3.1 Continuous Disclosure Requirements
Continuous disclosure forms the backbone of investor protection in securities markets. LODR requires listed entities to maintain a constant flow of material information to stock exchanges and investors, ensuring price-sensitive information is disseminated fairly.
Principles of Continuous Disclosure
- Materiality: Information that could affect investment decisions must be disclosed
- Timeliness: Disclosure must be made as soon as reasonably possible
- Accuracy: Information must be complete and not misleading
- Fair Disclosure: Information must be disseminated to all investors simultaneously
Channels for Disclosure
- Stock Exchange Platform: BSE LISTING and NSE NEAPS for immediate disclosure
- Company Website: Mandatory hosting of all disclosures for 5 years
- Press Release: For major announcements (optional but recommended)
- XBRL Filing: Mandatory for structured financial information
Schedule III Part A lists events that are deemed material by SEBI - no judgment required. These MUST be disclosed regardless of company's internal assessment. Part B events require materiality assessment by the board.
3.2 Material Events (Regulation 30)
Regulation 30 read with Schedule III is the most frequently invoked disclosure requirement. It classifies material events into mandatory disclosures and events requiring board's materiality assessment.
Part A - Events to be Disclosed Without Application of Materiality
| Event | Disclosure Timeline |
|---|---|
| Acquisition, merger, demerger, restructuring | Within 30 minutes of board meeting |
| Fraud or default by promoter or KMP | Within 24 hours of becoming aware |
| Change in directors or KMP | Within 30 minutes of board meeting |
| Change in statutory auditors | Within 30 minutes of board meeting |
| Outcome of board meetings | Within 30 minutes of meeting closure |
| Dividend declaration | Within 30 minutes of board decision |
| Issue or forfeiture of securities | Within 30 minutes of board meeting |
| Revision in rating | Within 24 hours of receiving rating |
| Outcome of litigation affecting operations | Within 12 hours of order |
| Cessation of agreement with media companies | Within 24 hours |
Part B - Events Requiring Materiality Assessment
Board must determine materiality based on criteria in Regulation 30(4):
- Agreement for loan, financial assistance from banks/financial institutions
- Disruption of operations due to natural calamity
- Commencement or completion of major projects
- Capacity addition, product launch
- Awarding or termination of significant orders/contracts
- Agreement with media companies for content
Board must adopt policy on materiality. Suggested quantitative thresholds: Impact of 10% or more on net worth, or 10% or more on turnover, or 10% or more on profit before tax. Qualitative factors: Change in business model, new product line, significant litigation.
Procedure for Disclosure
- Identify: Determine if event falls under Part A (mandatory) or Part B (materiality test)
- Assess: For Part B events, apply board-approved materiality policy
- Draft: Prepare disclosure in prescribed format with all required details
- Authorize: Get approval from Compliance Officer or authorized person
- Disclose: Submit through BSE/NSE electronic platforms within timeline
- Website: Upload on company website within 24 hours
The 30-minute timeline starts from conclusion of board meeting. Companies should prepare draft disclosures before the meeting and have IT systems ready for immediate filing. Pre-clearance from stock exchanges is not required.
3.3 Financial Results Disclosure
Regulation 33 mandates quarterly and annual financial results disclosure within strict timelines. These are among the most watched disclosures by investors and any delay attracts significant penalty.
Quarterly Results (Regulation 33)
| Quarter | Deadline | Review Type |
|---|---|---|
| Q1 (April-June) | 45 days from quarter end (August 14) | Limited Review by Auditors |
| Q2 (July-September) | 45 days from quarter end (November 14) | Limited Review by Auditors |
| Q3 (October-December) | 45 days from quarter end (February 14) | Limited Review by Auditors |
| Q4/Annual (January-March) | 60 days from year end (May 30) | Statutory Audit |
Content Requirements
- Standalone Results: Required for all listed entities
- Consolidated Results: Mandatory if company has subsidiaries
- Segment Reporting: If applicable under Ind AS
- Cash Flow Statement: Required for annual results
- Asset-Liability Statement: Required for annual results of NBFCs
Quarterly results require Limited Review by statutory auditors (not full audit). The review report must be submitted along with financial results. Listed entities cannot publish unreviewed quarterly results.
Trading Window Closure
SEBI Insider Trading Regulations require trading window closure before financial results:
- Closure Period: From end of quarter until 48 hours after results announcement
- Affected Persons: Designated persons and their immediate relatives
- Pre-clearance: No new trades permitted during window closure
3.5 Corporate Governance Report
Listed entities must submit quarterly corporate governance reports as per Regulation 27, demonstrating compliance with all corporate governance requirements under LODR.
Quarterly Compliance Report
- Timeline: Within 15 days from quarter end
- Format: Prescribed format covering all Regulation 17-27 requirements
- Contents: Board composition, committee composition, meeting details, compliance status
- Certification: By Compliance Officer of the company
Annual Compliance Report
| Component | Requirement |
|---|---|
| Corporate Governance Report | Part of Annual Report as per Schedule V |
| CEO/CFO Certificate | On financial statements and internal controls |
| Compliance Certificate | From PCS on corporate governance compliance |
| Directors' Report Extract | Prescribed disclosures on governance matters |
The Corporate Governance Compliance Certificate from a Practicing Company Secretary (PCS) is mandatory for annual report. Engage PCS early in Q4 to conduct review and identify gaps before year-end.
Key Annual Report Disclosures
Schedule V mandates extensive disclosures in annual report:
- Brief statement on company philosophy on code of governance
- Board of Directors - composition, category, attendance, other directorships
- Audit Committee - composition, meetings, attendance
- Remuneration of Directors - all elements with breakdown
- Stakeholder grievances - number received, resolved, pending
- General shareholder information - AGM details, dividend, stock data
- Code of Conduct - affirmation by CEO/MD
"Disclosure is the best disinfectant. Full and fair disclosure is the cornerstone of investor confidence in capital markets."SEBI Circular on Corporate Governance
Key Takeaways
- Schedule III Part A events must be disclosed regardless of materiality
- Most Part A events require disclosure within 30 minutes of board meeting
- Quarterly results due within 45 days, annual within 60 days
- Shareholding pattern due within 21 days of quarter end
- CG compliance report due within 15 days of quarter end
- Pledge changes require disclosure within 7 days