Monitoring of Corporate Disclosures
To facilitate corporate disclosures by the companies to the stakeholders and the Regulatory Agencies, there already exists an electronic registry with round the clock access including inspection of documents, through internet. The companies are also required to disclose their financial position in accordance with Schedule-VI of the Companies Act, 1956 and the Companies (Accounting Standard) Rules, 2006. Giving this information in the Rajya Sabha today in a written reply Shri Salman Khurshid, Minister for Corporate Affairs, said that an elaborate regulatory framework is already in place under the Companies Act, 1956 to deal with corporate disclosures by the companies registered under the Act. This framework provides for statutory disclosures to the stakeholders about the true and fair view of the state of affairs of the companies.
SEBI has been continuously putting in place various measures to enhance transparency in corporate disclosures and decision making of listed companies. This includes various requirements of listing agreement between the stock exchange and listed companies. One such requirement is that the decisions of the company’s board on major corporate events may be intimated to the stock exchange for public dissemination within 15 minutes from conclusion of board meeting. The company is required to furnish financial results to stock exchanges on quarterly basis as per the specified format which includes segment wise revenue, results and capital employed, Audit qualification, if any, etc. The financial results are also required to be published in newspapers. Further, the company is also required to intimate immediately to the stock exchanges all events which have a bearing on the performance/operations of the companies including price sensitive information.
Prosecutions are launched against companies which have not utilized funds for the stated purposes under various provisions of the Companies Act, 1956. Further, under clause 49 of the listing agreement, company is required to disclose to the Audit Committee about the use of funds on a quarterly basis. The company is also required to prepare a statement of funds utilized for the purpose other than those stated in the offer document which, has to be certified by Independent Auditors of the company. The Audit Committee shall also make appropriate recommendation to the Board to take steps in the matter. Under clause 43 of the Listing Agreement, all the Listed Companies shall intimate stock exchanges, on a quarterly basis, the variation, if any, between the proposed utilization of funds as disclosed in the offer document and the actual utilization of funds. Information is required to be given on annual basis, for each of the years for which proposed utilisation are provided in the prospectus. This is also required to be published in the newspaper, along with explanation for variation, which is also required to be included in the Directors’ Reports.