Stricter disclosure norms to take effect from Saturday: Sebi circular

The compliance burden for listed companies could grow multi-fold as the new framework around disclosure of material events and information will come into force from July 15.
 

The new disclosures cover a gamut of activities including disclosure of family arrangements, frauds, treaties with media companies, agreements within promoter groups, ratings revision, disposal of units and issuance of securities. 

Sebi’s board had approved changes to the Listing Obligations and Disclosure Requirements (LODR) Regulations in March. The latest circular issued by Sebi details the timelines for disclosures and other operational parameters.

For instance, if a listed company or its subsidiary has entered into any family arrangements or treaties with media companies, the company will have to share details such as names of parties with whom the agreement is entered, purpose of entering into the agreement and change in shareholding, if any, if the agreement is executed. Sebi has said companies will have to make such disclosures within 12 hours.

The timelines granted by Sebi for most disclosures range between 12 hours and 24 hours.

In case of fraud or defaults by a listed entity or its key managerial personnel, the listed firm will have to inform stock exchanges within 24 hours. Similarly, in case of initiation of forensic audit, the company will have to disclose to the exchanges within 12 hours if the initiation is by the company itself and within 24 hours if it is initiated by an external agency.

Legal experts said some of the disclosures will be applied retrospectively and companies may have to make public any special arrangements they have entered with their promoter group, private equity or a media company.

Sebi has said the objective of the new framework is to provide more transparency and to ensure timely disclosures. The move will help public shareholders in making informed decisions.