Securities and Exchange Board Of India (Sebi) has asked listed companies to disclose the estimated impact of lockdown on business revenues and profits.
Lockdown has resulted in distortions in the market due to the unavailability of the operations information of a company. Leaving investors’ to make obscure trading decisions.
SEBI aims to assist investors in assessing the damage that happened to business because of disruption in business operations.
Listed Companies to Disclose Financial Impact of Covid 19 & Lockdowns
SEBI said on Wednesday in a circular,” It is very significant for all listed companies to ensure all the information to disclose about the financial impact on a business caused due to COVID-19 or lockdown imposition or extension. Also, how much these events affecting company’s operation; should be communicated in a logical and timely manner to investors and to its stakeholders”.
In the present scenario, rules have been made making it compulsory for companies to disclose any disruption in the availability of materials that have any effect on the company’s performance or operations due to natural calamity, Force majeure, and other events.
The Exchange said most of the companies have announced shutting down operations due to the COVID-19 pandemic and extending lockdowns. However, the number of companies that disclosed the financial impact is Small scale.
Objective Of New Regulations
Companies also need to assess and specify the impact of these events on their ability to service debt along with assets, misc. financial arrangements, supply chain, demand for goods, and services in their financial statements.
Zerick Dastur, founder of Zerick Dastur Advocates and Solicitors said, “The objective of regulation seems to build a regulatory framework consisting of transparency, clarity, uniformity, consistency in a disclose-based regime”.