change | Immediate, include in Annual Report | Ensure CG report reflects updated list |
| Code of Conduct Compliance | SEBI LODR Reg. 26(3) | Annually | By end of financial year | To be signed and included in Annual Report |
| Appointment | SEBI LODR Reg. 30 | As and when applicable | Within 12 hours | Mandatory disclosure to stock exchange |
| Resignation with Reasons | SEBI LODR Reg. 30 | As and when applicable | Within 24 hours of effective resignation | Mandatory disclosure to stock exchange |
| Disclosure of Material Transactions with Potential Conflict | SEBI LODR Reg. 26(5) | Annual and Event-Based | As soon as conflict arises or annually | Maintain register of conflicts of interest |
| Annual Insider Trading Disclosure | SEBI PIT Schedule B Clause 14 | Annually | By April 30 every year | Mandatory for all Designated Persons |
FAQs on Senior Management Personnel (SMP)
1. Is resignation disclosure required for all SMPs?
Yes, as per SEBI LODR, resignations of any SMP must be disclosed to stock exchanges within 24 hours and with resignation letter and reasons within 7 working days.
2. What if an SMP fails to disclose a potential conflict of interest?
It can lead to regulatory scrutiny, penal action under LODR, and possible breach of fiduciary duty. Internal disciplinary action may also be warranted.
3. Do companies need to disclose conflict transactions to shareholders?
If the transaction qualifies as a related party transaction, it must be disclosed and, in some cases, approved by shareholders.
4. Are disclosures under PIT and LODR connected?
Yes. While PIT focuses on insider trading risks, LODR ensures corporate governance. Together, they enforce holistic compliance.
5. Can functional heads who are not statutory KMPs be treated as SMPs?
Yes. If they hold significant managerial responsibility or are included in your policy, they must be treated as SMPs for all disclosures.
6. Are all SMPs designated person?
Yes. As the definition of SMP includes all employees one level below CEO/MD/Manager/Whole-Time Director. While definition of DP includes all employees two level below CEO and person having UPSI.
7. Can SMP be appointed without approval of Nomination & Remuneration Committee?
No. The appointment of SMP needs to be routed through NRC.
8. Can SMP be paid incentive during the year without any approval?
No. Incentive to SMP can be paid only post approval of NRC and Board of Directors and in accordance with the Nomination & Remuneration Policy of the Company.
Conclusion
The evolving regulatory framework around Senior Management Personnel reinforces the need for proactive compliance, transparency, and internal governance. From Regulation 26(5) conflict disclosures to annual PIT declarations, listed companies must implement structured policies and digital tracking systems.
Quick Compliance Checklist for Company Secretary:
- Maintain updated SMP list
- Collect annual PIT and conflict disclosures
- Ensure Code of Conduct confirmations
- Disclose all SMP changes in corporate filings
- Conduct periodic SMP training
Stay Compliant, Stay Protected
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