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Capital markets regulator SEBI has tightened the disclosure norms for listed companies with strict timelines and introduced criteria for determining the materiality of events.
The new framework will come into effect from July 15, said Sebi in a circular on Thursday. .
Under the framework, the regulator asked listed companies to disclose family settlement agreements, which can impact the management and control of such firms to stock exchanges. These agreements must be disclosed in 12 hours if a listed entity is a party and in 24 hours if the listed entity is not a party.
Further, for 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.
For information from a decision taken in a board meeting, the disclosure must be made within 30 minutes from the closure of such meeting.
Besides, the timelines have been fixed 24 hours from the occurrence of the event in case the information is not emanating from within the listed entity. This included a revision in rating, fraud or defaults by a listed entity, its promoter, directors; restructuring in relation to loans from banks, one-time settlement with a bank and winding-up petition filed by any party/creditors.
About criteria for determining the materiality of events, SEBI said that one of the criteria is the omission of an event, whose value or the expected impact in terms of value, exceeds the lower of 2 per cent of turnover, or 2 per cent of net worth as per the last audited consolidated financial statements or 5 per cent of the average of absolute value of profit or loss after tax, as per the last three audited consolidated financial statements of the listed entity.
On guidance for disclosures under the LODR (Listing of Obligations and Disclosure Requirements) rules, SEBI said for events such as the decision on declaration of dividends the disclosure would be made on receipt of board of directors approval.
In case in-principle approval or nod to explore (which is not final approval) is given by the company’s board, the same would not require disclosure, it said.
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