Cos now will now have to reveal all

The Securities and Exchange Board of India (SEBI) has issued a new rule for the listed companies. These  companies will now have to give complete information about all types of commercial agreements and deals to investors.

What are the new rules of SEBI?
SEBI has tightened the rules under Listing Obligations and Disclosure Requirements ie LODR. Under SEBI’s new rule, listed companies will have to give detailed information about all such business deals, contracts, technical, manufacturing and marketing alliances and arrangements, which affect investment or market prospects. That is, now investors will have complete information about the deals happening in any listed company.

Till now it was left to the discretion of the companies, that if they feel that any information about such a deal is not worth giving to the common investors, then they can hide it.

The purpose of this move of SEBI is to increase transparency by bringing all confidential agreements and information of listed companies among the shareholders. According to the information given by the market regulator, the new revised rule has become effective from July 15.

How will investors benefit?
This step of SEBI will benefit the investors of the stock market. With this, investors and analysts will have to give more clarity about the business plan of the company. Based on the information of the listed company, any investor can decide whether to invest in the shares of that company or not. SEBI has given this instruction to the listed companies because the investor’s money should not sink due to wrong information or hidden information in any listed company in the stock market.

Family agreements
Apart from this, SEBI had said last week that promoters will also have to disclose their family agreements. According to this new amendment of SEBI, all shareholders, promoters, promoter entities, key managerial personnel should be aware of the agreement affecting them directly or indirectly.