Companies will need to prepare these documents in addition to the annual reports that they issue
Mumbai: The Securities and Exchange Board of India
(Sebi) on Tuesday asked all listed companies to prepare documents with
all relevant information about them every year so investors can make
better decisions about transacting in their shares.
These documents, to be known as annual information memorandum (AIM)
will be in addition to the annual reports that companies have to issue
with details on their earnings and balance sheets.
Sebi said the annual reports often do not carry enough
disclosures and several important facts about a company are scattered at
different places at different times, which makes it difficult for
investors to have a clear knowledge about the company.
“Listed companies in India are required to make
submissions with various authorities, viz. stock exchange, Registrar of
Companies, regulators, etc. The frequency of such submissions is
stipulated by the relevant legislation and can be annual, half yearly,
quarterly, event based, etc. While listed companies in India make such
submissions, there is no availability of a comprehensive information
memorandum about the company which would enable investors to obtain all
relevant information at one place,” Sebi said in a circular.
Material events after listing that are disclosed to the
public are available across a large time span and investors may find it
difficult to access all relevant information for the purpose of making
an informed investment decisionPGDM 1st SemSebi said.
The regulator said that while an investor in a primary
market has all the information relevant to investment decision-making at
one place in the form of an offer document, an investor in the
secondary market would have to sift through various disclosures made
over time to aggregate the information required for deciding on
investing in a company’s shares.
AIM will provide shareholders and prospective
shareholders with accurate and relevant information about the financial
and operating performance of the company. Such a document will be
comprehensive in nature and will include corporate governance and
business responsibility reports and related party disclosures.
Once companies include such details in AIMs, their annual
reports could limit their scope only to details required under the
Companies Act, which will consequently reduce costs as AIM will be
required to be filed in electronic format.
Sebi proposed that listed companies prepare AIM on a
yearly basis and disseminate these within 135 days from the end of every
fiscal.
The report, after being approved by the company’s board
of directors, will be disseminated electronically on the company’s
website and on stock exchanges, Sebi proposed.
Source- Livemint.com
By
Shah Mohammad Abdul Qadir
PGDM 1st Year
IIMT college Of Management
Greater Noida, U.P.
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