This article has been written by Nazmal Mohammed pursuing a Diploma in Corporate Law & Practice: Transactions, Governance and Disputes course from LawSikho.

This article has been edited and published by Shashwat Kaushik.


The decisions made by the CEOs are often influenced by their business objectives and the interests of the promoters, the board of directors and the majority shareholders.  Recently, in 2020, Zee Enterprises overstated their revenues and profits in their financial statements and the Securities and Exchange Board of India (SEBI) imposed penalties on the company and its officials for misleading statements. A similar instance was reported when Essel Infra Projects Limited was fined for not disclosing loans issued to the subsidiary companies and promoters involved. Most recently, high promoter ownership was reported in the Hindenburg research report against Adani Group. Allegations were made about accounting irregularities and stock manipulations.

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Publicly listed companies in India are required to disclose all promoter holdings and ownership. The disclosure requirements of the listed companies of the Bombay Stock Exchange (BSE) are regulated by SEBI. In this article, the factors and challenges faced in the decision-making process by the CEOs of the BSE-listed companies while ensuring corporate governance policies and corporate social responsibility (CSR) in regards to disclosure quality are included.

Factors influencing decision-making process of CEOs

CEOs of listed companies normally consider the factors like regulatory compliances, market dynamics, interests of investors and their relations, risk management and its impact, crisis management and communication, standards of corporate governance practices, etc. In some cases, CEOs may need approval from the board of directors for certain disclosures. The dynamics within the boardroom can influence the decision-making process. With an increasing focus on sustainability and corporate responsibility, CEOs are now factoring in ESG (environmental, social, and governance) considerations when making disclosure decisions. CEOs also consider how disclosure decisions align with the company’s long-term strategic goals. Transparency about future plans and initiatives is weighed against potential risks.

Sunil Mehta, the then CEO of Punjab National Bank in 2018, played a crucial role in handling the crisis through transparent disclosures, demonstrating the importance of effective communication in crisis management. Infosys is listed on the BSE and is known for its commitment to regulatory compliance. It also serves as a benchmark for other companies to maintain disclosure quality. Tata Consultancy Services (TCS) is recognised for its robust corporate governance practices. TCS emphasises the importance of transparency, not only in financial reporting but also in governance structures, reinforcing the company’s commitment to disclosure quality. As the Indian capital markets continue to evolve, the role of CEOs in shaping the narrative through effective and responsible disclosure practices remains paramount.

CEOs point of view : challenges shaping disclosure practices

The biggest challenge for CEOs is to strike a balance between legal obligations and effective communication; this demands an in-depth understanding of SEBI and other regulatory guidelines to ensure they are aligned.  It is sometimes possible that the company’s management decisions on disclosures are impacting the investors’ sentiments, stock value and overall perception of the company

Senior management often faces the challenge of balancing transparency with maintaining a competitive edge.  Revealing sensitive information can potentially harm the strategic interests of the company.  Overcoming the impact on stakeholders’ interests and the company’s reputation loss due to disclosure is very challenging for the management.

As the landscape of corporate governance evolves, the role of CEOs in fostering transparency remains crucial for sustainable and responsible business practices in the Indian capital market

Relationship between corporate governance and CSR disclosures

A well-established corporate governance mechanism creates accountability and transparency in a company and practices ethical standards. If the board members of a company consist of a majority of independent directors, such a company is normally free from conflicts of interest and usually pushes for comprehensive and accurate corporate social responsibility reporting. Similarly, if the board contains diversity in terms of gender, age and expertise in environmental and social issues, then CSR disclosure quality will be high.

A strong and independent audit committee can scrutinise CSR data and reporting practices, ensuring accuracy and preventing greenwashing. Greenwashing is a deceptive strategy where the company claims to be concerned with environmental and social issues but in reality they are not. 

The disclosures can be more meaningful if the company engages stakeholders regularly through various means like focus group discussions, surveys, etc. These can provide valuable insights and they are good means of setting CSR priorities, leading to more responsive and relevant disclosure.

Companies might prioritise fulfilling reporting requirements over a genuine commitment to responsible practices, resulting in misleading or incomplete information.

Regulatory disclosure requirements applicable for BSE-listed companies

BSE-listed companies must comply with the SEBI (Listing Obligations and Disclosure Requirements (LODR)) Regulations, 2015. These regulations outline the corporate governance framework, the composition of the board and the role of independent directors. These guidelines also mandate the formation of an audit committee, establishment of a nomination and remuneration committee and for some companies, the risk management committee (from Regulations 17 to Regulation 21)

Companies are required to disclose their quarterly and annual financial results within a specified period of time, which should include profit and loss statements, balance sheets, and cash flow statements

Companies are mandated to disclose various information on shareholding patterns, board meetings and resolutions, material facts and price sensitive information, information about mergers and acquisitions, annual reports, and financial statements.

Regulations also seek disclosures on the code of conduct of board members, related party transactions, changes in directors and key managerial personnel, listing fees and CSR policies from the eligible companies.  In addition to these, the specific disclosure requirements may vary based on the size and nature of the listed company. 

Corporate social responsibility and its alignment with SEBI regulations

Regulations 34, 5, 6, and 7 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 aim to encourage companies to contribute to social and environmental causes and promote sustainable and comprehensive development.  Firstly, these regulations relate to the constitution of a CSR committee with at least 3 directors, in which the independent director must be included. Secondly, companies are required to spend, in every financial year, at least 2% of the average net profits made during the three immediately preceding financial years on CSR activities. The CSR activities are identified in Schedule VII of the Companies Act, 2013. These activities include eradicating hunger, promoting education, gender equality, and environmental sustainability, among others.  The amount spent, the area of spending and the reasons why it was not spent must be disclosed in the annual report. If there is any non-compliance with CSR provisions, the same must be disclosed in the board report. The board’s report should also provide details on the composition of the CSR Committee and the CSR policy.

Emerging trends in CSR reporting, such as integrated reporting and the use of technology

Predominantly, two trends, namely, integrated reporting and tech-driven transparency, are reforming CSR reporting in India. Integrated reporting presents a holistic picture of a company’s value creation beyond the bottom line. This approach aligns CSR initiatives with core business strategies and also demonstrates how responsible practices contribute to a long-term financial success

Tech-driven Transparency refers to interactive online platforms, data visualisation tools, and social media that transform static reports into engaging storylines. Stakeholders can now have multiple options to examine deeper, filter data, track progress, and make informed decision-making.

The Securities and Exchange Board of India (SEBI) encouraged listed companies to adopt digital disclosure formats for annual reports, including CSR components. In 2021, the future of CSR reporting will be a lot easier.

These trends allow companies to build trust and accountability, and stakeholders gain a comprehensive understanding of a company’s impact, which creates trust and loyalty. Indian businesses can not only enhance their reputation but also contribute to a more sustainable and responsible future.

Business reporting in India : disclosure quality

Stakeholder groups are calling for more environmental, social, and global (ESG) data as well as more understanding of how these aspects impact financial performance and values. Better internal decision-making is also encouraged by high-quality reporting. One of the key factors in long-term organisational performance is access to high-quality information, which is essential to the management of the firm. Financial regulatory reporting, environmental, social, and governance (ESG) reporting, sustainability reporting, and increasingly integrated reporting are just a few of the many reporting activities that organisations engage in.

Organisations share information with their stakeholders about their goals, vision, objectives, and strategy, as well as governance procedures and risk management, trade-offs between short-and long-term strategies, and financial, social, and environmental performance.

Contents in business reports normally include a balance sheet, statement of profit and loss, cash flow statement and notes, including those relating to accounting policies and other statements and explanatory material that are an integral part of financial statements, taxation compliance reports, other compliance reports as per labour law, reports related to the employee state insurance act, gratuity act, pension, maternity, bonus, labour welfare fund, social security and protection fund, etc., CSR (corporate social responsibility) report, ministry of corporate affairs and ROC compliance reports, FEMA and RBI compliance reports, environmental compliance report, management discussion and so on..

Here are some facts about the disclosure quality of companies listed on the BSE:

Positive aspects:

  1. Improvement over time: Studies have shown an overall improvement in disclosure quality among BSE-listed companies over the past decade. This aligns with increased enforcement from SEBI and improved corporate governance practices.·
  2. Focus on mandatory disclosures: BSE-listed companies generally comply with mandatory disclosures related to financial information, board meetings, and shareholder voting. Non-compliance often leads to penalties and negative publicity.·
  3. Adoption of technology: Many companies are adopting technology-based disclosure platforms, making information more readily accessible and transparent.·
  4. Increased use of XBRL: BSE encourages the use of XBRL (Extensible Business Reporting Language) for filing financial statements, improving data accuracy and facilitating analysis.

Challenges and areas for improvement:

  1. Gaps in voluntary disclosures: While mandatory disclosures are generally met, companies might be less forthcoming with information beyond regulatory requirements. This can limit transparency about risks, strategies, and corporate social responsibility.·
  2. Timeliness of disclosures: Delays in filing quarterly or annual reports can occur, impacting investor confidence and decision-making. 


For CEOs of BSE-listed companies, the decision-making process regarding disclosure is a multifaceted responsibility. Navigating SEBI guidelines, influencing investor confidence, balancing transparency with competitive advantage, and managing stakeholder relations all contribute to the strategic decisions of CEOs. Given that an organisation offers strategic information that promotes the evaluation and engagement of various stakeholders, integrated reporting will aid corporations in providing information about their financial results, corporate governance, and sustainability. At present, companies are focusing mainly on providing mandated financial information, but that is not sufficient to make sound decisions for stakeholders. For this purpose, it is observed that business reports containing financial, non-financial, environmental, social and governance information comprehensively cater to the dynamic needs of stakeholders in their decision-making process. Thus, integrated reporting will be the future of business in India and across the globe. By embracing strong governance practices, companies can not only fulfil their social responsibilities but also create a foundation for transparent and trustworthy communication, building lasting relationships with stakeholders and ensuring long-term success.



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