"To build trust, we are reviewing Clause 36 of the listing agreement under which corporates have to disclose non-events. We found that disclosures are just fill in the blanks now. We have issued a discussion paper on Clause 36 so that investors get meaningful information," Sebi Whole-time member Prashant Saran said at a conference here.
Corporates would be required to disclose non-events such as loss of market share or technology obsolescence on a periodic basis (annually to start with) to shareholders through an exchange filing, Saran said.
"We have been reviewing Clause 36 of the listing agreement (for timeliness and adequacy) and have suggested that corporates disclose all material events in a manner such that investors will get a meaningful understanding."
Outlining the future of corporate disclosures, Saran said companies would have to incorporate such information in the annual information memorandum and periodically update the prospectus filed by them at the time of IPOs.
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This would provide secondary market investors with updated and vital information besides enabling companies to file for future capital raising in the form of rights or follow-on public offerings, he said.
Clause 36 requires a listed entity to disclose details of all events, which will have a bearing on its performance/ operations, as well as price sensitive information to stock exchanges immediately.
This usually consists of information on events like labour strikes, lock-outs, closure on account of power cuts among others.