The Finance Ministry has notified new format of annual report for Securities & Exchange Board of India (SEBI).

Basic focus of reworking is re-arrangement of contents to be presented. Also, income and expenditure will be required to be part of annual report as against existing provision of presenting annual account statement separately. There is feeling that income and expenditure section will get more and more eyes considering recent spar between Government and the regular over transfer of surplus fund. However, official term the mentioning of accounts as routine exercise and they say effort is to bring more and more details in the annual report.

SEBI is the regulator of stock market, commodity market and mutual fund. Till now, Securities and Exchange Board of India (Annual Reports) 1994 necessitated submission of an annual report “giving a true and full account of its activities, policies and programmes during the previous financial year.” Now, new format will be defined under Securities and Exchange Board of India (Annual Report) Rules, 2021. There is no change in the intent and the timeline which says annual report has to be presented within 90 days after the end of each financial year.

New rule prescribes contents to be arranged in 13 chapters. First chapter review the year gone by, then highlight the performance and then looking forward. Second chapter will review existing financial market. Third chapter will have details about primary market while fourth chapter to focus on secondary market. Fifth chapter will be about fund management activity (Mutual Fund, Alternative Investment Funds, Collective Investment Schemes, Real Estate Investment Trusts and Infrastructure Investment Trusts).

Chapter six will give insight about Foreign Portfolio Investors and Foreign Venture Capital Investors. Chapter seven, eight and nine to deal with Credit Rating Agencies, Protection of Investor Interests and Technology respectively. Chapter ten would be very important as it will chart out all details about Regulatory Action, Supervision and Enforcement. This chapter will also discuss progress or impact assessment of the new regulations/rules introduced during last year, which is important to evaluate rules and regulations formulated during any year.

Chapter eleven (International Engagements) and chapter twelve (National Institute of Securities Market) are routine ones, while last chapter, dealing with organisational matters has one important section about income and expenditure of the regulator. It may be noted that unlike RBI, SEBI presents its annual statement of account separately from its annual report.

Old Format

As on now, SEBI, in its annual report, used to distribute entire content into four parts – Polices & Programmes, Trends & operations in the Securities Market, Functions of the SEBI with respect to matters assigned under the law & regulatory actions and Organizational Matters. Under the new format third part will be giving more and more details under various chapters while fourth part has new addition for accounts.

Though, officials downplay changes in the format by terming it as routine exercise. However, experts feel that timing to issue notification is the key. “A day after ‘requesting’ the regulator the withdraw its circular on a certain category of debt instruments, notification on re-formatting the annual report has deep meaning,” an expert said on the condition of anonymity while admitting that such decision do not happen overnight.

Published on March 13, 2021