The practice of selective disclosure by the management to certain stakeholders at either post results analyst meets or in private meetings sought by fund managers and a few high net worth groups, is discriminatory. Besides, it is detrimental to the interests of the minority shareholders who are often not privy to the discussions and at a patent disadvantage over other, larger players. SEBI should be given kudos for finally framing this malpractice. A sub-committee formed under the aegis of Keki Mistry submitted its recommendations in the last fortnight of November and SEBI has promptly come out with a public discussion paper on the subject. The paper highlights the practices and tackles the problems of information asymmetry across various classes of shareholders. Many companies which hold meetings with select analysts often tend to give forward looking statements at such meeting, generally called at the behest of some broking outfit or another. Price-sensitive information and projections do not get captured in the post quarterly results of many companies. Most companies do not disseminate the information received from the analyst to the general public or put it up on either their own corporate website or the stock exchanges site. A few do. They do not often share it with other analysts or journalists, despite requesting them to do so. The normal plea – ‘We do not have the habit of storing such information and SEBI has not mandated public sharing!’ The committee has recommended putting a stop to such practices. However it has stopped halfway and said companies should share information on a voluntary basis over the next 12 months and this will be made mandatory thereafter. One fails to understand the need for giving the choice to the management of companies to share or not share. It goes against all tenets of equity to allow companies to continue with this discriminatory practice for another 12 months and only make it mandatory thereafter. No great software or effort is required on the path of the companies to record the entire meeting live. Currently, during the Covid period a telephonic recording of the meeting can be done instantaneously and it should be compulsory to upload the recording on the website without any outside editing. If the management does make some forward looking statements, these should not be off-record and only available to be used by a few analysts in their presentations. All shareholders should be treated equally, both on paper and in practice. SEBI is required to accept the report in toto and make it obligatory for companies to disclose the information within a few hours. The actual verbatim transcript can be uploaded two days later, on both sites.
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Illustration: Panju Ganguli
