The Securities and Exchange Board of India (SEBI) plans to ease certain disclosure norms for listed companies, ranging from related party transactions to large shareholders. SEBI is also evaluating giving a timeline of three months to fill up vacancies in board committee, it said in a consultation paper published on Wednesday.
Besides, the regulator also plans to give listed companies more time to publicly disclose litigations or disputes that they are involved in.
The proposals, based on the recommendations of an expert committee chaired by SK Mohanty, former Whole-Time Member of SEBI, aimed at facilitating ease of doing business, bringing in clarity and reducing the overall compliance burden, including the cost of compliance while effectively balancing investor protection.
For related party transactions, SEBI proposed that public companies be exempt from seeking audit committee approvals for directors’ and executives’ remuneration, or disclosing their compensation on a half-yearly basis.
Makarand M Joshi, founder, MMJC and Associates, said: “SEBI revamps provisions relating to trading plans by ensuring a balance between its usage and avoiding misuse. This move will bring in ease in complying with Prohibition of Insider Trading (PIT) regulations for market participants.”
Employee-centric move
With this change, SEBI also brings in flexibility in implementing trading plans under exceptional circumstances, thereby offering relief for KMPs (key managerial persons) and CXOs holding stock options. It is an employee-centric initiative, aimed at making trading plans more corporate-friendly.
Among other recommendations, the regulator proposed that companies, once listed, seek shareholder approval for compensation or profit-sharing agreements inked when they were privately-held.
The PIT Regulations had previously hindered employees’ ability to create wealth through ESOPs. This move will reduce burden, making it easier to exercise stock options and trade while remaining compliant with the regulations, said Joshi.
The regulator also sought that listed companies disclose information such as memorandum of association and articles of association on their website.