The refusal by United Spirits to make its internal report available to the BSE and the NSE for public dissemination has evoked mixed reactions from experts.

Shriram Subramanian, Founder and MD, Ingovern, a proxy advisory firm, said, “Companies are within their rights not to publicly share an internal enquiry report. However, the exchange can ask for a gist or synopsis that impacts shareholders. Exchanges can take up the issue with the regulator SEBI.

Exchanges and SEBI have the power to summon the executives of the company to get a deeper understanding and to get satisfied that there is minimal impact on minority shareholders.”

USL had declined access to the document citing reasons such as confidentiality, sensitivity, potential interference with the investigations besides a possible misuse of evidence.

Another school of thought feels that refusal to furnish information may amount to non-compliance with the listing agreement.

Obligatory under Clause 36 Tejesh Chitlangi, Partner IC Legal, said “Under Clause 36 of the Equity Listing Agreement, a company has to disclose any information having a bearing on its performance/ operations as well as price sensitive information, to the stock exchange. Additionally, the exchange also has a right to call for any other information concerning the company, which it may reasonably require.”

“However, where the company believes that a disclosure might be detrimental to its interest, a special submission to that effect may be made to the exchange while furnishing the information. Hence, refusal to submit information may tantamount to non-compliance with the listing agreement and other applicable SEBI laws,” he added.

The internal report submitted to USL’s auditors contains details on the manner in which certain transactions were conducted. Prima facie, it indicates various improprieties and legal violations. As the USL board was not in a position to determine the roles of any individuals involved, it directed the company to report such transactions to the authorities as required under law.

The announcement mentioned that the diverted amounts in connection with the receivables, advances and deposits owed to the company had already been included in the provision made by USL in its financial statements for FY14.

All of the dues owed to the company from United Breweries (Holdings) (UBHL) aggregating ₹1,337 crore were consolidated into a single loan agreement dated July 3, 2013, entered into between the USL and UBHL.

Any further implications of the contents of the internal report on the accounts of USL will be duly examined by the auditors and incorporated in the financial statements for FY15. Pending finalisation and publication of the audited accounts, it would be premature for any further public disclosures to be made in this regard, USL stated.

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