This article is written by Yash Sudhir Mukadam, pursuing a Diploma in M&A, Institutional Finance and Investment Laws (PE and VC transactions) from Lawsikho.com. Here he discusses “Which Disclosures are to be made on a Continuous basis by a Listed Company?”.

Introduction

A listed company has been defined in the Companies Act, 2013 to mean a company which has listed any of its securities on a recognized stock exchange. Thus, a listed company is not just a public limited company but can also include private companies that choose to list their debt securities on a recognized stock exchange. There are several reasons for a company to list itself on a stock exchange such as having access to a phenomenal number of investors who can help raise finances for a company’s operations and expansion, greater visibility in the market etc.  Being a listed company means its securities can be bought and traded by the general public thus creating an interest in the company. Hence the Companies Act 2013, and SEBI (Listing Obligations and Disclosure Requirements) Regulations (hereinafter referred to as “SEBI Regulations”), 2015, have set out a list of certain disclosures that listed companies need to make on a continuous basis. 

Rule 4 of SEBI Regulations lists out certain principles that need to be followed by such listed companies to ensure transparent, comparable and truthful disclosures, while Rule 6 necessitates the appointment of a Company Secretary as the compliance officer who shall be responsible, among other things, for following the principles laid down under Rule 4, and for acting as an intermediary between the company and the stock exchange it is listed on.  With these checks in place, the following are the disclosures that listed companies need to make on a continuous basis: 

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1. As part of their grievance redressal mechanism, listed companies need to file a quarterly statement giving the number of investor complaints pending at the beginning of the quarter, those received during the quarter, disposed of during the quarter and those which are remaining unresolved at the end of the quarter. Such a statement needs to be filed within 21 days from the end of each quarter.
2. Listed companies are to submit to the relevant stock exchanges and publish on their websites, a consolidated list of all related party transactions entered by the company. This is to be done within 30 days of publishing its half year financial results. This disclosure is thus to be made twice a year. 
3. Listed companies are necessitated to submit a compliance report, signed by the compliance officer or the CEO of the company, on corporate governance.  This is to be submitted to the relevant stock exchanges on a quarterly basis within fifteen days from close of the quarter. 
4. Listed companies are required to maintain a functioning website which is to be updated with correct disclosures regarding information listed out in Rule 46(2) under a separate section on their websites.

   Note: Rules mentioned under serial numbers 2 and 3 are only to be complied by companies having paid up equity share capital not exceeding rupees 10 crores and net worth not exceeding rupees 25 crores. Likewise, there is also additional information mentioned in Rule 46(2) which needs to be published by this class of companies.

5. Listed companies have to submit as statements showing holdings of securities and the shareholding patterns of the companies to stock exchanges on a quarterly basis or on a half yearly basis for companies listed on SME (Small and Medium-scale Enterprises)  exchanges.
6. Listed companies need to submit their (as well as of their subsidiaries if they have any) quarterly and year-to-date standalone financial results to stock exchanges. The companies also need to submit their (as well as of their subsidiaries if they have any) audited financial results and an audit report annually. The companies need to further submit standalone and consolidated financial results for the half year, by way of a note. For companies listed on SME (Small and Medium scale Enterprises) exchanges, ‘quarterly’ becomes ‘half yearly’ and ‘year-to-date’ does not apply. Rule 33 along with Part A of Schedule IV enumerates the way financial results are to be prepared and the disclosures to be made therein.
7. Listed companies also have to submit to the stock exchanges as well as publish on their websites, a copy of the annual reports (along with the notice of annual general meeting) sent to the shareholders. Contents and format of the annual report is enumerated in Rule 34(2), 53 (if applicable) and Schedule V of the SEBI Regulations. Disclosures required under Companies Act 2013 are also to be made.  Pursuant to Rule 43(A) top 500 companies (based on market cap) have to formulate and disclose their Dividend Distribution Policy with the Annual Report.
8. An Annual Information Manual is also to be submitted to the stock exchanges.
9. Listed companies have to submit to the stock exchanges, details of voting results of general meetings. This needs to be done within 48 hours of conclusion of a general meeting.
10. Listed companies also have to prepare and submit an unaudited/audited financial results to the stock exchanges on a half yearly basis. Additionally, audited financial results are also to be submitted to stock exchanges on an annual basis. 
11. Listed companies are required to disclose in their financial statements, the extent and nature of security created and maintained with respect to their secured listed non-convertible debentures. 
12. An undertaking is to be submitted to stock exchanges on an annual basis stating that all disclosures required to be made to debenture trustees have been complied with.

    Note: Disclosures mentioned from serial numbers 10 to 12 are only to be complied by listed entities that have listed their ‘Non-convertible  Debt Securities’ and/or ‘Non-Convertible Redeemable Preference Shares’ on recognized stock exchanges.

13. Listed companies are to file their Indian Depository Receipt holding the pattern on a quarterly basis. 
14. Listed companies are also required to file Financial Results (also to be published in the newspaper) and Annual Reports with stock exchanges as required to be submitted in their home countries.
15. Listed companies are required to publish the notices given to IDR holders as per requirements of the SEBI Regulations.

    Note: Disclosures mentioned from serial numbers 13 to 15 are only to be complied by listed entities that have listed their Indian Depository Receipts.

16. Listed companies are required to submit to the stock exchanges statements of information including financial information pertaining to Schemes on a monthly basis or where the periodicity of the receivables is not monthly; reporting shall be made for the relevant periods.

    Note: Disclosure no. 16 is only to be complied by Special Purpose Distinct Entities issuing securitised debt instruments and trustees of Special Purpose Distinct Entities.

17. Listed companies are required to intimate stock exchanges of information relating to daily Net Asset Value, monthly portfolio, half yearly portfolio of those schemes whose units are listed on those stock exchanges.

Note: Disclosure no. 17 is only to be complied by listed companies that have listed their mutual fund units. Along with the above disclosures, Listed Companies also have to comply with the provisions of the Companies Act 2013 and make certain disclosures thereunder.

 The continuous disclosures to be made under the said act are briefly listed as follows2:

1. All the listed companies are required to file an Annual Return with the Registrar containing particulars enumerated in Section. 92 of the Act. Additionally, such a return filed by listed companies is to be certified by a practicing Company Secretary stating that the annual return discloses the facts correctly and adequately and that the company has complied with all the provisions of the Act.
2.  Listed public companies are required to prepare a report on each annual general meeting conducted and file a copy of the report with the Registrar within 30 days of the conclusion of the annual general meeting. The report must also include confirmation to the effect that the meeting was convened, held and conducted with respect to the provisions of the Act and Rules made thereunder. 
3. A Board’s Report shall be prepared and attached with Financial Statement and circulated or published. Companies Act 2013 and The Companies (Accounts) Rules, 2014 enumerate certain disclosures such as related party transactions, foreign exchange earnings and outgo, details of Corporate Social Responsibility policy etc. which need to be made in the Board’s Report.
4. Copy of Financial statements along with all additional attachments (such as the Board’s Report) are to be filed with the Registrar within 30 days of the annual general meeting. Such financial statements are required to be a true and fair view of the state of affairs of the companies and shall be in the form provided in Schedule III of the Companies Act. 
5. All companies are required to inform the Registrar of appointment of auditors and since listed companies are required to change (1.) an individual auditor after maximum 1 term of 5 consecutive years (2.) an auditor’s firm after maximum 2 terms of 5 years, the disclosure regarding appointment of auditors is to be made on a continuous basis.  
6. Companies eligible to fulfil Corporate Social Responsibility requirements in a given year are to disclose their Corporate Social Responsibility policy (which includes activities to be undertaken, implementation scheme etc.) on their website.
7. Further, in case of Government Companies, their Annual reports, Audit reports etc. are laid before both the Houses of Parliament/State Legislature as the case may be. 

These disclosures and compliances help listed companies stay transparent and create a sense of trust among investors, lenders and the general public alike. 

Endnotes

1. “Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 [Last Amended on July 29, 2019].” SEBI, https://www.sebi.gov.in/legal/regulations/jul-2019/securities-and-exchange-board-of-india-listing-obligations-and-disclosure-requirements-regulations-2015-last-amended-on-july-29-2019-_37269.html.
2. “Companies Act, 2013.” Companies Act, 2013, Ministry of Corporate Affairs, http://ebook.mca.gov.in/default.aspx.

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