Sebi extends timeline for mandatory verification of market rumours by listed entities

Capital markets regulator Sebi (Securities and Exchange Board of India) has extended the timeline for mandatory verification of market rumours by listed entities.

Sebi regulations mandate that top 100 listed entities by market capitalisation must verify, confirm, deny or clarify market rumours from October 1, 2023. This has now been extended to February 1, 2024.

Similarly, the top 250 listed entities were to mandatorily verify and confirm, deny or clarify market rumours with effect from April 1, 2024, which now stands extended till August 1, 2024.

"It has been decided to extend the effective date of implementation of the provisions for top 100 listed entities by market cap to February 1, 2024 and for top 250 listed entities to August 1, 2024," a Sebi statement noted.

Currently, some of the largecap companies on a voluntary basis file to exchanges, clarifying various rumours related to acquisitions or appointments etc., Mostly, this relates to various news reported in the mainstream media.

If the listed entity confirms the reported event or information, it must also provide the current stage of such event or information.

Sebi had in March this year approved a proposal to verify market rumours to strengthen corporate governance and disclosure framework. The move was based on the recommendations made in three consultation papers released by SEBI between November 2022 and February 2023.

Prior to this, listed entities had it upon themselves to verify and respond to market rumours.

The decision to mandatorily verify rumours was taken to protect investors and stakeholders as potential misinformation can influence market sentiments.

By making it mandatory for companies to respond to rumours, the move was also aimed at increasing transparency and maintaining a level-playing field for listed entities. However, some companies felt, this would increase the compliance burden.