SEBI Chairman Ajay Tyagi on Wednesday flagged the lack of adequate disclosures by listed companies.

Speaking at the annual capital markets conference, organised by the Federation of Indian Chambers of Commerce and Industry, Tyagi said that many companies were treating the disclosure requirements just as a check-box exercise in their annual reports and their disclosures with regard to material events were inadequate.

Disclosures, or the lack of it, can move share prices sharply. It is a process of making facts or information known to the public or shareholders. Every other company has at some stage dismissed the disclosure of vital information to the stock exchanges and public by terming it immaterial, he said.

Concern over quality of info

Tyagi also expressed concern over the quality of information companies are giving out.

“Documents as important as the financial results, annual reports, corporate governance reports need the level of quality the investors deserve. In many cases, they appear more like a check-box exercise. This is not acceptable,” he said.

“In several cases, articles appear in the media which are followed by stock exchanges seeking clarification on the same from the companies and the companies then replying to the exchanges. This is surely not the right way,” Tyagi said, urging companies to be more proactive.

Tyagi said SEBI was working on the shift from the ‘promoter’ to a ‘controlling shareholder’ regime for listed companies. “SEBI had issued a consultation paper some time back seeking comments on whether there is a need for such shift and, if yes, the manner and timeframe for such a move. With almost all corporate-related laws based on the promoter concept, I need not emphasise how important this proposal is. We are analysing the feedback for taking an appropriate view,” added Tyagi.

Framework for SPACs

SEBI is also deliberating on a SPACs (Special Purpose Acquisition Companies) framework. They have no commercial operations but are formed only to raise capital through initial public offerings. In the US, SPAC listings are gaining traction and it was recently allowed in Gujarat International Finance Tec-City, which is an offshore trading platform. “SEBI’s Primary Market Advisory Committee is deliberating on whether a framework for SPACs should be introduced and, if yes, given certain concerns being raised on such vehicles, with what safeguards,” he said.

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