To safeguard investors' interest by bringing in greater transparency, leading stock exchange NSE has issued a framework that provides guidance to listed entities on making right disclosures.
A circular by NSE said last night that the framework comes up on observations that in the "absence of any standard or guidance on fair disclosures for the appreciation/ assessment of the event by investors, companies are furnishing varying details in their disclosures for similar events.
"Such variations are not helpful to investors to set their expectations on the information content in the disclosures".
The framework would also help companies make comprehensive disclosures relating to certain 'material' events to the stock exchange in prompt and accurate manner while also enabling the investors to make informed decision related to investments.
As mandated under current listing norms, entities are required to immediately inform the exchanges of all the events that have bearing on the performance and operations of the company as well as disclose price sensitive information.
Mandatory disclosures are required by firms in cases such as change in the general character or nature of the business, disruption of operations due to natural calamity, commencement of commercial production and commercial operations.
Besides, developments with respect to pricing/realisation arising out of change in the regulatory framework, litigation with a material impact, revision in ratings, are also required to be compulsory disclosed to the stock exchanges.
NSE has said that management of every listed entity would be required to appoint an authority which would take decisions on matters related to disclosures.
Such authority could be the company's board of directors, CEO, an operating committee of senior level executives or key managerial personnel, NSE said.
As per the exchange, the appointed authority would be required to take a view on the materiality of an event that qualifies for disclosure, decide the appropriate time for filing the disclosure, among others.
"It may be noted that the onus of ensuring that the information disclosed to the exchange is duly authorised to be disclosed as such, lies with the listed entity only and the exchange shall assume that any disclosure received has been duly authorised," NSE said.
Further, the bourse has asked the listed entities to make the disclosures to the exchange "promptly and accurately" and with due authorisation so that "present and potential investors are able to take informed decision relating to their investment in the listed entity".
While the disclosures by listed entities would be placed by the exchange on its website, the bourse could also seek further clarification if it finds the information inadequate.
All clarifications and communications received by the entities would be disseminated by the exchange on its website.
