Sebi Introduces New Framework For Market Rumour Verification From This Date - Details

According to the new regulations, listed entities must verify and respond to market rumours if they cause significant changes in stock prices. The initiative has been formulated in collaboration with industry associations such as Assocham, FICCI, and CII, along with stock exchanges.
Sebi On Market Rumour Verification

Sebi On Market Rumour Verification (Image Source: iStockphoto)

The Securities and Exchange Board of India (Sebi) has announced a new framework to streamline the verification of market rumours, aiming to facilitate ease of doing business.
This initiative has been formulated in collaboration with industry associations such as Assocham, FICCI, and CII, along with stock exchanges. These associations will publish the detailed standards on their websites.
According to the new regulations, listed entities must verify and respond to market rumours if they cause significant changes in stock prices. Compliance with these standards is mandatory for the top 100 listed entities starting from June 1, 2024, and will extend to the top 250 listed entities by December 1, 2024. Stock exchanges are advised to inform companies about these changes and ensure adherence.
As per the SEBI's circular, "The requirement to verify market rumours under Regulation 30(11) of LODR Regulations shall be applicable to top 100 listed entities with effect from June 01, 2024 and to top 250 listed entities (i.e., next top 150) with effect from December 01, 2024 as specified by SEBI circular dated January 25, 2024."
In a separate but related move, Sebi has revamped the method for calculating the market capitalisation of listed companies. Previously, market capitalisation was determined based on the stock price on a single day, specifically March 31.
The new method requires using the "average market capitalisation" over a six-month period, a change recommended by an expert committee led by Sebi's former whole-time member, S K Mohanty. This adjustment, effective from December 31, 2024, aims to provide a more accurate reflection of a company’s market size by accounting for daily fluctuations over time.
Additionally, Sebi has harmonised the timeline for prior intimation of board meetings to two working days for all types of events, promoting uniformity. Under the current Listing Obligations and Disclosure Requirements (LODR) regulations, companies must notify stock exchanges about board meetings concerning proposals like financial results, share buybacks, and fundraising within a timeframe of 2-11 working days.
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