[Opinion] Shedding Light | Initiating the Disclosure of Material Events & Information

Deepti Jambigi Joshi & Vallabh M Joshi – [2023] 152 taxmann.com 314 (Article)

To enable investors to make well-informed investment decisions, timely, adequate, and accurate disclosure of information on an ongoing basis is of utmost importance. Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as “LODR Regulations” or “LODR”), requires listed entities to disclose material events or information to the stock exchanges. The different types of events or information which may occur in respect of any listed entity are categorized into different parts in Schedule III of LODR Regulations.

I. Categorization of material events

The above-mentioned Schedule III of LODR Regulations, which enlists the different kinds of events or information which may occur in a listed entity, is divided into different parts based on the nature of securities listed by an entity. Part A of Schedule III deals with events or information with regard to entities which have listed their equity shares and it is coming from Regulation 30 of LODR Regulations. This Part A of Schedule III is further divided into 4 Paras.

The events specified in Para a of Part a of Schedule III of LODR Regulations (hereinafter referred to as “Para A”) are deemed to be material events that the listed entities are required to disclose, and there is no discretion to listed entities in this regard. Whereas, events enumerated in Para B of Part A of Schedule III of LODR Regulations (hereinafter referred to as “Para B”) are required to be disclosed based on the application of the guidelines for materiality, which the listed entities are required to frame in the form of a policy (hereinafter referred to as “Materiality Policy”) based on the criteria specified in regulation 30(4) of LODR Regulations, as amended vide latest amendment dated 14th June 2023.

II. Erstwhile Timelines for disclosure to stock exchanges

As per erstwhile Regulation 30(6) of LODR Regulations, the general timeline for disclosure of events or information was within twenty-four hours from the occurrence of the event or information except in a few cases where disclosure was required to be given within 30 minutes of the conclusion of the board meeting for certain events. In the present age of digital communication and the widespread usage of social media, information permeates very fast. That may be the reason why SEBI might have felt a need for ensuring quicker disclosure of certain material events or information by listed entities.

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