Home >Market >Stock-market-news >Sebi tells listed firms to provide annual information memorandum

Mumbai: The Securities and Exchange Board of India (Sebi) on Tuesday asked all listed companies to prepare documents with all relevant information about them every year so investors can make better decisions about transacting in their shares.

These documents, to be known as annual information memorandum (AIM) will be in addition to the annual reports that companies have to issue with details on their earnings and balance sheets.

Sebi said the annual reports often do not carry enough disclosures and several important facts about a company are scattered at different places at different times, which makes it difficult for investors to have a clear knowledge about the company.

“Listed companies in India are required to make submissions with various authorities, viz. stock exchange, Registrar of Companies, regulators, etc. The frequency of such submissions is stipulated by the relevant legislation and can be annual, half yearly, quarterly, event based, etc. While listed companies in India make such submissions, there is no availability of a comprehensive information memorandum about the company which would enable investors to obtain all relevant information at one place," Sebi said in a circular.

Material events after listing that are disclosed to the public are available across a large time span and investors may find it difficult to access all relevant information for the purpose of making an informed investment decision, Sebi said.

The regulator said that while an investor in a primary market has all the information relevant to investment decision-making at one place in the form of an offer document, an investor in the secondary market would have to sift through various disclosures made over time to aggregate the information required for deciding on investing in a company’s shares.

AIM will provide shareholders and prospective shareholders with accurate and relevant information about the financial and operating performance of the company. Such a document will be comprehensive in nature and will include corporate governance and business responsibility reports and related party disclosures.

Once companies include such details in AIMs, their annual reports could limit their scope only to details required under the Companies Act, which will consequently reduce costs as AIM will be required to be filed in electronic format.

Sebi proposed that listed companies prepare AIM on a yearly basis and disseminate these within 135 days from the end of every fiscal.

The report, after being approved by the company’s board of directors, will be disseminated electronically on the company’s website and on stock exchanges, Sebi proposed.

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