Disclose Loans to Promoters in Half-yearly Report: Sebi to Listed Firms

Listed companies should disclose loans and guarantees provided by them to their promoters or any other entity controlled by them in their half-yearly compliance report on corporate governance, said markets regulator Sebi on Monday.

The move is aimed at bringing transparency and strengthening disclosures about such loans and guarantees, the Securities and Exchange Board of India (Sebi) said in a circular, while coming out with a new disclosure format in this regard which will be effective from financial year 2021-22.

“In order to bring about transparency and to strengthen disclosures around loans/ guarantees/comfort letters/security provided by the listed entity, directly or indirectly to promoter/promoter group, or any other entity controlled by them, it has been decided to mandate such disclosures on a half-yearly basis, in the compliance report on corporate governance,” Sebi said.

Under the new format, any loan or other form of debt, advanced by the listed entity directly or indirectly — to their promoter, promoter group directors or their relatives, key management personnel, or any other entity controlled by them — need to be disclosed, along with aggregate amount advanced during six months, and balance outstanding at the end of six months.

In case of any guarantee or comfort letter provided by the listed entity in connection with any loan(s) or other form of debt, Sebi said the listed entity needs to disclose the aggregate amount of issuance during six months, and balance outstanding at the end of six months, taking into account any invocation.

With regard to any security provided by the listed entity, they need to disclose the type of security — whether it is in cash or in shares — aggregate value of security provided during six months, and balance outstanding at the end of six months.