Corporate Disclosure

Rationale` for Disclosures
 An effective disclosure based regulation
(DBR) implies greater responsibilities on
the company directors, its management
and advisers
 An effective DBR promotes investor
activism
 Markets believe that perceived benefits
outweigh perceived costs

Disclosure based Regulation –
Components & types of disclosure
Disclosures Disclosures
by whom for whom
Public Listed Cos. Shareholders
Intermediaries Investors
Stock Exchanges MARKET Intermediaries
Mutual Funds Regulator
Analysts & advisors Government
Other stake -
holders

Disclosure Based Regulation
Components & types of disclosures
 Initial Disclosures – Disclosures for raising capital
by companies, mutual funds in offer documents
- Public Offers
- Private Placement
 Continuous disclosures – financial / non-financial
 Frequency of disclosure
 Dissemination process – electronic, physical,
centralised, dispersed
 Accessibility of information

Disclosure Based Regulation
 Initial Disclosures
 Continuous disclosures
 Corporate Governance
 Financial disclosures
 Risk based disclosures for
intermediaries
 Disclosures for stock exchanges

Disclosures
Board of Directors: information that must be
supplied
 Annual, quarter, half year operating plans, budgets and
updates
 Quarterly results of company and its business segments
 Minutes of the audit committee and other board committees
 Recruitment and remuneration of senior officers
 Materially important legal notices and claims, as well as any
accidents, hazards, pollution issues and labor problems
 Any actual or expected default in financial obligations
 Details of joint ventures and collaborations
 Transactions involving payment towards goodwill, brand
equity and intellectual property
 Any materially significant sale of business and investments
 Foreign currency and other risks and risk management
 Any regulatory non-compliance

Disclosures
Disclosures to shareholders in addition to
balance sheet, P&L and cash flow statement
 Board composition (executive, non-exec, independent)
 Qualifications and experience of directors
 Number of outside directorships held by each director
(capped at director not being a member of more than 10
board-level committees, and Chairman of not more than 5)
 Attendance record of directors
 Remuneration of directors
 Relationship (familial or pecuniary) with other directors
 Warning against insider trading, with procedures to
prevent such acts
 Details of grievances of shareholders, and how quickly
these were addressed
 Date, time and venue of annual general meeting of
shareholders

Disclosures
Disclosures to shareholders in addition to
balance sheet, P&L and cash flow statement
 Dates of book closure and dividend payment
 Details of shareholding pattern
 Name, address and contact details of registrars
and/or share transfer agents
 Details about the share transfer system
 Stock price data over the reporting year, and how
the company’s stock measured up to the index
 Financial effects of stock options
 Financial effects of any share buyback
 Financial effects of any warrants that are to be
exercised
 Chapter reporting corporate governance practices

Disclosures
Disclosures to shareholders in addition to
balance sheet, P&L and cash flow statement
 Detailed chapter on Management Discussion and
Analysis focusing on markets, operations,
finances, accounts, risks, opportunities and
threats, internal control systems
 Consolidated financial statement, incorporating
accounts of all subsidiaries (over 50% shares
held by reporting company)
 Details of all significant related party
transactions
 Detailed segment reporting (revenues, costs,
operating profits and capital employed)
 Deferred tax liabilities and assets and
debit/credit in the P&L for the reporting year

Disclosures
(A) Basis of related party transactions
I. A statement in summary form of
transactions with related parties in the
ordinary course of business shall be placed
periodically before the audit committee.
II. Details of material individual transactions
with related parties which are not in the
normal course of business shall be placed
before the audit committee.
III. Details of material individual transactions
with related parties or others, which are not
on an arm’s length basis should be placed
before the audit committee, together with
Management’s justification for the same

Disclosures
(B) Disclosure of Accounting Treatment
To disclose in the financial statements, if
an accounting treatment other than
prescribed in Accounting Standard has
been followed alongwith explanation.
(C) Board Disclosures – Risk management
 Internal and external business risks
 Procedures to inform Board members about
the risk assessment and minimization.
 Periodically reviewed

Disclosures
(D) Proceeds from public issues, rights issues,
preferential issues etc.
 To disclose to the Audit Committee, on
use/application of funds as and when any issue
is made
(E) Additional disclosures:
 In the Annual Report the criteria of making
payments to NEDs to be disclosed or a reference
to be made that the same is available on the
company’s website
 number of shares and convertible instruments
held by NEDs.
 NEDs shall disclose their shareholding (both own
or held by / for other persons on a beneficial
basis) in the company in which they are
proposed to be appointed as directors, prior to
their appointment.

Disclosures
F) Management
A Management Discussion and Analysis
report to form part of the Annual Report.
G) Shareholders
Disclosures to shareholders in case of
appointment /reappointment of directors,
quarterly results and presentations made,
shareholders’ grievance committee and
share transfer committee, shareholding
pattern-change

CEO/CFO certification
The CEO, i.e. Managing Director and the CFO i.e.
whole-time Finance Director or head of the finance
function to certify to the Board that:
(a) They have reviewed financial statements and the
cash flow statement for the year and these
statements:
(i) do not contain any materially untrue statement or
omit any material fact or contain statements that might
be misleading;
(ii) together present a true and fair view of the company’s
affairs and are in compliance with existing accounting
standards, applicable laws and regulations.
(b) no transactions entered into by the company
during the year which are fraudulent, illegal or
violative of the company’s code of conduct.

CEO/CFO certification (contd)
(c)They accept responsibility for establishing and
maintaining internal controls and that they have
evaluated the effectiveness of the internal control
systems of the company and they have disclosed to
the auditors and the Audit Committee, deficiencies in
the design or operation of internal controls, if any, of
which they are aware and the steps they have taken
or propose to take to rectify these deficiencies.
(d)They have indicated to the auditors and the Audit
committee
(i) Significant changes in internal control during the year;
(ii) Significant changes in accounting policies during the
year and that the same have been disclosed in the notes
to the financial statements; and
(iii)Instances of significant fraud of which they have
become aware and the involvement therein, if any, of the
management or an employee having a significant role in
the company’s internal control system