Regulations
Companies must disclose price-sensitive info to bourses first: SEBI

The market regulator said it noticed certain listed companies giving monthly disclosure of their sales,  turnover and production figures to their respective trade bodies and the same is not disclosed to the bourses

Mumbai: Listed companies will now have to necessarily disclose all price-sensitive information, including monthly sales figures, to bourses first, market regulator Securities and Exchange Board of India (SEBI) said, reports PTI.

 

"...all the events or material information which will have a bearing on the performance/ operations of the company as well as price sensitive information shall be first disseminated to the bourse as required under Clause 36 of the Listing Agreement," SEBI said in a circular.

 

The regulator said it has noticed certain listed companies giving monthly disclosure of their sales / turnover / production figures to their respective trade bodies and the same is not disclosed to the bourses.

 

The information considered to be 'price sensitive' as per the guidelines include, any change in nature of business, disruptions due to natural calamity, commencement of commercial operations, developments arising out of change in regulatory framework, litigation or disputes having a material impact and revision in credit ratings.

 

SEBI also advised stock exchanges to take into account the requirements of the circular and bring the same to the notice of the listed companies.

 

As per the clause 36 of the Agreement, listed firms are required to the concerned bourses immediately of events such as strikes, lock outs, closure on account of power cuts and all events which would have a bearing on the performance as well as prices. This has to be done both at the time of occurrence of the event and subsequently after the cessation of the event.

 

The announcements are necessary in order to enable the security holders and the public to "appraise the position of the the company and to avoid the establishment of a false market in its securities."

 

"In addition, the issuer will furnish to exchange on request such information concerning the Issuer as the exchange may reasonably require," the Listing Agreement said.

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RBI's Subbarao makes a case to preserve independence of central banks

Central banks cannot fix economies by themselves and the governments too need to act from the fiscal side and both monetary and fiscal policies have to act in harmony

Mumbai: Reserve Bank of India (RBI) Governor D Subbarao has said there is a need to preserve the independence of central banks as their mandate has expanded in recent times, reports PTI.

 

"The issue of monetary policy independence has acquired greater potency following the expansion of mandates of central banks and their more explicit pursuit of real sector targets such as growth and unemployment," he said.

 

Subbarao cited Japan, where there is political pressure on the Bank of Japan to adopt a higher inflation target so as to create more room for growth stimulus, and said the case is "by no means an exception".

 

His comments come weeks ahead of the RBI's third quarter policy review scheduled for 29th January in which it might go for a cut in interest rates.

 

Subbarao said government and RBI need to act in harmony as the central banks on their own cannot fix economic woes.

 

"Central banks cannot fix economies by themselves. Governments need to act too from the fiscal side and monetary and fiscal policies have to act in harmony," Subbarao said.

 

Welcoming Nobel laureate Joseph Stiglitz at the CD Deshmukh Memorial Lecture, he said the monetary and fiscal policies should "act in harmony" to achieve common goals.

 

The comment comes in the backdrop of growing instances of apparent divergent views between the RBI and the Finance Ministry on a string of issues, including lowering interest rates and issuance of new bank licences.

 

The RBI had not lowered interest rates despite nudging to do so by Finance and Commerce Ministries. The central bank did not initiate the process of issuing bank licences despite assurance from Finance Minister P Chidambaram that government would amend the Banking Act in time.

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COMMENTS

M G WARRIER

5 years ago

Difference in perception about, say, causes and effects of inflation or when to take a certain measure to induce growth or improve liquidity in the system between individuals holding different positions of responsibility is natural and can be handled by mutual discussion. What we find with political leadership, GOI and corporates on one side and statutory bodies which do not have the same access to media or legislative process on the other side is an ongoing tussle emanating from the expectation of the GOI that statutory bodies should implicitly obey the dictat of ministers, or still worse, ‘ministries’. This approach impairs the equilibrium based on the checks and balances consciously built into the system of governance by the framers of Indian Constitution. The concern of RBI Governor has to be viewed in this context.

SEBI moots stronger norms for share buybacks

The proposals from SEBI are primarily aimed at ensuring that only serious companies launch a share buyback programme, which in turn would help in protecting the interest of investors

Mumbai: Market regulator Securities and Exchange Board of India has proposed significant changes to existing framework for buyback of shares by companies from open market, that require the process be to complete in three months and minimum repurchase to be 50% of the target, reports PTI.

 

The proposals are primarily aimed at ensuring that only serious companies launch a share buyback programme, which in turn would help in protecting the interest of investors.

 

The market regulator has proposed to make it mandatory for companies to buy back a minimum of 50% shares of the total targeted amount while the repurchase programme should be completed in three months from the launch date.

 

At present, the period of share buyback is 12 months.

 

"... it is proposed that companies complete the buy back in three months. To ensure that only serious companies launch the buyback programme, it is further proposed that these companies be mandated to put 25% of the maximum amount proposed for buy back in an escrow account," SEBI said in a discussion paper.

 

SEBI has sought comments on the paper titled 'Proposed modifications to the existing framework for buy back through open market purchase' till 31st January.

 

Making the norms stringent, the regulator has suggested that the companies, which are unable to buyback all the targeted shares (or proposed amount), should be barred from coming up with another repurchase offer for one year.

 

"... listed companies coming out with buyback programs may not be allowed to raise further capital for a period of two years," SEBI said.

 

Another suggestion is that companies should disclose the number of shares purchased and the amount utilised to the exchanges on a daily basis.

 

Citing buyback offer trends, SEBI said despite the intention disclosed by companies to their shareholders at the time of making buyback offer, the buyback offer is not used as an opportunity for enhancing the book value of the shares of the company.

 

"It has been observed that in 75 buyback cases through open market purchases, which closed during the last three financial years (from 1 April 2007 to 31 March 2010), an average of 49.91% of the maximum offer size (as disclosed in public announcement to shareholders) was utilised by the companies for the buy back," the paper said.

 

Further, SEBI said in many instances, companies took shareholders/board approval for buybacks but did not take a "single step to buy the shares".

 

Generally, buybacks are intended to return surplus cash to the shareholders, to provide support for share price during periods of temporary weakness and to increase the underlying share value.

 

SEBI has said share issuance on account of Employee Stock Option schemes need to be allowed during buyback period, provided that the scrips are "not allotted to directors and key managerial personnel of the company".

 

According to the market regulator, it would be desirable to encourage buybacks using tender method when larger amount of surplus funds are involved.

 

"It is proposed that buy-back of 15% or more of (paid up capital+free reserves) must be only by way of a tender offer method," the regulator said.

 

Through tender offer method, all shares are bought back at a fixed price which is generally at a premium to the market price. "Thus, the tender offer method of buy-back is more equitable way of distributing surplus funds with the companies to its shareholders," SEBI said.

 

In terms of disclosures, SEBI has said companies should reveal the total number of shares proposed to be bought back in the offer.

 

"Cumulative number of shares bought back till the end of previous reporting period and amount utilised for the same," should be reported.

 

Also, companies have to disclose the number of shares yet to be bought back and amount yet to be utilised.

 

Regarding physical shares, they have to tender the scrips at a "separate window in trading system".

 

"This window will remain open only during the buyback programme... Shareholders holding 500 shares or less in physical form will be eligible to tender their shares in this window," the discussion paper said.

 

Meanwhile, companies can "extinguish/destroy" shares bought back during the month, on or before fifteenth day of the succeeding month while in the last month, repurchased shares have to be extinguished within seven days of the completion of the offer.

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