SEBI likely to fine-tune disclosure norms soon

Capital markets regulator Sebi is understood to be looking at better disclosures by companies after recent episodes where material information was not made available to exchanges and, in some instances, where developments reported to the bourses did not take place. The regulator is believed to be taking a relook at the regulations under the Listing Obligations and Disclosure Requirements (LODR) and is understood to be working on guidelines that clearly define material and non-material events. BSE MD and CEO Ashishkumar Chauhan confirmed that discussions were on at various levels between the regulator, the government and the exchanges on the proposed nature, timing and the mode of disclosures. “There is a debate about what to disclose because any person can write anything. If you don’t disclose it’s a problem, if you disclose it’s even more of a problem. Because of social media, you tend to have consequences which are unintended,” he said. Discussions between the Securities and Exchange Board of India (Sebi) and the exchanges began shortly after Infosys last year did not disclose to exchanges that it had received whistleblower complaints. In response to queries from the exchanges, Infosys had said “Before conclusion of the investigation of the generalised allegations in the complaints, a disclosure under Regulation 30 of LODR Regulations was not required. The disclosure made on October 22, 2019, was to respond to multiple media inquiries and reports”. It has been learnt the proposed changes have been discussed at Sebi’s Primary Market Advisory Committee (PMAC) and Secondary Market Advisory Committee (SMAC). The Corporate Governance Report, submitted to Sebi by Uday Kotak in October 2017, says “high-quality information represents the basic input for governance because it reduces the twin problems of reliability and asymmetric information, which refer to the fact that professional managers, board members and auditors possess significantly greater information than the average investor in these companies”. —FE