SEBI Proposes Changes In Listing Norms For Quicker Disclosure Of Financial Results

The market regulator proposed changes in its rules for quicker disclosure of financial results to investors.

The Securities and Exchange Board of India seeks to amend its listing regulations to bring down the time a listed entity takes to disclose the approval of its financials to stock exchanges, according to a consultation paper uploaded on the regulator's website. It has invited comments from stakeholders by Oct. 11.

Companies disclose approved financials to stock exchanges within 30 minutes after a board meeting ends. But in certain instances, board meetings may span for multiple days and investors get information after it ends.

For example, a listed company has 10 items to discuss in the board meet. Say the first one is on financial statements and is approved on the first day. The rest require extensive discussion. If the rest of the agenda takes two more days, the approval of financial results is disclosed along with the outcome of other agenda.

SEBI has now proposed that a listed entity will have to disclose financial results within 30 minutes from the conclusion of discussion on the agenda for approval of results, even if the board meeting hasn't concluded.

Other important proposals:

Continuing Compliance Requirements

Top 2,000 listed entities by market capitalisation are required to comply with additional or more stringent norms than the rest. Some compliances are:

• Top 100 listed entities have to hold an annual general meeting before five months from end of a financial year.
• Top 500 listed entities have to ensure that their chairperson meets the additional independence criteria.
• Top 2,000 listed entities are required to have at least six board directors. Similarly, one independent director should form part of each board meeting’s quorum.

According to SEBI, stock exchanges detected that such companies stop complying with the threshold-based compliances once they fall below the group of the top 100/500/2,000 entities . SEBI has now proposed that such companies will have to keep complying with additional compliances even if they no longer are part of the top entities.

Balancing Listing Rules With Companies Act

Another important proposal aims to harmonise the provisions of the company law with the Listing Obligation and Disclosure Requirements.

The criteria for independent directors under the Companies Act, 2013 is wider than the listing rules. For instance, the company law prohibits a wider range of transactions by independent directors with their relatives. The proposed change will make the criteria similar under both laws.

SEBI has also proposed changes in compliances related to consolidation of foreign subsidiary’s financials, corporate governance report and disclosures on beneficial ownership.