Introduction and Context
The Securities and Exchange Board of India (SEBI) issued Circular No. SEBI/HO/CFD/PoD2/CIR/P/2025/47 on April 1, 2025, to clarify the organizational hierarchy requirements for the appointment of a Compliance Officer in listed entities. This clarification pertains to Regulation 6(1) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, commonly referred to as the LODR Regulations.
The need for this clarification arises from amendments made via the Third Amendment to the LODR Regulations dated December 12, 2024, which introduced specific criteria for the Compliance Officer’s employment status and seniority within the company.
Amendment Overview
According to the revised Regulation 6(1) of the LODR Regulations:
- The Compliance Officer must be in whole-time employment with the listed entity.
- They must be not more than one level below the Board of Directors.
- The officer must be designated as a Key Managerial Personnel (KMP).
The provision is aimed at strengthening governance by ensuring the Compliance Officer has adequate seniority and access to top leadership, allowing for efficient implementation of regulatory responsibilities.
Clarification on ‘Level Below the Board’
SEBI received several queries from listed companies regarding the interpretation of the term “one level below the Board of Directors.” In response, SEBI issued the following clarification:
- The term ‘level’ refers to the organizational structure of the listed entity.
- “One level below the Board of Directors” means the Compliance Officer should be positioned directly under the Managing Director (MD) or Whole-time Director(s) who are themselves members of the board.
- This aligns with the definition of Key Managerial Personnel under:
- Regulation 2(1)(o) of the LODR Regulations, and
- Section 2(51) of the Companies Act, 2013.
Clarification for Companies without MD/WTD
In situations where a listed company does not have a Managing Director or Whole-Time Director, SEBI clarified that the Compliance Officer must be not more than one level below the:
- Chief Executive Officer (CEO),
- Manager, or
- Any individual responsible for managing day-to-day operations of the company.
This ensures that, regardless of the company’s leadership structure, the Compliance Officer holds a sufficiently senior and influential role within the organization.
Regulatory Authority
This circular has been issued under:
- Section 11(1) of the SEBI Act, 1992, and
- Regulation 101 of the LODR Regulations.
These provisions empower SEBI to issue directions, clarifications, and guidance to ensure effective implementation and enforcement of its regulations.
Availability and Contact
The circular is available on SEBI’s official website under Legal → Circulars. SEBI has also provided contact information for further queries:
Raj Kumar Das
Deputy General Manager
Corporation Finance Department – Policy and Development
📞 +91-22-26449253
📧 rajkd@sebi.gov.in
Conclusion
This clarification by SEBI ensures greater consistency in how listed companies structure their compliance function. It reinforces the importance of placing the Compliance Officer in a senior, accessible, and empowered position, thereby strengthening governance, transparency, and investor protection.
