Working on ease of compliance for companies to address market rumours: SEBI chief

Market regulator Securities and Exchange Board of India (SEBI) has received recommendations from Industry Standards Forum for implementing a smooth process using which listed entities can address market rumours, said Madhabi Puri Buch on November 25.

“In principle, no one is against the idea of addressing market rumours. But, its implementation has challenges. ISF has recommended some standards for ease of compliance. That is our objective as well, that there should be no trouble in compliance,” said the SEBI chief in a press conference.

The ISF is led by veteran banker KV Kamath, and all three industry bodies – FICCI, ASSOCHAM and CII – are active participants in it.

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“We have accepted the recommendations, but we need to make a modification in another regulation. That’s why, we have given the date till February,” Buch added.

SEBI wants companies to confirm or deny market rumours within 24 hours of occurrence. The practice is supposed to come into effect from February 1, 2024 for large-cap companies and August 1, 2024 for mid-cap companies.

Moneycontrol earlier reported how implementation of such time-bound obligation can be extremely onerous for listed entities. While enhancing transparency is a commendable goal, experts believe that many corporates may not be able to comply with the strict 24-hour directive as a result of operating in different time zones.

Additionally, as companies routinely engage in certain activities which may not fructify and given that rumours may crop up at any stage, say pre-negotiation or even mid-negotiation, any acceptance or denial of such rumours may be premature and prove to be counterproductive.

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