Sebi to revisit default diktat

Mumbai: Market regulator Sebi is set to revisit its earlier directive that made it mandatory for listed companies to inform stock exchanges in the event of loan default.

This will be one of the items that will be looked into by the Securities and Exchange Board of India (Sebi) at its agenda-heavy board meeting on December 28.

The Sebi board is also likely to be apprised of the recent probe into the circulation of unpublished price-sensitive information of various listed companies through social media such as WhatsApp.

It could also review the regulatory framework for credit rating agencies (CRAs) and implement some steps based on the recommendations made in a consultation paper.

In September, Sebi had put off the implementation of its directive "until further notice" that required listed firms to inform exchanges if they defaulted on loan payments to banks and financial institutions. The deferment came a day before it was supposed to be implemented from October 1.

In its directive, Sebi had asked listed firms to inform bourses in case it defaulted on the payment of interest, instalment obligations on debt securities and loans from banks and financial institutions and external commercial borrowings and such a disclosure had to be done within one working day from the date of default at the first instance of default.

Experts, however, had said the Sebi's directive was tough as a technical default could happen even in case of a standard asset. Market circles do not rule out some relaxation in the Sebi directive.

At present, the Sebi listing guidelines require specific disclosures on delay or default in the payment of interest or principal on debt securities, including listed non-convertible debentures, listed non-convertible redeemable preference shares and foreign currency convertible bonds.

On the issue of the circulation of price-sensitive information about various listed companies through WhatsApp messages, the Sebi board may consider whether insider trading norms need to be modified to tackle such information leaks.

The market watchdog had launched a probe after reports had indicated that price-sensitive information on the financials of a dozen listed companies were being circulated prior to the public announcement of their quarterly results. The market regulator had last week conducted searches on the premises of more than 30 market analysts and dealers and seized documents, computers, mobiles and laptops.

The Sebi board may also announce fresh norms for the CRAs. Earlier a consultation paper had recommended a hike in the minimum net worth of such entities to Rs 50 crore. It had also said that if a CRA is promoted by a corporate body other than banks, financial institutions or foreign credit rating agency, the promoter must have a sound track record for at least five years.