Mumbai, Feb. 19: Companies will soon be required to compile all the announcements they make and the information they provide to the shareholders and the public at large at discrete intervals into one document that must be filed at the end of the year.
In an attempt to improve the quality of disclosures by listed companies, the Securities and Exchange Board of India (Sebi) has suggested the creation of an Annual Information Memorandum (AIM) where all the relevant information relating to company can be found at one place.
The market regulator said information about a particular company was now available to shareholders and the public at large but it was fragmented and there was no single document that contained any subsequent updates of the company at one place.
At present, companies make detailed disclosure at the time of filing offer document for an issue apart from periodic announcements to the stock exchanges on various matters such as financial position, shareholding pattern and corporate governance among others. Additional disclosures are also made in the annual report.
Floating a discussion paper on the subject, Sebi said investors in secondary market had to sift through various individual disclosures made over time to aggregate the information before taking investment decisions.
In a bid to allow investors in the secondary markets to access the desired information with ease, it had floated the concept of AIM.
While the frequency for preparation of AIM will be yearly, it should be disseminated within 135 days from the end of the financial year. Sebi added that the AIM could be disseminated electronically by uploading it on the company’s website and simultaneous filing with stock exchanges.
Moreover, the company’s AIM must be approved by the board of directors at their meeting prior to dissemination.
“While, updating the AIM, the companies may update the quantitative as well as qualitative information by replacing the details pertaining to most distant year with details pertaining to the most recent year where such information is required to be furnished for multiple years. Further, all the information shall be reviewed for accuracy, sufficiency and relevance,” Sebi added.
The regulator has proposed that in the case of the top 200 listed companies based on market capitalisation on the BSE or the NSE as on March 31, 2014, AIM will be implemented from the financial year beginning on or after April 1, 2014. All other listed companies will have to comply with the requirement from the following year.