SEBI has asked the top 100 listed companies by market capitalization to confirm, deny or clarify any market rumor reported in the mainstream media. According to the PTI report, SEBI has notified the rules in this regard. Top 100 listed companies will have to give clarification on the rumors appearing in the media from October 1.
Apart from this, the rules for the top 250 listed units will be applicable from April 1, 2024. The Securities and Exchange Board of India has given this information in a notification.
Explanation will have to be given within 24 hours of receiving the news.
These companies will have to confirm, deny or clarify any information or reported event in the mainstream media, which is not normal and which indicates that rumors are being spread among investors regarding a matter. Companies will have to do this within 24 hours of receiving the news of these rumours.
SEBI’s eye on these shareholders
In order to strengthen corporate governance in listed entities, SEBI has come out with a framework to address the issue of shareholders who are continuing to enjoy special rights. The shareholders of a big unit will get any special right only on one condition. For this, once in every five years from the date of getting the special rights, the shareholders will have to approve through a special resolution in the general meeting.
Public institutional shareholders are continuously raising their voice against the special rights given to the promoters, founders and some body corporate of those companies.
SEBI mentioned that the shareholders’ agreement is drafted in such a way that those special rights will continue even after reduction in their holding in those entities. Due to this, shareholders are allowed to continue to enjoy such special rights, which is against the principle of having the right proportion of holding and rights in the investor’s company.
New condition for director joining the board of the company
With this, the regulator has said that all directors appointed on the board of a listed company will have to go through the process of periodic shareholders’ approval. This will give the director the right to continue on the board.
The regulator has issued rules to strengthen the framework for slump sales done outside the scheme of agreement framework to protect the interests of minority shareholders.
Default in payment of fine has to be disclosed
Apart from this, SEBI has asked listed entities to disclose fraud and default by directors or senior management. Listed entities have been asked to disclose default in payment of penalty or payment of any dues to any regulatory, statutory, enforcement or judicial authority.
SEBI has also said that the vacancies of Chief Executive Officer, Managing Director and Whole Time Director will have to be filled within three months of such vacancy.