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To:E.Ds / Presidents / M.Ds. of all Stock Exchanges

Apr 07, 1998
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Circulars

 SECURITIES AND EXCHANGE BOARD OF INDIA
SECONDARY MARKET DEPARTMENT
Mittal Court, A Wing, Gr. Floor,
224, Nariman Point, Mumbai 400 021

SMD/Policy/CIR-12/98
April 07, 1998

To,

The President/Executive Directors/Managing Directors-
of all the Stock Exchanges
 

Dear Sir,

SEBI had appointed a Committee under the chairmanship of Shri C B Bhave, to
suggest measures for improving the continuing disclosure standards by corporates and timely dissemination of price sensitive information to the public. The report of the Committee was submitted to SEBI. SEBI Board in its meeting held on March 27, 1998, inter alia, approved the proposal regarding implementation of the recommendations of the Committee. Accordingly, the following amendments to the Listing Agreement should be carried out by the Stock Exchanges.
 
 

  1. As per existing Clause 41 of the Listing Agreement, the company is required to furnish to the Stock Exchange and to publish un-audited financial results on half yearly basis. The clause may be modified to make these requirements quarterly.

    2.  

  2. Clause 43 of the Listing Agreement may be amended to provide for publishing by the companies which mobilise funds from the public through public/rights issues, the details of deployment of such funds on an half yearly basis instead of the yearly basis.

    3.  

  3. The un-audited results sent to the Stock Exchange and published in newspapers should be based on the same set of accounting policies as those followed in the previous year. In case, there are changes in the accounting policies, the results of previous year will be recast as per the present accounting policies, to make it comparable with current year results.

    4.  

  4. At present, the Clause 36 of the Listing Agreement requires the company to inform immediately to the Stock Exchange of events such as strike, power cuts, etc. This should be applicable for all events which will have bearing on the performance/operations of the company as well as price sensitive information. The material events may be event such as :
  • Change in the general character or nature of business

Without prejudice to the generality of Clause 29 of the Listing Agreement, the Issuer will promptly notify the Exchange of any material change in the general character or nature of its business where such change is brought about by the Issuer entering into or proposing to enter into any arrangement for technical, manufacturing, marketing or financial tie-up or by reason of the Issuer, selling or disposing of or agreeing to sell or dispose of any unit or division or by the Issuer, enlarging, restricting or closing the operations of any unit or division or proposing to enlarge, restrict or close the operations of any unit or division or otherwise.
 
 

  • Disruption of operations due to natural calamity

The issuer will soon after the occurrence of any natural calamity like earthquake, flood or fire disruptive of the operation of any one or more units of the Issuer keep the Exchange informed of the details of the damage caused to the unit thereby and whether the loss/damage has been covered by insurance, and without delay furnish to the Exchange an estimate of the loss in revenue or production arising therefrom, and the steps taken to restore normalcy, in order to enable the security holders and the public to appraise the position of the issue and to avoid the establishment of a false market in its securities.
 
 

  • Commencement of Commercial Production/Commercial Operations

The Issuer will promptly notify the Exchange the commencement of commercial/production or the commencement of commercial operations of any unit/division where revenue from the unit/division for a full year of production or operations is estimated to be not less than ten per cent of the revenues of the Issuer for the year.
 
 

  • Developments with respect to pricing/realisation arising out of change in the regulatory framework

The Issuer will promptly inform the Exchange of the developments with respect to pricing of or in realisation on its goods or services (which are subject to price or distribution, control/restriction by the Government or other statutory authorities, whether by way of quota, fixed rate of return, or otherwise) arising out of modification or change in Government’s or other authority’s policies provided the change can reasonably be expected to have a material impact on its present or future operations or its profitability.

  • Litigation/dispute with a material impact

The issuer will promptly after the event inform the Exchange of the developments with respect to any dispute in conciliation proceedings, litigation, assessment, adjudication or arbitration to which it is a party or the outcome of which can reasonably be expected to have a material impact on its present or future operations or its profitability or its profitability or financials.
 
 

  • Revision in Ratings

The Issuer will promptly notify the Exchange, the details of any rating or revision in rating assigned to any debt or equity instrument of the Issuer or to any fixed deposit programme or to any scheme or proposal of the Issuer involving mobilisation of funds whether in India or abroad provided the rating so assigned has been quoted, referred to, reported, relied upon or otherwise used by or on behalf of the Issuer.
 
 

  • Any other information having bearing on the operation/performance of the company as well as price sensitive information which includes but not restricted to ;
  1. Issue of any class of securities.

    2.  

  2. Acquisition, merger, de-merger, amalgamation, restructuring, scheme of arrangement, spin off of setting divisions of the company, etc.,
  3. Change in market lot of the companies shares, sub-division of equity shares of company.

    4.  
  4. Voluntary delisting by the company from the stock exchange(s).

    5.  
  5. Forfeiture of shares,

    6.  
  6. Any action which will result alteration in the terms regarding redemption/cancellation/retirement in whole or in part of any securities issued by the company.

    7.  
  7. Information regarding opening, closing of status of ADR, GDR or any other class of securities to be issued abroad,


     
  8. Cancellation of dividend/rights/bonus, etc.

The above information should be made public immediately.

The above amendments shall be effective for all the listed companies from the quarter ending June 1998 and the maximum period for publishing the above results by the companies shall be one month from the end of the quarter. In case, the company prefers to give audited results instead of unaudited results for the last quarter of the financial year of the company, then the company shall publish /submit the audited results within two months from the end of the last quarter of the financial year. This is a continuous disclosure requirement and so the companies should publish the quarterly statements even when the previous year results are not available during the intervening period.

 

You are advised to accordingly amend the listing agreement of the Exchange immediately and confirm it to SEBI.
 

Yours faithfully, 
  
O.P.GAHROTRA
SR. EXECUTIVE DIRECTOR