Sebi tells bourses to ensure quality of disclosure

Put in place appropriate framework including adequate manpower to effectively monitor the adequacy and accuracy of the disclosures made by listed companies, said Sebi in its circular.

It further added that the stock exchanges should devise a framework to detect any non-compliance and mechanism to handle complaints linked to inadequate and inaccurate disclosure and non-compliance.

It has also asked the stock exchanges to submit an exception report with details of companies that do not respond to the clarifications sought by them and where the responses are not satisfactory. Sebi has directed the stock exchanges to begin with monitoring of top 500 listed companies by market capitalisation as on March 31,2013 fort he quarter ending Dec ember 31,2013.

Sebis move follows from the IMF report on assessment of Indias financial sector and pointed out that the recognised stock exchanges RSEs have not done enough to enforce compliance.

8230;Mechanisms to ensure compliance with listing obligations in India,which include periodic reporting,are a responsibility of the RSEs8230; .The information provided shows that the RSEs review periodic reports. However,such information for examples,the minutes of the committee on non-compliance leads to conclude that the RSEs have also not acted as vigorously as necessary in enforcing compliance by issuers with the listing/reporting conditions8230;, said the report.

Earlier,while speaking on the issue in New Delhi last month,Sebi chairman UK Sinha,said that there are examples where companies are either not disclosing at all or when they are disclosing then in those cases the information provided is not correct.

He said that Sebi will make it more and more onerous and make sure that quality of disclosure improves and if it does not improve then resultant actions will follow.

Action Points

The move follows an IMF report on assessment of Indias financial sector that pointed out that recognised stock exchanges have not done enough to enforce compliance

Securities and Exchange Board of India has asked stock exchanges to place the framework such as manpower and also mechanisms to monitor quality of disclosures

Sebi has also asked exchanges to submit reports where companies do not respond or the responses are not satisfactory