SEBI has defined two methods to determine materiality of information — quantitative and qualitative.
Under quantitative criteria it said information where the value involved or the impact exceeds the lower of 5 per cent of revenue or 20 per cent of net worth, would be considered material.
The qualitative criteria means omission of which would result in significant market reaction if the information came to light at a later date. If the company board considers the information material, it should be disclosed.
SEBI has also laid down norms to identify price sensitive information. This includes any information which relates directly or indirectly to a listed entity and which, if published, is likely to materially affect the price of shares. Also, information, that could be used by investors need to be disclosed if the board of directors considers the event/ information as price sensitive.
The indicative list of events/ information include commencement or any postponement of commercial production; change in the nature of business; adoption of new lines of business; closure of operations; M&As ; capacity additions; product launches; new contracts; JVs; public issues; buybacks; corporate actions; strikes and lockouts, litigations; revision in ratings; and frauds/defaults by directors, employees or agents.
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