Defaulting on debt and disclosures

Sebi circular of August 4 asking corporations to disclose delays/defaults addresses number of issues

Sebi, for long, focussed on principles-based regulations. In the same spirit, its Listing Obligations and Disclosure Requirements Regulations of 2016 expected companies to disclose material information and events to the stock exchanges. While not being over-prescriptive, this was expected to mean:
 

• The omission of information which is likely to result in discontinuity or alteration of event or information already available publicly;
• The omission of information which is likely to result in significant market reaction if the said omission came to light at a later date.

 At the risk of exaggerating, companies have taken “material” to mean being expeditious in reporting purchase orders