Overhaul disclosure norms: Sebi panel

A sub-committee of the Securities and Exchange Board of india has suggested continuous disclosures by listed companies instead of the current practice of disclosures only at the time of issue of capital.

In a report on "Integrated Disclosures" put out for public comments, the Sub-committee on Integrated Disclosures (SCID) has said the areas of disclosures should include the history of the company, capital structure, business strategy, promoters and others. The disclosures relate to company information, excluding financial and accounting disclosures.

The report differentiates between company information and transaction information. Company information includes details about management, recent financial results, capital structure and is already available in the public domain.

Transaction information includes underwriting commissions paid, intended proceeds of capital raised, details of types of securities offered related to the particular issue of capital and is published in the prospectus.

"Under the proposed structure, there will be a need to strengthen the existing disclosure norms so that information which is sought only at the time of issue of capital becomes generally available not only to investors of new securities, but to the existing shareholders as well. As a result, full disclosures would be enjoyed by a larger class of investors and potential investors. At the same time, by avoiding duplication, issue costs would come down," said the report.

Consequently, the report recommends starting a process for companies issuing equity capital much like the process of "shelf registration" for raising capital through debt instruments, that provides for multiple issues of capital with a single prospectus.

Each additional tranche of securities needs only incremental disclosures and transaction details.