SEBI _ Proposing to redifine the information flow ( Corporate to Market )

In order to ensure fairness and efficiency in the market, two factors generally apply :

(a) Timely disclosure of relevant information by listed companies to investors and

(b) Adequacy of the information disclosed. Thus, ‘timely and adequate’ disclosure is one of the defining
     characteristic of efficient securities markets across the globe.

To this end, SEBI has released  discussion paper on 19th August 2014 & seeks to review the continuous disclosure regime for listed companies in India and provide appropriate regulatory framework to assist listed entities to understand and comply with their disclosure obligations under Equity Listing Agreement / Regulations (proposed).

Presently Clause 36,of listing agreement  in its present form, requires a listed entity to disclose to Stock Exchange(s), details of all events which will have bearing on the performance/operations of the listed entity as well as 'price sensitive information'.

While in general, the company is required to keep the Stock Exchange(s) informed of events such as strikes, lock-outs, closure on account of power cuts etc., and seven more indicative events

These disclosures were mandated on listed entities to enable the shareholders and the public to be appraised of the position of the Company and to avoid the establishment of a false market in its securities.

Disclosures made by listed entities under Clause 36 and other related clauses over a period has brought out disparities in disclosures across listed entities and Stock Exchange(s), leading to unequal information being available with the investors.

Further, the material information disseminated by listed entities through various modes is, at times, not notified to the Stock Exchange(s). One of the reason for such disparity appears to be lack of sufficient clarity on 'materiality' and ‘price sensitive information'

Comments to the discussion paper has to be given by 12th September 2014