Sebi asks top 500 listed companies to adopt integrated reporting

To improve disclosure standards and help shareholders make an informed decision, markets regulator Securities and Exchange Board of India (Sebi) today asked top 500 listed companies to voluntarily adopt integrated reporting framework from next financial year.

Such reporting will indicate a concise communication about how an organisation's strategy, governance, performance and prospects create value over time.

The move is aimed at providing stakeholders relevant information that are useful for making investment decisions.

The decision has been taken in consultation with industry bodies and stock exchanges.

"Integrated Reporting may be adopted on a voluntary basis from the financial year 2017-18 by top 500 companies which are required to prepare BRR (business responsibility reports)," Sebi said in a circular.

The BRR is mandatory for top 500-listed entities based on market capitalisation at BSE and NSE. These are submitted by the companies along with annual reports and indicate, among others, the number of complaints related to child labour, forced labour, involuntary labour and sexual harassment during a financial year.

Sebi said that information related to integrated reporting should be provided in the annual report separately or by incorporating in 'Management Discussion & Analysis' or by preparing a separate report.

In case the firm has already provided the relevant information in any other report prepared, it should provide appropriate reference to the same in its integrated report so as to avoid duplication of information.

As a green initiative, the companies may host the integrated report on their website and provide appropriate reference to the same in their annual report, Sebi said.

The International Integrated Reporting Council (IIRC) has prescribed guiding principles which underpin the preparation of an integrated report, specifying the content of the report and how information is to be presented.

As per IIRC, an integrated report should provide insight into the firm's strategy and how it relates to the organisation's ability to create value in the short, medium and long term, and to its use of and effects on capital.

It should be concise and show a holistic picture of the combination, interrelatedness and dependencies between the factors that affect the firm's ability to create value over time.

The report should include all material matters, both positive and negative, in a balanced way and without material error. Also, it should disclose information about matters that substantively affect the organisation's ability to create value over the short, medium and long term.