The Securities and Exchange Board of India (Sebi) is
increasingly looking towards regional and international
regulatory activity in mandating higher disclosure
requirements, according to counsel at IFLRs India Capital
This year Sebi has increased its disclosure standards in
several areas. One example is its requirement for listed
file a comprehensive annual disclosure statement along the
lines of the US SECs 20F filing.
Panelists agreed that Sebi is encouraging them to think more
carefully about disclosure.
OMelveny & Myers David Makarechian said,
Sebi has recently emphasised the need for counsel to move
beyond checklist disclosure towards a much more involved
Counsel welcomed the move. High disclosure standards
are very important: they result in good issues, which
eventually lead to a strong market, said Ajay Vaidya of
Kotak Mahindra Capital.
According to Pooja Sinha, counsel at OMelveny &
Myers, Sebi is increasingly asking what other markets are doing
to deal with issues, so its important to be aware of
whats happening elsewhere.
She named Hong Kong as a key influencer: Hong Kong has
a similar market with high retail participation and many IPOs
[initial public offerings], so Sebi may look towards its
regulators activities, she said.
Vaidya agreed, commenting that more than the US and UK, it
seems that Sebi is looking to Hong Kongs Securities and
Futures Commission (SFC) as well as the Monetary Authority of
Hong Kongs Hontex case, which sparked the upcoming
sponsor regulations. In the case, the SFC required the company
to return its IPO proceedings to investors by requiring a share
repurchase after evidence of fraud.
Its a sign of regulatory power and an indicator
of whats to come, Sinha said.
Although counsel didnt predict sponsor regulations in
India, they have observed Sebi becoming more active in
investigating banks. Vaidya said that now Sebi will go to a
merchant bankers website and review disclosures of
banks issue management track record.
However Sinha added that Indias disclosure system
seems to be working.
At the end of the day, we havent seen
large-scale diligence fraud or failure in India, she
said. Regardless, its a good time to overhaul the
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