To address information asymmetry amongst shareholders, a Sebi panel has recommended that listed companies should make available audio and video recordings of post-earning conference calls on their websites as well as stock exchanges within 24 hours or before the next trading day.
The recommendations have been made in a report on disclosures pertaining to analyst meets, investor meets and conference calls, prepared by a sub-group headed by HDFC Vice Chairman and CEO Keki Mistry. The sub-group was formed by the Primary Markets Advisory Committee (PMAC), which also discussed the report this month.
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The panel has also suggested that written transcripts of post-earning conference calls should be made available on websites of listed companies and respective stock exchanges within five working days after such calls. Further, listed companies should make available audio/ video recordings and the written transcripts on their websites for at least eight years in addition to the details disseminated on respective stock exchanges.
The recommendations should be made applicable in a phased manner. The requirements should be initially recommendatory for a period of one year and mandatory thereafter for all listed companies, as per the report. The panel noticed that "though certain companies have an elaborate mechanism in place to effectively disclose information to shareholders, there are many listed companies which lack such procedures or deal with the disclosure requirement as more of tick of the box compliance".
While many listed companies disclose the occurrence of institutional investors meet or conference call with analysts, it has also been noticed that they do not divulge the details of what transpired in such meetings. Minority shareholders, who do not attend these meetings, are not privy to theinformation shared with a select group of investors, thereby creating information asymmetry among different classes of shareholders, according to the sub-group.
While companies disclose the presentations as mandated under Sebi (Listing Obligations and Disclosure Requirements), Regulations to the stock exchanges and on their respective websites, Sebi observed that theygenerally confine themselves to merely disclosing Power Point slides presented in such meetings. "Audio/ video recordings shall be made available on the website of the listed entity andrespective stock exchanges immediately after the post-earnings conferencecall/ quarterly call, before the next trading day or within 24 hours from the occurrence of event or information, as required under the …Sebi (LoDR)Regulations, 2015, whichever is earlier," the report said.
LoDR refers to Listing Obligations and Disclosure Requirement. It noted that listed companies can decide as to whether conference calls are open to everyone to attend or limit such calls to their existing shareholders.
Listed companies should provide number of one-to-one meetings with select investors as part of corporate governance reports submitted by them to stock exchanges on a quarterly basis along with affirmation that no Unpublished Price Sensitive Information (UPSI) was shared by any official of the company in such meetings, the report said. Further, company should maintain a record of all such one-to-one meetings, as the same could be required for future reference. The data should be preserved for a period of at least eight years, it added.
The Securities and Exchange Board of India (Sebi) has sought comments from public on the panel's recommendations till December 21. The issue of such information asymmetry between various classes of investors arising out of limited disclosures in respect of analyst meets or institutional investors meet/ conference calls was discussed by PMAC in July 2020.