SEBI Plans to Loosen Rules on Disclosure Norms for Public Companies

SEBI is planning to relax disclosure requirements for listed companies, including easing the rules for disclosing related party transactions

SEBI is looking to relax some disclosure requirements for listed companies. These prospective changes include easing rules related to disclosing related party transactions.

The market watchdog is also exploring the possibility of giving listed companies more time to publicly disclose litigations or disputes they are involved in. According to a Reuters report, SEBI has released multiple consultation papers, over the years. This is usually seen as the first step towards making policy changes to simplify regulations for companies listed on India's stock markets.

SEBI has proposed to exempt public companies from obtaining audit committee approvals for the remuneration of directors and executives in the related party transactions segment. It has also proposed an exemption for bi-annual disclosure of compensation details.

SEBI's Clause 49 outlines regulatory guidelines for related party transactions. It defines such transactions as involving the transfer of resources, services, or obligations. These rules extend beyond those specified in the Companies Act 2013.

For any related party transaction deemed significant, approval from shareholders is required through a special resolution. And all related parties involved are prohibited from voting on these resolutions.

The market regulator has also suggested that once the companies are listed, they should obtain shareholder approval for compensation or profit-sharing agreements made during their private ownership phase.

Besides this, it has also recommended that listed companies should disclose documents like their memorandum of association and articles of association on their websites.

These proposals are open for feedback from market participants until July 17.

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