India goes for stricter rules on results disclosure

Mumbai: The Securities and Exchange Board of India is tightening disclosure requirements for listed firms. Managements will now have to include a trailing quarter comparison when they report their financial results for the October-December period.

Corporate houses will also have to shorten the time period for submitting a limited review report after filing their unaudited financial results, thereby looking to plug a loophole that some companies have been exploiting.

In a circular issued today, the market regulator amended clause 41 of the listing agreement that companies sign with the bourses, which makes it mandatory for them to disclose figures of the immediately preceding quarter along with their current results. Listed entities also have been told to submit the last quarter results along with the audited annual results.

At present, companies compare performance in the relevant quarter against the year-ago period when they declare their financial results. However, many analysts have been tracking the sequential numbers since a comparison with the same quarter last year may not accurately reflect the correct picture as a lot can change in a year.

Sebi explained that by giving figures for the preceding quarter, investors could get a better comparative picture.

The market regulator also cracked down on tardy firms that submitted a limited review report long after filing their unaudited results. Sebi has said the limited review report must be filed along with the unaudited results.

In an initiative to usher in greater transparency, Sebi ruled that listed entities should disclose their voting results in a prescribed format to the exchanges within 48 hours from the conclusion of the shareholders’ meeting. This will initially be applicable to top 500 listed firms based on market capitalisation.