Sebi to boost disclosure norms; do away with permanent board seats for individuals

New Delhi, To ensure more transparency and timely disclosure of material events by listed entities, Sebi on Wednesday decided to amend norms whereby a quantitative threshold will be introduced for determining the materiality of events. Besides, there will be a "stricter timeline for disclosure of material events/ information for which decision has been taken in the meeting of the board of directors (within 30 minutes) and which are emanating from within the listed entity (within 12 hours)," Sebi said in a release.

Also, the regulator has decided to do away with the practice of individuals having permanent seats on boards of listed companies.

These proposals were cleared by the board of Sebi during its meeting here on Wednesday.

"Market rumours to be verified and confirmed, denied or clarified, as the case may be, by top 100 listed entities by market capitalisation effective from October 1, 2023, and by top 250 listed entities with effect from April 1, 2024," the release said.

To bolster corporate governance at listed entities, the regulator said that periodic shareholders' approval will be required for any special right granted to a shareholder of a listed entity to address the issue of the perpetuity of special rights.

Periodic shareholders' nod will also be needed for any director serving on the board of a listed entity "to do away with the practice of permanent board seats".

Among others, the timeline for submission of the first financial results by newly-listed entities will be streamlined in order to overcome the challenges in the immediate submission of financial results post-listing and to ensure that there is no omission in the submission of financial results.

Sebi also said that listed entities will be required to fill up the vacancy of Directors, Compliance Officer, Chief Executive Officer and Chief Financial Officer within a period of three months from the date of such vacancy to ensure that such critical positions are not kept vacant.

In an effort to strengthen the investor grievance redressal mechanism in the securities market, Sebi has decided to operationalise the online dispute resolution mechanism for investors across registered intermediaries and regulated entities.

The move comes against the backdrop of an increase in investor participation in the securities market and the emergence of technology aided dispute resolution frameworks.

The Online Dispute Resolution (ODR) system would be extended to MII (Market Infrastructure Intermediaries) administered conciliation and arbitration mechanism to registered intermediaries, regulated entities and their investors and clients.

Besides, the proceedings would be conducted in a hybrid mode, the dispute resolution process will be streamlined and other measures will be adopted to strengthen the enforcement of awards, the release said.

Among others, the Issue of Capital and Disclosure Requirements (ICDR) regulations will be amended to increase transparency and streamline certain issue processes.

If underwriting for the shortfall in demand or to cover subscription risk is opted by the issuer, the same has to be disclosed in the offer document prior to the opening of the issue.

A listed entity can announce a bonus issue of shares, only after obtaining approval from the stock exchanges for listing and trading of all the pre-bonus securities issued by it. The bonus issue should be made only in dematerialised form, the release said.