SEBI: Extends timeline for verification of market rumours by listed entities

Background:

The Securities and Exchange Board of India (“SEBI”) has implemented significant amendments to
the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR Regulations”),
effective from October 1, 2023. The SEBI (Listing Obligations and Disclosure Requirements) (Second
Amendment) Regulations, 2023 introduce a new provision under regulation 30 of the LODR
Regulations, focusing specifically on addressing market rumours. “Market rumours” are defined as
unverified information or speculative content circulating in the financial market concerning a
particular company or its securities.
Prior to the Amendment, regulation 30(11) of the LODR Regulations empowered listed entities to
voluntarily confirm or deny any reported event or information to the stock exchange(s).

Facts of Circular

1- The proviso to Regulation 30(11) of SEBI (Listing Obligation and Disclosure Requirement) Regulation, 2015
inter-alia require below entities to mandatorily verify and confirm, deny or clarify market rumours:

• top 100 listed entities, by market capitalization, with the effect from October 1, 2023 and
• top 250 listed entities, by the market capitalization, with the effect from April 1,2024.
  2- It has been decided to extend the effective date for implementation of the proviso to regulation 30(11) of the LODR Regulation for:
• top 100 listed entities by market capitalization to February 1 ,2014, and
• for top 250 listed entities by market capitalization to August 1, 2024.

Impact of the Amendment

1. Enhanced Transparency- By mandating rumour verification, the amendment reinforces transparency in the functioning of listed entities and helps maintain a level playing field for all market participants.
2. Investor Protection: Investors can make well-informed decisions based on accurate and verified
   information, minimizing the risk of acting upon rumours that could lead to unnecessary volatility.
3. Market Stability: By promptly addressing and debunking rumours, the amendment aims to stabilize the market and prevent undue speculation, which can have detrimental effects on stock prices and investor confidence.

Umang Mittal, Audit Associate, SW India