While the new norms are less stringent compared to the earlier circular, Ajay Tyagi, chairman, Sebi, said it is better than the current scenario where no such disclosures are required.
“Our philosophy is that more and more information should be in the public domain as it guides investors and all the stakeholders. Right now, there now there is no disclosure requirement at all. So, in that case, it is a betterment,” he said.
While bond defaults are immediately made public, failure to repay banks don’t get recorded, leading to information disparity.
Market players said the move will help banks, as companies will now be more careful in extending payment deadline beyond 30 days, fearing backlash from investors. It will also help credit rating agencies.
“A regulatory stipulation to mandatorily disclose instance of delays on even loans etc, at least for listed entities, indeed would be useful, notwithstanding a 30-day lag,” said Jitin Makkar, head credit policy, ICRA.
said it would soon issue a uniform format for making such disclosures. The Sebi
also entirely revamped the framework for portfolio management services (PMS) and shortened the time period taken for completion of rights issues.
The minimum net worth for portfolio managers
will be Rs 5 crore, up from Rs 2 crore. Players, however, will be given three years to comply. Also, the minimum investment size has been increased from Rs 25 lakh to Rs 50 lakh. Sebi has also directed to PMS providers to offer direct plans; streamlined performance disclosures and fee structure; and capped operating expenses.
The rights issue
timeline has been reduced from 55 days to 31 days and there is scope to bring it down further. For the first time, Sebi has allowed trading in rights entitlement. In other words, a shareholder entitled to get shares under the rights programme can transfer the entitlement to another investor at a price.
The Sebi board also extended the business responsibility reporting to top 1,000 companies. At present, only the top 500 companies have to make such disclosures.