Sebi to keep earnings call information out of disclosure norms ambit

NEW DELHI: As it firmed up a stringent disclosure regime for listed companies, Sebi has decided not to make them disclose details about their earnings calls and future income prospects apprehending that such information would be prone to misuse.

To protect investor interest and prevent selective leak of market-sensitive information related to listed companies, the capital market watchdog would soon be coming out with stricter disclosure norms.

While an elaborate list of events are being brought under the disclosure norms ambit, Sebi has decided to keep disclosing details about earnings calls and future income prospects out of the same.

These events have been excluded on the grounds that disclosing details about them could be misused in the markets.

According to a Sebi document, disclosure for earnings call, prospects for future earnings or dividends and release of any projected profits of the group by issuers or their directors may not be considered as it would be prone to misuse.

Also, it would be difficult to fix onus or responsibility in case of discrepancies in projections from actual, it said.

A decision in this regard was approved by board of Securities and Exchange Board of India (Sebi) during its meeting on March 22 where it had approved various changes to the proposed Sebi (Listing Obligations and Disclosure Requirements) Regulations.

In some foreign jurisdictions, listed entities are required to disclose details about their earnings call.

Among the public comments received by Sebi with regard to disclosure norms, it was suggested that earnings call/ investor meet done by a listed company with investor groups should be compulsorily converted into a text transcript and updated to the exchanges within an hour.

The Primary Market Advisory Committee (PMAC) too was not in favour of the suggestion and the view was accepted by Sebi.

The regulator, meanwhile, has approved disclosures related to major market upheaval in the industries, countries or regions where the issuer has significant operations or transactions.

Besides, premature removal of auditors before end of their term in office and prompt reporting of cancellation of an agreement which was previously the subject of an announcement have been brought under disclosure norms.

Changes to accounting policy that may have a significant impact on the accounts, have also been included.

Sebi had received many public comments on its proposal to tighten disclosure norms for listed companies.

"The periodicity, volume, quality and depth of information disclosure is so high that companies would prefer to delist rather than be subject to such scrutiny that would impact their operations and greatly increase the cost of compliance without adding any real value to market information," one of the public comments had said.

It was also suggested that the list of events requiring disclosures should be "an indicative list and not in the form of deeming provisions".

Sebi has decided to tighten its corporate disclosure norms for listed companies, including by asking them to disclose board decisions within 30 minutes and details of other 'material' developments within 24 hours as well as provide for stricter penal actions for non-compliance.