NEW DELHI: Markets regulator Sebi will soon put in place a ‘system-driven disclosure regime’ for the listed companies and their top officials to help improve its real-time monitoring of insider trading cases and other corporate governance related lapses.
The move is also aimed at reducing the compliance burden on the companies and the individuals, as the new system would use technology for automatic gathering and integration of information from all available sources.
Besides, Sebi is also reviewing the disclosure requirements in the Red Herring Prospectus filed by the companies before raising funds from the market, while it has already completed a review of IPO and other application forms, as per an internal memo submitted to the regulator’s board. Sebi said it has also observed that currently listed entities follow different standards of disclosures.
In order to provide a level playing field to investors by way of timely, adequate and accurate disclosures, Sebi has proposed to review the existing regulatory framework on continuous disclosures for listed entities.
“This is expected to enable the investors to make well informed investment decisions. Apart from dissemination of information on an ongoing basis, this would also result in better price discovery and reduce the likelihood of manipulation and insider trading in the market,” Sebi said.
Besides strengthening the monitoring of listed companies including implementation of Sebi norms for Corporate Governance, the regulator is also undertaking measures to create awareness amongst listed companies for ensuring better compliance culture.
To make use of technology, the concept of system driven disclosures seeks to disclose the changes in shareholding in a listed company by automatically gathering and integrating information from available sources in a timely and accurate manner.
“It is proposed that disclosures made under different regulations may be integrated to the extent possible so as to reduce the number of times the same disclosure is required to be made by an individual or a company.
“Such system-driven disclosures can significantly help in monitoring compliance on a real-time basis while reducing the burden of compliance on individuals,” the regulator said.
Earlier, Sebi had set up a committee for reviewing the disclosures and application form in public issues with an objective to revisit the adequacy and quality of disclosures made along with the application form (including prospectus and abridged prospectus).
The committee also looked into the review of the structure, design, format, contents and order of information from the point of ensuring that the materially important information is provided in a structured and user-friendly manner.