RELATED VIDEO
Sebi tightens corporate disclosure norms
MUMBAI: Capital market regulator Sebi on Monday tightened disclosure norms for listed companies after discovering that several firms were sidestepping rules by making inaccurate disclosures.
“Concerns have been raised that even though listed companies make disclosures to stock exchanges within the framework stipulated under the listing agreement, the contents of the disclosures made by such companies are not adequate and accurate,” Sebi said in a circular posted on its web site.
“Therefore, investors are unable to take informed investment decisions based on such disclosures.”
On Monday, ET broke the story about Sebi’s impending move on disclosures.
The regulator has empowered stock exchanges to make its current system more effective while monitoring disclosures made on shareholding pattern, financial results and on other price-sensitive information.
Sebi has asked exchanges to treat “inadequacy” and “inaccuracy” of disclosures as non-compliance and to take appropriate action, including imposing a fine on companies. Bourses will have to submit an exception report to the regulator apart from the existing reporting requirements with the details of companies which do not respond to clarifications sought by them.
“For capital markets, the only raw material is information which therefore has to be correct, complete and timely and should be made available to all shareholders at the same time,” said Prithvi Haldea, chairman of Prime Database.
“Sebi has now empowered stock exchanges and also put greater responsibility on them to improve the disclosure regime,” Haldea said.
Exchanges will have to compare corporate filings with the previous quarter, too, to ascertain if there is any change in shareholding pattern and pledged shares among others. They will also have to ensure that companies have not omitted any important information.
Sebi has put the onus on exchanges to follow-up with listed companies at every stage for the updates on material events reported. Exchanges will have to set up a separate monitoring cell to monitor the disclosures made by listed entities.