To check recurrence of Satyam-like situations, where its chairman Ramalinga Raju pledged most of his promoter stake on the sly, the Securities and Exchange Board of India (Sebi) Board has decided to make it mandatory for promoters (including promoter groups) of companies to make full disclosures if they pledge shares.
“The Sebi board has felt the need to enhance disclosure requirements and have decided to make it mandatory for promoters to disclose details of pledge of shares,” CB Bhave, chairman of Sebi, told reporters here on Wednesday.
The disclosure will be event-based and period-based, he said. Under event-based disclosures, promoters are required to inform their company of any pledge; the company would then inform the public through the stock exchanges.
Promoters are required to give the status of their stake in quarterly statements under period-based disclosures. “This is a new process and we will implement the system keeping in mind the time needed to adhere to it,” Bhave said.
He said that stake sold by lenders would also fall under this disclosure ambit, as the sale would result in change in stake-holding. On allegation of insider trading by lenders, Bhave said, “Lenders are not insiders but if they trade on inside information or on insider tips, they come under the purview of law against insider-trading.”
“We are looking at long-term system improvement. There will be quite a few things we learn from this (Satyam) incident and we will take steps for necessary changes accordingly,” he said.