Sebi for stricter disclosure norms, consults global models

With an aim to preventing insider trading, capital markets regulator Sebi is looking at

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regulations in overseas markets to tighten disclosure norms for the listed companies and other market entities in India.

While Sebi has recently announced various additional disclosures required to be made by listed firms and intermediaries like brokers, investment bankers and mutual funds, it is looking at stricter norms for compliance, as also further necessary details required to be made public.

In this regard, the Securities and Exchange Board of India (Sebi) is looking at regulations in various countries, including major Asian financial markets like Singapore and Hong Kong, to fine-tune its own disclosure norms, a senior official said.

Sebi might find regulations within Asian markets more relevant for disclosures to be made by market intermediaries, although norms similar to those in Western countries like the US and UK could be considered when it comes to disclosures regarding 'price sensitive information' by listed companies.

The steps are being taken amid a growing trend of companies announcing some key business developments outside the regulatory framework, while many companies also failing to make the routine disclosures like quarterly results, board meeting announcements and shareholding patterns in time.

The existing norms provide for largely a generic set of disclosure requirements for listed companies and are contained in the 'Listing Agreement' they sign with the stock exchanges.

The Listing Agreement has six categories of 'price sensitive information' required to be disclosed by companies, while there is also a category of 'any other information' having a bearing on their operations and share prices.

In the recent months, Sebi had already asked companies to file a 'business responsibility report' every year, while disclosures have been tightened for audit observations made on their accounts as well.

Besides, Sebi had also sought additional disclosures from the mutual funds and investment bankers, including those about their track records.

Sebi has developed quite an advanced surveillance and investigation system, which many foreign regulators are also looking to emulate and it now wants to make its disclosure regulations as well among the best in the world, the official said.

Sebi is of the view that a strong disclosure regime also helps in developing an equity culture in the country as the investor confidence tends to improve in a better-regulated market environment, besides working as a check on possible market manipulative activities, he added.

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