Sebi revamping listing agreement guidelines for greater enforcement, says UK Sinha

Securities and Exchange Board of India (Sebi) Chairman UK Sinha on Tuesday said the existing listing agreement guidelines are being revamped and will be made into listing regulations shortly.

Speaking on the sidelines at a Morgan Stanley event in Mumbai on Tuesday evening, the chairman said, the listing guidelines were being changed into listing regulations so that they have more force of law.

Sinha also said the capital market regulator was working on new guidelines in the fields of prevention of insider trading and delisting regulation. Sebi has been encouraging institutional investors, especially mutual funds, to have a voting policy and also disseminate their voting pattern on various resolutions on their websites, he said.

On proxy advisory firms, the chairman observed that they should avoid conflict of interest. "You will recall that there have been some advisory firms which have now come up in the country and they are playing an important role. In the new regulations, which have come up, we have also been careful to place some discipline so that these advisory firms avoid any conflict of interest," the chairman said.

Earlier in the day on Tuesday, addressing a mutual fund summit organised by MorningStar, Sebi's whole-time member Prashant Saran said the market watchdog was revamping the listing agreement in general, and Clause 36 in particular, to make it mandatory for corporates to disclose non-events for the benefit of investors/share-holders.

"To build trust, we are reviewing Clause 36 of the listing agreement under which corporates have to disclose non-events. We found that disclosure are just fill in the blanks now. We have issued a discussion paper on Clause 36 so that investors get meaningful information," Saran said.

Under the new norms, corporates would be required to disclose non-events such as loss of market share or technology obsolescence on a periodic basis (annually to start with) to share-holders through an exchange filing, Saran added.

The capital market regulator had issued the discussion paper on August 19, 2014 which is expected to be taken up during the next board meeting scheduled for November 19.

Clause 36 of the listing agreement requires a listed entity to disclose details of all events which will have a bearing on the performance/operations of the listed entity as well as price sensitive information to stock exchanges immediately. This usually consists of information on events like labour strikes, lock-outs, closure on account of power cuts among others.