Tighten disclosure monitoring, SEBI tells stock exchanges

The Securities & Exchange Board of India (SEBI) today directed the country's stock exchanges to beef up their surveillance systems to ensure that the disclosure standards of listed companies are ''accurate and adequate''.

The stock market regulator said this is aimed at ensuring complete and timely information to investors.

''The contents of the disclosures made by (some) companies are not adequate and accurate. Therefore investors are unable to take informed investment decisions based on such disclosures,'' SEBI said in a circular today.

''The current monitoring mechanism of stock exchanges to ascertain the adequacy and accuracy of disclosures made in compliance with the Listing Agreement need to be made more effective,'' it added.

A listing agreement is a contract between a stock exchange and a company. It comprises more than 50 clauses; dealing with corporate governance and information-based disclosures such as filing of results, shareholding data.

The regulator said it would allow the country's stock exchanges to set up a separate monitoring unit for corporate disclosures and report instances of non-compliance. SEBI also authorised the exchanges m to seek additional disclosures from listed companies if needed.

Listed companies in India are currently required to disclose details about their shareholding pattern, financial results and other market-moving information regularly, but enforcement has been lax.

SEBI chairman U K Sinha had said at an event in Delhi last week that he was unhappy with non-compliance with various clauses of listing agreements by large number of companies.

''You will be perhaps shocked to know that today there are 1,100 plus listed companies which are non-compliant for the requirement of clause 35 of the listing agreement ... and there are 900 companies which are non-compliant on the requirement of corporate governance- clause 49 … I am sure you will accept that this can't be allowed to go on,'' he had said.

SEBI today asked exchanges to treat inadequacy and inaccuracy of disclosures as non-compliance and submit an 'exception report' with details companies that don't respond on clarifications sought by exchanges.

It also asked the exchanges to provide details of promoters, directors and other key personnel who would be responsible for ensuring compliance at listed companies.