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Market regulator SEBI has directed stock exchanges to implement a framework to ascertain compliance with disclosures on shareholding pattern, price-sensitive information, financial results and compliance of corporate governance of the equity listing agreement.
If these indicative parameters are in place, it would make the quality of disclosures by companies more adequate and accurate, said SEBI in its circular on Monday.
Henceforth, exchanges need to deploy adequate manpower and devise a framework to detect violation of the listing agreement.
They have to put in place a mechanism for handling complaints related to inadequate and inaccurate disclosures treating them as non-compliance before proceeding against the violation.
Exchanges also have to submit an exception report to SEBI (within 45 days) on companies that do not respond to queries or provide unsatisfactory response.
They also have to ensure that details of the person responsible for the compliance of the listing agreement as also information of the default, in any, be put up on the exchange’s Web site.
Starting December 2013 quarter, exchanges have to monitor the quality of disclosures of the top 500 companies by market capitalisation.
Exchanges have to monitor changes in the names of the promoters, their shareholding, encumbered shares, persons holding more than the required percentage in public category and ensure whether the company has made the requisite disclosures in compliance with the Prohibition of Insider Trading and takeover regulations. Exchanges have to closely monitor disclosure of financial results and compliance with corporate governance norms for quality and substantive compliance.
To ensure price-sensitive information is not omitted, exchanges have to keep a tab on news updates on listed companies in the print and electronic media while scrutinising disclosures submitted to them.
Exchanges also have to follow up with listed companies for updates on material events reported, either on their own or on receipt of information from other sources.
The follow up has to continue until all the queries are fully addressed. If replies are still unsatisfactory action has to be taken as per SEBI’s standard operating procedure.
>raghavendrarao.k@thehindu.co.in
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