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Stringent guidelines will soon be put in place to tackle the menace of non-submission or delayed submission of information by companies to bourses, said market regulator SEBI on Thursday.
The capital market regulator may confer more powers on the stock exchanges to deal firmly with the issue of poor quality disclosures by listed entities, U.K. Sinha, SEBI Chairman, indicated on the sidelines of a PHDCCI event here.
The new norms will be stringently enforced by the stock exchanges in order to bring erring companies to book.
Consecutive defaults may even result in suspension of trading of the securities of the company concerned.
SEBI’s talks with stock exchanges on the issue of improving the quality and timeliness of corporate disclosures are almost over, Sinha said.
More on the breach
“You will soon get to see the guidelines on improving the quality of disclosures,” he added.
Although listing agreement currently requires companies to disclose price-sensitive or material information to the bourses, this norm is followed more in the breach.
From the companies’ side, the quality of disclosures is often poor and sometimes no disclosures are made.
On their part, the stock exchanges, which are the first level regulators, don’t act against companies for the violations.
Currently, listed companies have to deal with two types of disclosures. One is the initial disclosures that are governed by the ICDR (Issue of Capital and Disclosure Requirements) Regulations, and the other the continuous disclosures governed under the listing agreement.
A listing agreement is a contract between a company and the stock exchange. But legal sanctity of an agreement is often seen to be lower than that of SEBI regulations.
So, the capital market regulator may look at redefining disclosures through the regulations route in the coming days, M.S. Sahoo, Secretary, Institute of Company Secretaries of India, told Business Line .
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