The Securities and Exchange Board of India (SEBI) has extended the timeline for verification of market rumours to February 1, 2024, for the top 100 listed firms by market capitalisation and to August 1, 2024, for the top 250 listed entities.

The norms for the top 100 listed firms were supposed to be effective from October 1 this year, and those for the top 250 listed entities from April 1, 2024. This was part of the changes made to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, earlier this year and had received pushback from corporates.

New norms

As per the new norms, companies are required to confirm, deny, or clarify any reported events or information in mainstream media that are not general in nature and that indicate that rumours of an impending specific material event or information are circulating among the investing public. This is to be done no later than 24 hours from the reporting of the event or information. If the reported information is confirmed, the firm has to provide the current stage of such an event/information.

Jurisprudence in securities litigation has generally been in favour of companies choosing to remain silent in the face of rumours, according to a recent note by Vinod Kothari Consultants. Stock exchanges, however, have always maintained that companies have a duty to promptly notify the investing public of material news and developments, it said.

The essential principle was incorporated decades ago in a 1981 version of the NYSE Manual. The requirement of a “frank and explicit” response has remained in the NYSE rulebook ever since. Similar rules have been a part of the NASDAQ rulebook.

"The amendments in Reg 30 (11) are in line with global regulations. The introduction of the requirement for top-listed companies is only a precursor to widening its applicability in course of time,” the note said.