In a clampdown on the practice of media groups entering into share transactions in

RELATED ARTICLES Sebi asks firms to disclose details of utilisation of warrants Sebi to give MCA names of over 500 cos who violated CIS rules Sebi seeks external consultant for overhaul of role, structure Sebi opens new window for promoters to dilute stake Sebi imposes Rs 40 lakh penalty on four individuals

return for coverage or advertisements, the Securities and Exchange Board of India (Sebi) on Friday asked the former to make disclosures regarding stake held in the company on which it has come out with news report, article, editorial or advertisements.

The regulator said the guidelines for the media comes after it raised concerns the issue with Press Council of India its concerns on practice of many media groups entering into agreements, such as ‘Private Treaties’, with companies.

Typically, such arrangements are with companies which are listed or which proposes to come out with public offerings. These, in general, entail a company, giving stake in it (shares, warrants, bonds etc.) in return for media coverage through advertisements, news reports, advertorials etc. in the print or electronic media.

“It was felt that such agreements may give rise to conflict of interest and may, therefore, result in dilution of the independence of press. This may consequently compromise the nature, quality and content of the news/editorials relating to such companies,” a Sebi statement said.

“Needless to say, biased and motivated dissemination of information, guided by commercial considerations can potentially mislead investors in the securities market. Such journalism would not be in the interest of securities market.”

Sebi, the statement said, given its legal mandate to protect the interest of investors, felt that such brand building strategies of media groups, without appropriate and adequate disclosures may not be in the interest of investors and financial markets.

There are prescribed norms of Journalistic Conduct that require journalists to disclose any interest that they may have in the company about which they are reporting. However, there are no equivalent requirements in the case of media companies holding a stake in the company which is being reported /covered.

The regulations for media groups were finalised after Press Council of India, in its meeting held on February 22, 2010, accepted the suggestions of Sebi. The other strictures to be followed by the media group include

1) Disclosure on percentage of stake held by media groups in various companies under such 'Private Treaties' on the website of media groups should be made.

2) Any other disclosures relating to such agreements such as any nominee of the media group on the Board of Directors of the company, any management control or other details, which may be required to be disclosed, and which may be a potential conflict of interest for media group, should also be mandatorily disclosed.