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Sebi directive: Disclosure norms tightened for firms

Sebi directive: Disclosure norms tightened for firms
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First Published: Wed, Jul 11 2007. 01 05 AM IST
Updated: Wed, Jul 11 2007. 01 05 AM IST
Stock market regulator Securities and Exchange Board of India (Sebi) has tightened disclosure norms for listed firms by asking them to file a copy of their quarterly and annual financial results within a month of the end of the quarter or year. Currently, they can file it within two months.
This change, and others that simplify disclosure norms for firms even as they try to serve investor interests, are part of the amendments made by Sebi to Clause 41 of the Equity Listing Agreement that firms enter into with stock exchanges on which their stock is listed.
The amended clause retains a provision of the original Clause 41 that allows firms furnishing unaudited financial results to change these numbers by filing a limited review report within two months from the end of the quarter or year. But the extent to which firms can fine-tune these numbers has been curtailed. Previously, they were asked to provide an explanation to the exchanges only if the variation between the unaudited and audited results was 20% or higher. The revised clause requires explanations if the variation is higher than 10% or Rs10 lakh, whichever is higher, on net profit or loss, and on exceptional and extraordinary items.
Apart from ensuring that investors get to know results sooner, the amendments ensure that firms do not make huge changes while fine-tuning their unaudited results as some have been known to do.
“The revised Clause 41 of the Equity Listing Agreement shall come into force for all filings made to stock exchanges in respect of accounting periods commencing on or after 1 July 2007,” Sebi said in a communication to all stock exchanges.
Sebi has also given an option to firms with subsidiaries and that file both standalone and consolidated results to publish either one, subject to the condition that a choice once exercised would not be changed during the year. Sebi has also clarified that in case the firm changes its option in any subsequent fiscal, it would have to furnish comparative figures for the previous fiscal year in accordance with the option exercised for the current year.
On Tuesday, the regulator also amended certain provisions of the Sebi (Disclosure and Investor Protection) Guidelines, 2000. These govern the draft offer documents filed by companies wishing to sell shares. The amendments make it easier for government companies and special purpose vehicles set up by them that are in the infrastructure sector to raise funds. The specific amendments have to do with a relaxation in promoter contribution and lock-in period.
(PTI contributed to this story.)
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First Published: Wed, Jul 11 2007. 01 05 AM IST
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