A recent circular from the Securities and Exchange Board of India (Sebi) asks stock exchanges to provide copies of annual reports on their websites. This comes on the back of the closure of its Electronic Data Information Filing and Retrieval Project (Edifar), which was loosely modelled on US Securities and Exchange Commission’s EDGAR (Electronic Data-gathering, Analysis and Retrieval) system, which involves electronic submission of key filings by firms. This included financial results, annual reports, shareholding patterns and announcements. But while SEC’s EDGAR is a good repository of information on listed firms, Edifar hadn’t taken off in India. Even when it was live, compliance among firms did not appear uniform—delays and absence of reports were common.
The Securities and Exchange Board of India (Sebi) decided to phase out Edifar because of the creation of a new portal, Corporate Filing and Dissemination System (CFDS), which was put in place jointly by the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). Under the listing agreement, companies don’t need to send their annual reports to stock exchanges, but they had to do so under Edifar. With that being phased out, Sebi has rightly mandated that they should now be sent to the stock exchanges.
But even while CFDS sounds like a good idea, more needs to be done to make it an equivalent of EDGAR. Currently, the CFDS portal hosts data in the same format that is visible on the BSE and NSE websites. Note here that both exchanges have different ways of displaying financial data, and so there isn’t uniformity.
A comprehensive set of guidelines covering all types of pertinent disclosures and their form and time limit of submission would help. There have been discussions on using new reporting formats that make it easier for investors to access the information, but little progress appears to have been made on that front.
The discretion available to companies to make disclosures, too, should be restricted. For example, some firms submit presentations and press releases made during results to stock exchanges, others don’t. Very few firms submit transcripts of conference calls with analysts. These result in the asymmetric availability of information to different classes of investors. While companies are keen on embracing a new set of global accounting standards, it seems unwilling to go the extra mile for disclosures.