New Delhi: To ensure sound disclosure requirements, the Securities and Exchange Board of India (SEBI) notified rules, asking the top 100 listed companies by market capitalization to confirm, deny or clarify any market-related rumour reported in the mainstream media coming into effect from October 1.

Moving further, for the top 250 listed companies, the regulation will be applied from April 1, 2024, said the SEBI.

The objective of the rule

In order to make corporate governance more reliable and strong at all listed firms, Sebi decided to lay a framework to address the issue of certain shareholders relishing their special rights continuously.

As per Sebi, from now on, any special right granted to the shareholders of a listed company will first have to seek the approval of shareholders in a general meeting. The approval will be made by placing a special resolution once every five years commencing from the date of the grant of such special right.

What are the concerns behind this?

Such a rule came out as public institutional shareholders were voicing their concerns against special rights at an increasing speed, special rights conferred upon the promoters, founders, and certain individuals of the firms.

“With effect from April 1, 2024, the continuation of a director serving on the board of directors of a listed entity shall be subject to the approval by the shareholders in a general meeting at least in once every five years from the date of their appointment or reappointment, as the case may be,” Sebi stated.

With this, the market regulator also issued rules to reinforce the framework of slump sales done outside the scheme of arrangement framework to defend the interest of minority shareholders.

For giving this effect, Sebi has amended LODR (Listing of Obligations and Disclosure Requirements) rules, which would be applied from July 14.