Securities and Exchange Board of India (Sebi) is considering timely and detailed disclosures by listed entities in regards to their loan defaults.
In its annual report for 2017-18, the capital markets regulator said it aims at examining stipulation of timely and detailed disclosures pertaining to defaults on debt obligations by listed entities to enhance transparency.
Concerned over the fraud at Punjab National Bank, the watchdog has been contemplating to mandate listed entities to urgently disclose all substantial loan defaults within a day of such defaults.
The move to tighten the disclosure norms for listed companies defaulting on loans taken from banks and other financial intuitions will help banks to recognise stressed assets as non-performing "more uniformly and enhance transparency in the securities market", according to its annual report.
In the situation of non-repayment of loans by listed firms, the framework, if implemented, will help investors make an informed decision.
"Corporate governance is a globally relevant theme. Jurisdictions all across the world are grappling with the ever-increasing challenges being posed in this area," Sebi's annual report said, adding that to improve the corporate governance framework, recommendations by the committee set up under the chairmanship of Uday Kotak will be taken up for implementation after approval from its Board.
The regulator has also proposed to review its regulations in the context of the corporate insolvency resolution process under the Insolvency and Bankruptcy Code 2016.
Meanwhile, the market watchdog is also exploring the possibility of reducing the time gap between the closure date of public offer and listing.
In the annual report, it said the possibility of reducing the time gap between the closure of bidding period in the public offer and listing of shares of the company on stock exchanges is also being explored.
From the current six working days, effective from January 1, 2016, Sebi has been keen to reduce the number of days for listing of shares with closure date of the public offer to four working days. Earlier, the time taken was 12 working days.
INFORMED DECISION
- The regulator has been contemplating to mandate listed entities to urgently disclose all substantial loan defaults within a day of such defaults.
- The move to tighten the disclosure norms will help banks to recognise stressed assets as non-performing "more uniformly and enhance transparency in the securities market"
