Make price-sensitive disclosures early: Sebi

In a bid to disseminate price-sensitive information faster to investors, the Securities and Exchange Board of India...

In a bid to disseminate price-sensitive information faster to investors, the Securities and Exchange Board of India Sebi has proposed to curtail the gap of reporting such transactions to company and subsequently to stock exchange from nine days to two working days.

The Sebi proposal, if implemented, would make it necessary for a director, shareholder or officer having an access to market-sensitive information like allotment of shares or the acquisition or sale of shares among others, to disseminate the information to company and stock exchange within two days of the transactions as against the current practice of a total of nine days.

Sebi said price-sensitive information must be passed to company the next day of such transactions. After receiving the information, company would provide it to exchange the next day. 8220;In line with Sebi Substantial Acquisition of Shares and Takeover Regulations, 1997, it is proposed that the time gap between the date of transaction and the date of dissemination of information by the stock exchange may be reduced from nine days to two,8221; Sebi said.

Under the present regulations, the shareholder of a listed company is required to disclose to the company information regarding the shareholding or voting rights within four working days of receipt of intimation of allotment of shares or the acquisition or sale of shares etc. The company has to inform the exchange regarding the developments within five days.

This leads to a gap of nine days before price-sensitive information is disseminated to the public, the market regulator said, adding the rationale for the disclosure is diluted due to the time gap. The proposal envisages that all relevant information, having the potential of impacting the price of the shares of a company, is promptly disseminated to the market.

Disclosure of price-sensitive information is mandatory for any listed company under the Sebi Prohibition of Insider Trading Regulations, 1992. The directors or officials of the company, being insiders, have access to the unpublished price-sensitive information. The dealing in shares by major shareholders is price-sensitive information and therefore rules require that these entities disseminate information about their dealing in the shares of the company on crossing a certain threshold limit.