Sebi notifies disclosure norms; top 100 listed firms to confirm or deny market rumour from Oct 1
June 15, 2023
Sebi notifies disclosure norms, and asks top 100 listed companies by market capitalisation to confirm, deny or clarify any market rumour reported in the mainstream media from October 1, 2023
The Indian market regulator Sebi Thursday said that it has notified the disclosure norms and asked the top 100 listed companies by market capitalisation to confirm, deny or clarify any market rumour reported in the mainstream media from October 1, 2023. For the top 250 listed entities, the new disclosure norms will kick in from April 1, 2024.
The Sebi said these companies will have to "confirm, deny or clarify any reported event or information in the mainstream media which is not general in nature and which indicates that rumours of an impending specific material event" are circulating amongst the investing public, within 24 hours from the reporting of the information.
The market regulator said the material events or information which emanate from the listed entity, including those related to acquisitions, scheme of arrangement, consolidation of shares, and buyback of securities, the timeline for disclosure by the entity has been reduced from 24 hours to 12 hours.
In case of information that emanates from a decision taken in a meeting of the board of directors, the disclosure should be made within 30 minutes from the closure of such meeting.
The Sebi further said the listed companies will have to disclose fraud and defaults by directors or senior management as specified material information for investors. Listed entities have been asked to disclose default in payment of fines, penalties, and dues to any regulatory, statutory, enforcement, or judicial authority, the notification added.
To strengthen the corporate governance at listed entities, Sebi said any special right granted to the shareholders of a listed entity will be subject to the approval of the shareholders in a general meeting by way of a special resolution once every five years starting from the date of grant of such special right.
Sebi noted that shareholders' agreements are drafted in such a way that those special rights (nomination rights) would continue to be available even after significant dilution of their holding in those entities. This permits the shareholders to enjoy such special rights perpetually, which is against the principle of rights being proportional to one's holding in a company.
The regulator said that all directors appointed to the board of a listed entity need to go through a periodic shareholders' approval process, thereby providing legitimacy to the director to continue to serve on the board.
"With effect from April 1, 2024, the continuation of a director serving on the board of directors of a listed entity shall be subject to the approval by the shareholders in a general meeting at least in once every five years from the date of their appointment or reappointment, as the case may be," Sebi said.
Sebi asked listed entities to make disclosures in relation to cybersecurity incidents, cybersecurity breaches, or loss of data and documents in the quarterly corporate governance report.
Sebi said that any vacancy in the office of Chief Executive Officer, Managing Director, and Whole Time Director needs to be filled within three months from the date of such vacancy.
[Mint]
