Top 1000 Listed Entities to Submit ‘Business Responsibility and Sustainability Report’ (BRSR) from FY 22-23: SEBI

Informal Guidance No. SEBI/HO/CFD/P/OW/2023/22328, Dated: 31.05.2023

The SEBI, in its reply to Informal Guidance, clarified that as per Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirement) Regulations 2015, starting from FY 2022-23, the top 1000 listed entities based on market capitalization are required to submit a ‘Business Reporting and Sustainability Report’ (BRSR) in the format specified by the Board.

Query raised by the Applicant Company

The Applicant Company has been covered in the top 1000 listed entities based on market capitalisation as on March 31, 2021. However, it has fallen below such thresholds of the list of top 1000 listed entities based on market capitalisation as on March 31, 2022.

In this regard, the Applicant Company sought informal guidance regarding the applicability of the ‘Business Reporting and Sustainability Report’ for the financial year 2022-23. The following queries were raised:

(a) Whether the Company has to comply with the prospective amendments applicable to top 1000 listed entities based on market capitalisation as per regulation 3(2) of LODR?

(b) Whether the Company was liable to comply with reporting of ‘Business Responsibility Report’ or it has to comply with BRSR as per regulation 34?

Provisions specified in LODR regulations

Regulation 34 read as follows –

34. Annual Report

34 (1)….

(2) The annual report shall contain the following:

(a)….

(f) for the top 1000 listed entities based on market capitalization, a business responsibility report describing the initiatives taken by the listed entity from an environmental, social and governance perspective, in the format as specified by the Board from time to time:

Provided that the requirement of submitting a business responsibility report shall be discontinued after the financial year 2021-22 and thereafter, with effect from the financial year 2022-23, the top 1000 listed entities based on market capitalization shall submit a business responsibility and sustainability report in the format as specified by the Board from time to time:

Provided further that even during the financial year 2021-22, the top one thousand listed entities may voluntarily submit a business responsibility and sustainability report in place of the mandatory business responsibility report.

Further, Regulation 3(2) read as follows –

The provisions of these regulations which become applicable to listed entities on the basis of market capitalisation criteria shall continue to apply to such entities even if they fall below such thresholds.” The sub-regulation has been made effective from May 05, 2021.

Provisions as per BRSR Circular

In terms of the aforesaid amendment. with effect from the financial year 2022-2023, filing of BRSR shall be mandatory for the top 1000 listed companies (by market capitalization) and shall replace the existing BRR.

SEBI’s observations

A perusal of the abovementioned provisions makes it clear that till the financial year 2021-2022, the top 1000 listed entities on the basis of market capitalization were required to submit a BRR in their annual report. Thereafter, from the financial year 2022-2023, such listed entities are required to submit a BRSR.

However, SEBI observed that the company was only among the top 1000 listed entities for the financial year ending on March 31, 2021. Therefore, their obligation under the aforesaid provisions was only limited to the submission of BRR for that specific financial year.

SEBI’s reply

In its reply, SEBI clarified that since the company was in the top 1000 listed entities only for the financial year ending on March 31, 2021 and not thereafter, it is not required to submit the BRR. Further, it is not required to submit the BRSR u/r 34(2)(f) of the LODR Regulations.

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