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SECURITIES AND EXCHANGE BOARD OF INDIA
SECONDARY MARKET DEPARTMENT
Mittal Court, A Wing, Gr. Floor,
224, Nariman Point, Mumbai 400 021
SMD/POLICY CIR-04/99
March 8, 1999
To:

The Executive Director / Managing Director
of all the Stock Exchanges

Sub: Amendment to the listing agreement- clause 32 and 41
  related to disclosure of status on Y2K preparedness

Dear Sir,

The Exchanges are advised to amend the Clause 32 and Clause 41 of the Listing Agreement related to quarterly and annual results to incorporate the brief status on the Y2K preparedness level disclosing the following :

  1. Companies State of readiness :
A company should describe its Year 2000 issues in sufficient detail to allow investors to fully understand and the challenges that it faces. A full description of a company’s disclosure should include the following three elements :
  1. The disclosure should include both the IT and non-IT systems.
  2. For both IT and non-IT systems companies should disclose where they are in the process of becoming ready for the year 2000. The status of the company’s progress, identified by phase, including the time-table for completion of each remaining phase, is vital information to investors and should be disclosed.
  3. Due to interdependence of computer systems the companies have to address the Year 2000 issues relating to third parties with whom they have a material relationship. Companies should disclose the nature of these material relationship, as well as the status of assessing third party risks.
  1. The Cost to Address the Company’s Year 2000 issues :
Companies must disclose material historical and estimated costs of remediation. This includes costs of directly related to fixing Year 2000 issues. In the worst case, the replacement cost of a non-compliant IT system should be disclosed as an estimated Year 2000 cost.
  1. The Risk to the Company due to Year 2000 bug
The companies should list the operations, processes, functions, which could be adversely affected due to the Year 2000 problem.
  1. The Company’s Contingency Plans
Companies should briefly disclose the contingency plans in the event of system breakdown/failure due to the Year 2000 problem.

The aforesaid amendments shall be made effective from the year ending December 31, 1998 or thereafter.

Yours faithfully,
 

P K BINDLISH
DIVISION CHIEF