Module: | Statutory Audit, NFRA & ICAI Standards
Q75: Consider the following statements regarding the disclosure of the resignation of Key Managerial Personnel (KMPs) under SEBI LODR Regulations:
1. A listed entity must disclose the resignation of any Key Managerial Personnel to the stock exchanges within 24 hours of receiving the resignation letter.
2. The company is strictly mandated to disclose the detailed letter of resignation submitted by the KMP along with the stock exchange intimation.
3. The rule regarding the public disclosure of the exact resignation letter applies to the Chief Financial Officer and the Managing Director, among other designated senior management.
Which of the above statements is/are correct?
2. The company is strictly mandated to disclose the detailed letter of resignation submitted by the KMP along with the stock exchange intimation.
3. The rule regarding the public disclosure of the exact resignation letter applies to the Chief Financial Officer and the Managing Director, among other designated senior management.
Which of the above statements is/are correct?
✅ Correct Answer: D
🎯 Quick Answer:
D. All statements 1, 2, and 3 are correct.Their sudden departure is highly price-sensitive information indicating potential internal crises.
Structural Breakdown: Statement 1 is correct; SEBI enforces a strict 24-hour timeline for intimating the market about KMP resignations.
Statement 2 is correct; mere notification is insufficient; the actual resignation letter must be uploaded.
Statement 3 is correct; the mandate explicitly covers top executives like the CFO, whose resignation is often a massive red flag for accounting irregularities.
Historical/Related Context: Historically, companies would hide executive departures for weeks or claim the CFO resigned for "health reasons" while internal investigations into fraud were ongoing.
In mid-2023, SEBI tightened the LODR rules to force immediate, transparent disclosures of senior management exits, fully enforcing it through 2025.
Causal Reasoning: Publishing the actual resignation letter prevents the company's PR department from sanitizing the narrative.
If a CFO resigns due to ethical conflicts with the promoters, the exact wording of their letter provides vital clues to the public shareholders.