Markets watchdog to tighten disclosure norms for promoters (Lead)January 21st, 2009 - 7:53 pm ICT by IANS
Mumbai, Jan 21 (IANS) India’s markets watchdog Wednesday decided to tighten the disclosure norms for company promoters who pledge shares with lenders, finding lapses during its probe into the Rs.70-billion Satyam Computer Services scam.“The founders must disclose shares with lenders,” C.B. Bhave, chairman, Securities and Exchange Board of India (SEBI), told reporters here after a meeting of the board of the markets watchdog.
“This will be mandatory for listed companies.”
He said such disclosures would be of two types. First, when the number of shares pledged goes beyond a particular limit, also called event-based disclosures, and the second will call for periodic filings by the promoters.
Bhave, however, did not specify what the watchdog meant by “particular limit”. “We will define this in the coming weeks.”
The regulator also said that the Satyam scandal, in which its founder and former chairman B. Ramalinga Raju said he had inflated the company’s cash balances and profits, would trigger a long-term system improvement.
“Whenever any such scandal happens, we need to look for long-term systemic improvements. Sometimes one can come up with quick solutions, like the one on disclosure of shares,” Bhave said.
He also maintained that the size of the Satyam scam was difficult to ascertain and that it was trying to ascertain how much cash the troubled IT firm actually held in different bank accounts.
“We will approach banks to verify the amount of Satyam’s deposits.”
He also said while officers in his organisation had questioned the auditors and the finance department of Satyam, they had not been able to question the firm’s founder Raju yet.
Officials of the Crime Investigation Department (CID) of Andhra Pradesh Police are questioning Raju, his brother and former managing director B. Rama Raju, and former chief financial officer Vadlamani Srinivas.