Sebi targets analyst meets, proposes steps to curb information asymmetry

Sebi targets analyst meets, proposes steps to curb information asymmetry

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The Securities and Exchange Board of India (Sebi) has proposed a slew of measures to curb information asymmetry arising out of analysts’ meets and conference calls conducted by listed companies.

The market regulator has said companies will need to make an audio or video recordings for all such meets and they should be made available on their website and with stock exchanges within 24 hours from the occurrence of event.

However, has said if companies discuss any unpublished price-sensitive information (UPSI) at such meetings, it needs to be immediately disclosed to the public at large.

Further, companies will also have to prepare written transcripts of such calls, which should be made available within five working days after the earnings call.

These files should be archived on company’s website for at least 8 years, has proposed.

It is a fairly common practice for companies to conduct analyst meet or to participate in investor conferences where participation is restricted.

Industry player said such platforms have gained prominence as means of communication and sharing of information with large institutional shareholders.

Many companies even conduct one-to-one meets with select investors.

“Listed companies to provide number of one-to-one meetings with select investors as part of corporate governance report submitted by them to stock exchanges on a quarterly basis along with affirmation that no UPSI was shared by any official of the company in such meetings. Company shall maintain a record of all such one-to-one meetings, as the same could be required for future reference. The data should be preserved for a period of at least eight years,” has proposed.

The recommendations have been made by an expert group set up by Sebi under the leadership of Keki Mistry, CEO, HDFC.

The brief given to the committee was to address concerns around information asymmetry rising out of such meets.

“It is noticed that while many listed companies disclose the occurrence of institutional investors meet or conference call with analysts, they do not divulge the details of what transpired in such meetings. Minority shareholders, who do not attend these meetings, are not privy to the information shared with a select group of investors, thereby creating information asymmetry among different classes of shareholders,” Sebi has said in the discussion paper.

Experts said the measures proposed by Sebi will help reduce the information gap between institutional investors and small shareholders.

Sebi has invited public comments on the various proposals until December 21. Based on the feedback, the regulator will then finalise the norms.

New rules

Make all audio/video recordings available on website, stock exchanges immediately

Provide written transcripts in five days

Maintain archive for such transcripts for at least 8 years

Cos allowed to decide if conference calls open to everyone or existing shareholders

No sharing of UPSI in one-to-one meets

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