SEBI’s Proposed Disclosure Regime: Impact on Public M&A and Directors’ Liabilities

Institutional investors, listed companies, and retail shareholders – three key market participants – will be watching SEBI with eagle-eyes while it attempts to implement a new disclosure regime, as set out in its recent consultation paper. Most of SEBI’s proposals are well-intentioned and workable. If at all, SEBI (and other market players) must remain cautious of the risks the proposals potentially open up. Flooding the market with too much information, increased liabilities for directors, and challenges for strategic and financial investors may compromise many of the benefits which the changes seek to bring.

We analyse certain key changes proposed and their potential effect on key market players.

Key Takeaways:
  • Most proposals are well thought through – unintended impact in a few cases
  • Mandatory clarification of media rumours – M&A dealmaking compromised and potential creation of a false market?
  • Objective materiality thresholds introduced – could inadvertently lead to over-disclosure and a failure to disclose material information
  • Open-ended and ambiguous proposals cast a wide net – likely to increase directors’/ KMPs’ liabilities

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