Companies 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.

Yearly memo, updates Outlining the future of corporate disclosures at an event in Mumbai on Tuesday, Prashant Saran, Whole-Time Member of the Securities and Exchange Board of India (SEBI), 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 their initial public offerings.

This, Saran said, would provide secondary market investors with updated information besides enabling companies to file for future capital raising in the form of rights or further public offerings.

“Right now, the imperative is to build trust, as a lot of trust has been lost in the last decade. We have to build it assiduously. We have been reviewing the 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,” said Saran.

The Clause 36 of the equity listing agreement requires a listed entity to disclose details of all events, which will have a bearing on the performance/ operations of the listed entity, as well as price sensitive information to stock exchanges immediately. This usually consists of information on events such as strikes, lockouts, closure on account of power cuts and the like.

SEBI’s discussion paper dated August 19, 2014, is expected to be taken up during the next board meeting likely to be held this month.

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