NSE issues guidance on disclosure norms

Norms pertain to disclosure of price sensitive information on events to ensure investors can take timely decisions

The National Stock Exchange (NSE) has issued a guidance note for its listing agreement disclosure norms. NSE, in a circular issued on Tuesday evening, has issued guidelines for companies to make public price sensitive information on events to ensure investors can take timely decisions.

“It is observed that, in the absence of any standard or guidance on fair disclosures for the appreciation/ assessment of the event by investors/ shareholders, companies are furnishing varying details in their disclosures for similar events. Such variations are not helpful to investors to set their expectations on the information content in the disclosures under Clause 36...,” said the circular. Clause 36 under the listing agreement requires listed companies to make disclosures regarding events that are price-sensitive in nature and could have an impact on the operations of the company. The qualification of such events as being price sensitive is to be determined by an authority within the company like the CEO or the board of directors or any such key managerial officials of the company.

“It may be noted that the onus of ensuring that the information disclosed to the exchange is duly authorised to be disclosed, as such, lies with the listed entity only and the exchange shall assume that any disclosure received has been duly authorised,” said the circular.

Further, companies will now have to disclose to the exchanges the rationale and benefits that arise from changes in the company’s business such as technical, marketing or financial, among others. In case of strikes and lock-outs, companies are now required to make disclosures on a real-time basis as opposed to a quarter-end report mandated earlier. The report submitted should include the reason for such strike and the impact on production, at the time of occurrence and periodically till situation is restored to normal.

Also, if a company’s operations are hit by natural calamities, such companies will have to submit detailed reports on the extent of the damage caused within 15 days of the event. Disclosure regarding litigations or disputes or any regulatory action with possible impact on the company’s operations could be subject to the company’s discretion on the extent of the impact.“If, listed entity is of the opinion that making any such disclosure is not in the interest of the listed entity, disclosure may be limited to the extent of stating the occurrence of the event,” the circular said.