In order to bring more transparency and to ensure timely disclosure of material events or information by listed entities, market regulator Securities and Exchange Board of India (SEBI) on Wednesday, March 29, introduced new regulations.

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Bringing amendments to the Listing Obligations and Disclosure Requirements (LODR) regulations, SEBI introduced the concept of quantitative threshold for considering materiality of events/information.

Given below is what SEBI feels should be the threshold for considering materiality of events/information.

Materiality threshold:

Expected impact in terms of value exceeds the lower of the following:

2 percent of turnover, as per the last audited standalone financial statements of the listed entity

2 percent of net worth, as per the last audited standalone financial statements of the listed entity

5 percent of three-year average of absolute value of profit/loss after tax, as per the last three audited standalone financial statements of the listed entity.

The watchdog said market rumours have to be verified and confirmed, denied, or clarified by the top 100 listed entities by market capitalisation, effective from October 1, 2023, and by the top 250 listed entities from April 1, 2024.

Also, SEBI said there must be a stricter timeline for disclosure of material events or information for which a 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).

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It also approved a regulatory framework to allow private equity funds to become sponsors of mutual funds, a move that will help further deepen the mutual fund industry. Besides, the regulator has given its nod for norms for environmental, social and governance (ESG) disclosures by listed companies.

According to a release issued after the board meeting, SEBI said it has decided to end the practice of individuals having permanent seats at boards of listed companies. The move is part of efforts to further boost the corporate governance ecosystem.

SEBI will introduce a fund-blocking facility for secondary market transactions like being done for initial public offerings (IPOs). The measure is aimed at safeguarding investors' money from misuse by stock brokers. The regulator will also put in place a formal mechanism to prevent frauds and market abuse by stock brokers.

(Edited by : Shoma Bhattacharjee)

First Published:Mar 29, 2023 7:05 PM IST