The Securities and Exchange Board of India (Sebi) is planning to ask companies to make more disclosures at the group company or conglomerate level, including on financial transactions involving unlisted entities.
In its annual report released on Monday, Sebi said group-level disclosures could be made mandatory around cross holdings where one publicly traded company owns stock in another.
Sebi said it plans to harmonise disclosures made for the purpose of public offers and continuous disclosure requirements.
“While listed entities are subject to comprehensive disclosure requirements, the same levels of disclosure requirements are not applicable to unlisted companies. Therefore, there is a need to identify, monitor and manage the risks introduced into the securities market ecosystem by unlisted companies in a conglomerate with a complex set of listed and unlisted associates,” Sebi said.
The plan is to facilitate transparency around the conglomerate by enhancing the group-level reporting of transactions.
The move is part of the regulator’s broader plan to review and standardise disclosures. Last month, Sebi tightened the disclosure norms for listed companies with strict timelines and introduced criteria to determine the materiality of events. The new framework came into effect on July 15. Under this, the regulator has asked listed companies to disclose family settlement agreements, which can impact the management and control of such firms, to stock exchanges. These agreements must be disclosed in 12 hours if a listed entity is a party and in 24 hours if it is not.
Further, for material events or information which emanates from the listed entity, including that related to acquisitions, scheme of arrangement, consolidation of shares and buyback of securities, the timeline for disclosure has been reduced from 24 hours to 12 hours.
For information on a decision taken in a board meeting, the disclosure must be made within 30 minutes of the closure of the meeting.
Eligibility norms for stocks in derivatives to be reviewed
Sebi plans to review the eligibility criteria for the introduction and continuation of stocks in the derivatives segment. The last review of the eligibility criteria for introduction of stocks in derivatives was done in 2018. According to the regulator, since then, broad market parameters reflecting the size, liquidity of the cash market, market capitalisation and turnover have “changed considerably”.