Promoters must disclose family pacts: Sebi

economictimes.indiatimes.com:

promoters must disclose to exchanges their family settlement agreements or arrangements that have a bearing or influence on management control of listed entities for such deals to remain legal. In its notified rules, the capital market regulator Securities and Exchange Board of India (Sebi) has said that agreements that subsist as of the date of notification are to be disclosed to the stock exchanges.

It was earlier understood that only prospective agreements must be disclosed, not retrospective. Sebi has notified rules aimed at bringing transparency by divulging all secret pacts between key shareholders through a gazette notification on June 14, 2023.

The regulator said new amendments would come into force on the thirtieth day from the date of their publication in the official gazette, which means the effective date is July 15. According to the amendments, all the shareholders, promoters, promoter group entities, and key managerial personnel of a listed entity who are parties to the agreements that directly or indirectly or potentially impact the management or control of the listed entity, impose any restriction, or create any liability on the listed entity should be disclosed to the stock exchanges.

According to lawyers, the amendments in their current form are so broad that they will likely cover all the pacts, including unintended categories of contracts within its ambit. «As per the new notified norms, all the agreements between promoters or shareholders, including family settlements, which impact the management or control of the listed company or impose any restriction or create any liability on the listed company, should be disclosed to the stock exchanges,» said Vinay Chauhan, a leading corporate and securities