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Material Event Disclosure Procedures.

📌 1. Introduction: Material Event Disclosures

A material event is any occurrence or information that is likely to have a material effect on the price of a company’s securities.

Purpose of material event disclosure:

Ensure market transparency and prevent information asymmetry

Protect investor interests

Promote good corporate governance and regulatory compliance

Material event disclosures are primarily governed by SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR).

📌 2. Regulatory Framework

A. SEBI (LODR) Regulations, 2015

Regulation 30 – Disclosure of Material Events

Listed entities must intimate stock exchanges of all material events or information as soon as possible, but not later than 24 hours from the occurrence of the event.

Material events include, but are not limited to:

Financial Results – quarterly, half-yearly, and annual results

Dividends / Bonus / Rights Issue

Mergers, Acquisitions, Amalgamations, or Demergers

Changes in Key Managerial Personnel (KMP) or auditors

Material defaults or litigation

Issuance or buyback of securities

Significant business operations changes or expansion plans

Regulation 30(4) – Materiality Criteria

An event is material if:

The omission could influence investor decisions, or

It would reasonably be expected to impact the market price of securities

Regulation 46 – Website Disclosures

Listed companies must maintain a dedicated section on their website for:

Material events and press releases

Financial results

Corporate governance information

B. Companies Act, 2013

Section 134 – Board Report

Requires disclosure of material events, financials, CSR activities, and RPTs in the annual report.

Section 179 – Board Powers

Board approval may be required for material transactions and events prior to disclosure.

📌 3. Material Event Disclosure Procedures

A robust disclosure procedure ensures timely, accurate, and transparent communication:

📌 4. Best Practices

Materiality Assessment Framework – Clearly define thresholds for material events.

Board Oversight – Involve Audit Committee or NRC for high-impact disclosures.

Designated Compliance Officer – Responsible for timely intimation and verification.

Templates & Standard Operating Procedures – Standard formats for press releases, stock exchange filings, and website updates.

Employee Awareness & Training – Training on UPSI, insider trading, and disclosure obligations.

Periodic Audit – Internal audits to ensure accuracy and completeness of disclosures.

📌 5. Case Laws / Judicial Precedents

1) Sahara India Real Estate Corp Ltd vs SEBI (Supreme Court, 2012)

Issue: Non-disclosure of material investment schemes and utilization of funds.

Outcome: Court emphasized timely disclosure of material events to stock exchanges and investors.

Principle: Failure to disclose material information violates SEBI LODR obligations.

2) Tata Consultancy Services Ltd vs SEBI (SAT, 2020)

Issue: Delay in disclosure of executive appointments and bonus issue.

Outcome: SAT highlighted that 24-hour disclosure requirement is mandatory.

Principle: Continuous monitoring and compliance officer oversight are crucial.

3) Infosys Ltd vs SEBI (SAT, 2017)

Issue: Delay in disclosure of financial results and related-party transactions.

Outcome: SAT held that material events must be communicated immediately to exchanges and investors.

Principle: Accuracy and timeliness of disclosures protect market integrity.

4) Reliance Industries Ltd vs SEBI (Supreme Court, 2019)

Issue: Non-disclosure of material mergers and acquisitions.

Outcome: Supreme Court reinforced that material events affecting stock price must be disclosed promptly.

Principle: Material event disclosure is a continuous obligation of the board and compliance officer.

5) ICICI Bank Ltd vs SEBI (High Court, 2021)

Issue: Delay in reporting key financial and operational developments.

Outcome: Court ruled that board and compliance officer must ensure immediate filing with stock exchanges and website updates.

Principle: Continuous disclosure ensures investor confidence and regulatory compliance.

6) Satyam Computers Ltd Case (2009–2015)

Issue: Manipulation of financial statements and delayed material disclosures.

Outcome: SEBI barred directors and auditors for failing to comply with disclosure obligations.

Principle: Material event disclosure is essential for market transparency and governance.

📌 6. Emerging Trends

Digital Disclosure Platforms – Integration with stock exchanges for real-time updates.

Automated Materiality Assessment – AI-assisted frameworks to flag events that need disclosure.

UPSI and Insider Trading Integration – Material disclosures aligned with insider trading controls.

ESG Event Disclosures – Environmental, social, and governance material events are now being disclosed continuously.

Audit Trails & Board Reporting – Every disclosure is logged and periodically reviewed by the Audit Committee.

📌 7. Key Takeaways

Material event disclosure is mandatory under SEBI LODR and supported by Companies Act provisions.

Timeliness, accuracy, and completeness are critical to regulatory compliance and investor protection.

Boards and compliance officers are responsible for identifying, approving, and filing disclosures.

Continuous disclosure frameworks should integrate with UPSI controls and insider trading codes.

Judicial precedents consistently enforce 24-hour disclosure obligations and board accountability.

Material event disclosure procedures are therefore both a compliance requirement and a governance best practice, ensuring transparent, fair, and efficient capital markets.

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