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Exchanges warn listed firms against misleading or false publicity


Listed companies have got a rap on the knuckles from the stock exchanges for issuing manipulative or distorted statements. Amid a boom in the stock market, stock exchanges have come out with a list of dos and don’ts companies need to keep in mind while communicating with their shareholders.

In a strongly-worded statement, exchanges warned companies exchanges said the listed entity should not make any statement, promise, or forecast which is untrue or misleading.

“The company can position itself as a leader, pioneer, expert, or any word indicating it as the best only based on factual data which is widely available and not based on single-source unless such source is a recognised source and has the third-party certification. The company shall also indicate the source based on which such claim is being made. And the information on such sources should be in the public domain and verifiable,” BSE and NSE told listed companies in a communication.

If the company presents any financial data, the statement shall also include data for the past three years. The data should include details regarding sales, gross profit, net profit, share capital, reserves, earnings per share, dividends, debts, and the book values. The companies should also provide a link to the company’s website where the details are available and verified. Moreover, the company should only provide publicly reported financial information and not give any forward-looking statement.

Gaurav Mistry, Associate Partner, DSK Legal, said the circulars would work as a screening checklist for statements and information proposed to be released to the public. And will act as a catalyst in safeguarding the interest of investors.

If the company receives awards, disclosure should include whether the listed entity has any relations with the awarding agency. The disclosure should also provide details of the number of evaluated participants, recognition of the awarding agency in the field in which the award is given, and publicly available information relating to the awarding agency.

“The exchanges have acknowledged that publication, discussion about plans, awards, and performance are imperative for the sustenance of the companies. But has emphasised on the confidentiality of price-sensitive information, thereby holding the stakeholder’s interest paramount to the functioning of the market,” said Sonam Chandwani is the Managing Partner at KS Legal & Associates.

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