SEBI Mulls Stricter Disclosure Norms for Unlisted Conglomerates
- ByStartupStory | August 8, 2023
Capital markets regulator, the Securities and Exchange Board of India (SEBI), is deliberating the implementation of comprehensive disclosure requirements for unlisted companies that are part of business conglomerates. Unlike their listed counterparts, unlisted companies currently face varying levels of disclosure mandates. “There is a need to identify, monitor, and manage risks introduced into the securities market ecosystem by unlisted companies in a conglomerate with a complex set of listed and unlisted associates,” Sebi said in its annual report for 2022-23.
SEBI’s proposed measures aim to bolster transparency within conglomerates and include the enhancement of group-level transaction reporting. Detailed disclosures regarding cross-holdings and significant financial dealings within these conglomerates are also under SEBI’s examination for potential annual disclosure.
The country’s prominent business conglomerates, such as the Tata Group, Reliance Industries, Adani Group, Aditya Birla Group, and Bajaj Group, are among those that would be impacted by these anticipated changes.
Additionally, SEBI has plans to revisit the eligibility criteria for introducing stocks into the derivatives segment. To align with evolving market dynamics, SEBI’s proposal seeks to revise these criteria, which were last reviewed in 2018. Notably, market parameters like market capitalization and turnover have undergone significant growth since then.
To further refine equity derivatives’ volatility management and reduce information asymmetry, SEBI is actively enhancing the existing price band framework for these financial instruments. The envisioned framework intends to mitigate potential price risks arising from sudden market volatility, operational errors, or technical issues. This adjustment will involve introducing more controlled price bands, contingent upon specific conditions and trading activity levels.
Another focal point in SEBI’s agenda involves reviewing the pricing mechanism for delisting cases. The regulator aims to assess the reverse book-building process and explore alternative methods for determining exit prices in instances of voluntary delisting. Additionally, SEBI plans to evaluate the effectiveness of the compulsory delisting framework administered by stock exchanges.
As SEBI continues to evolve its regulatory landscape, these proposed measures highlight the regulator’s commitment to fostering transparency, minimizing risks, and ensuring equitable market practices.
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