Sebi to mandate more disclosure from person acting in concert

The Securities and Exchange Board of India (Sebi) might soon require ‘persons acting in concert’ as defined in the exchange listing rules to disclose their Permanent Account Numbers. The move is part of new transparency standards to be included in these regulations.

These are part of the subjects before the Sebi board meeting the coming Wednesday. The listing agreement is currently a contract between a stock exchange and a company listing on it. Replacing the agreement with a regulation makes it more enforceable, Sebi chairman U K Sinha had said.

Sources in the know say the board will also discuss regulations for uniform disclosure of shareholding patterns, beside quarterly and annual results to prevent selective leakage of price-sensitive information.

REVAMP OF LISTING NORM

• Sebi to mandate uniform disclosure of quarterly and annual results
   
• Sebi to mandate a set format for filing of shareholding pattern
   
• PACs and promoters could be asked to disclose PAN details
   
• Sebi to make ‘non-event’ reportable

More disclosures from persons acting in concert and promoters would ensure more accountability towards their shareholders, it is felt. “Companies end up not disclosing losses or these are disguised in a way that is impossible for a retail investor to calculate,” said a source.

Proxy advisory firms and chartered accountants have observed instances of non-uniform disclosure. For example, if a company's earnings have fallen in a given quarter from that in the year before, the company sometimes gives year-to-date numbers, from which it becomes more difficult to calculate the earnings decline.

“There is no valid excuse for companies to have an asymmetry of information. Sebi’s stance is that there should be a uniform format and timely dissemination of information, to ensure the same information is available to all sets of investors at the same time,” said J N Gupta, managing director at Shareholders Empowerment Services, a proxy advisory firm.

On the shareholding pattern, there have been instances where the stake of Life Insurance Corporation (LIC), for instance, have been included by some companies as the stake of domestic insurance companies, while other listed entities have listed it under the stake of financial institutions.

Speaking on the sidelines of an event, Sebi member Prashant Saran stated the regulator was also revamping other parts of the listing agreement. “To build trust, we are reviewing Clause 36 of the agreement, under which corporates have to disclose non-events... (it was) just filling in the blanks till now. Under the new norms, corporates would be required to disclose non-events such as loss of market share or technology obsolescence on a periodic basis to shareholders through an exchange filing,” he said.

At a recent meet, V Sundaresan, chief general manager, Sebi, stated they were moving towards a rule-based environment. “Clause 36 currently, by and large, is still a principle…We found instances at stock exchanges that companies were not disclosing specifics about company events; the disclosure requirements were being met only in principle,” he said.