Stock exchanges may soon issue guidance note on disclosures

The major stock exchanges in the country are likely to issue a detailed guidance note for companies on disclosures with the focus on clause 36 of the listing agreement.

"We are voluntarily coming out with a detailed guidance note targeting companies' compliance officers for making proper disclosures which are price sensitive," BSE GM, listing compliance, Khushro A Bulsara said in Mumbai on Friday on the sidelines of Assocham-organised CFO conclave.

"This step will help the compliance officers for better understanding on requirements of disclosures under the regulations," he said.

It had been found that non-disclosure was not always intentional but because of lack of understanding of importance of the information, Bulsara said.

The Securities and Exchange Board of India (SEBI) was also planning to streamline the disclosure rules under clause 36 properly and for that a discussion paper had also been circulated.

Bulsara said that since the last one year the quantum of compliance had jumped but the stringent rules were coming in the way of greater compliances by companies.

He said in the recent past, the SEBI had surveyed the bourses disclosure tracking system to ensure the stock exchanges' capability to chase the companies properly in case of non-disclosure.

Meanwhile, Deepak Narang, UBI ED, said on Friday that in most cases of defaults diversion of capital and use of debt as capital were the principal reasons for financial trouble.

"These created dual leverage. In a economic down swing, this led to defaults," the banker observed.