The Securities and Exchange Board of India (SEBI) has recently released a circular on the Listing Agreement, which has major implications for companies listed on Indian stock exchanges. The circular, which was released on October 29, 2021, lays out the latest guidelines for companies to comply with the Listing Agreement and maintain their listing status.
The Listing Agreement is a contractual agreement between a company and a stock exchange that lists the company`s securities for trading. It lays down the rules and regulations that companies have to abide by to maintain their listing status. Compliance with the Listing Agreement is mandatory for companies listed on any Indian stock exchange.
The new circular from SEBI lays out a number of key changes and updates to the Listing Agreement. One of the major changes is the introduction of a new reporting requirement for companies. Under the new rules, companies will have to report any divergence in their financial statements within 24 hours of becoming aware of it. This is a significant change from the earlier reporting requirement, which gave companies up to seven working days to report any divergence.
Another important change introduced by the SEBI circular is the requirement for companies to disclose their sustainability reporting in their annual report. This is in line with global trends towards greater emphasis on sustainability reporting and ESG (environmental, social, and governance) factors in investment decision-making.
The circular also introduces a number of amendments to existing Listing Agreement rules. For example, it clarifies the definition of `control` in the context of mergers and acquisitions, and it lays down specific timelines for companies to submit their quarterly financial results.
Overall, the latest SEBI circular on the Listing Agreement is an important development for companies listed on Indian stock exchanges. Compliance with the new guidelines is mandatory, and companies will need to ensure that they are up to date with the changes in order to maintain their listing status. For investors, the new guidelines should help to ensure greater transparency and consistency in reporting, which is essential for making informed investment decisions.