SEBI issues consultation paper on disclosure requirements for listed firms

SEBI issues consultation paper on disclosure requirements for listed firms

The Securities Exchange Board of India (SEBI) released a consultation paper on streamlining disclosure requirements by listed entities.

This development comes after SEBI received representations regarding challenges faced by the newly-listed entities immediately after their listing and about the gap in the current regulatory provisions for ensuring timely disclosure of the first financial results of such newly-listed entities.

"Listed entity, post listing, shall submit its first financial results, quarterly or annually as the case may be, immediately succeeding to the periods for which financial statements were disclosed in its offer document for the initial public offer, as per the timeline indicated... as applicable, or within 15 days from the date of listing, whichever is later," SEBI proposed.

SEBI by its consultation paper, seeks to address the challenges faced with regard to submission of the financial result for the first time by newly listed firms and related to timeline to fill up vacancy of directors, Compliance Officer, Chief Executive Officer (CEO) and Chief Financial Officer (CFO) in listed entities.

Further, it seeks to address the issue of freezing of DEMAT accounts of the Managing Director, Whole-time director, and CEO of a listed entity for continuing non-compliance with the Listing Obligations and Disclosure Requirement Regulations (LODR Regulations) or non-payment of fines by a listed entity.

A DEMAT or dematerialization account helps investors hold shares and securities in an electronic format.

SEBI proposed "that the DEMAT accounts MD(s) / WTD(s) / CEO(s) who resign from a non-compliant entity shall be unfrozen after the listed entity complies with the applicable provisions of the LODR Regulations and / or pays the outstanding fines, or on the 90th day from the date of getting relieved from the company, whichever is earlier. The new MD / WTD / CEO shall be given 90 days' time from the date of assuming charge to ensure the listed entity's compliance with the applicable provisions and payment of outstanding fines, failing which their DEMAT account(s) shall be frozen. The same shall be incorporated in the SoP circular."

Explaining the need for the amendments, it said the timeline prescribed for submission of financial results may at times be difficult.

"Since the financial results are price sensitive information, such disclosures immediately post listing may have a large impact on the company's share price even before the price of its scrip has stabilized post listing," it said.

In its paper, the SEBI said it is also seeking to address issues related to timelines to fill up vacancies of directors, Compliance Officers, Chief Executive Officers (CEO), and Chief Financial Officer (CFO) in listed entities.

The regulator has sought comments from public till 6th March on the proposals.