Correspondence with SEBI and the Stock Exchange

When This Correspondence Arises

Everything covered so far in this chapter applies to a company whether or not its shares are traded on a stock exchange, because the Registrar of Companies has jurisdiction over every registered company. Correspondence with the Securities and Exchange Board of India (SEBI) and with a stock exchange, by contrast, arises only once a company's securities are actually listed for trading — an unlisted private or public company has no occasion to correspond with either body in the ordinary course of its affairs.

SEBI's Role

SEBI, established under the SEBI Act, 1992, regulates India's securities market with the primary objective of protecting the interests of investors and ensuring the market functions fairly and transparently. For a listed company, SEBI's regulations (principally the SEBI (Listing Obligations and Disclosure Requirements) Regulations) require prompt, accurate disclosure of information that could affect an investor's decision to buy, hold, or sell the company's securities. A listed company is required to designate a senior officer — very often the Company Secretary — as its Compliance Officer, specifically responsible for ensuring the company meets these disclosure obligations and for liaising with SEBI and the stock exchange on the company's behalf.

Correspondence with the Stock Exchange

A listed company's day-to-day statutory correspondence in this area is, in practice, mostly with the stock exchange(s) on which its securities are listed, rather than directly with SEBI. A listed company must promptly intimate the exchange of matters that could affect the price of its securities or that investors would reasonably want to know without delay — for example, the outcome of a Board Meeting (declaration of a dividend, approval of financial results, appointment or resignation of a director), a proposed merger or major acquisition, or any material event or development. It must also submit periodic filings the listing regulations require, such as its financial results within the prescribed time after the Board approves them, and a compliance certificate confirming it has complied with the listing conditions.

Correspondence Directly with SEBI

Direct correspondence with SEBI itself is comparatively rarer for an ordinary listed company, and typically arises in specific situations: responding to an investor grievance escalated through SEBI's investor grievance-redressal mechanism, replying to SEBI's query or show-cause notice during an inquiry into the company's compliance, or making disclosures SEBI's regulations require to be filed with it directly (for example, in connection with a public issue, a buy-back, or a takeover).

Keeping the Scope Honest …