Sebi's rumour verification rule and its implications
Sebi) requires top listed companies to confirm, deny or clarify market rumours reported in mainstream media from June 1. Reena Zachariah looks at what it means for these companies:
What's the new Sebi rule on market rumour verification?
The top 100 listed companies are required to confirm, deny or clarify market rumours reported in the mainstream media. However, they needn't respond to all kinds of rumours, except those that have a material impact on their share price movements. These include matters such as mergers and acquisitions, health issues of managing directors, leadership changes, and corporate frauds, among other things. They are required to clarify these rumours before the next trading day or within 24 hours of material price movements, whichever is earlier.
Do companies need to CLARIFY every rumour floating around?
They have to only clarify those market rumours that have a material impact on their stock price movements. The purpose of this new rule by Sebi is to avoid false narratives that would impact share prices positively or negatively.
«Rumours appearing on social media platforms need not be clarified,» said Sunil Sanghai, founder of NovaaOne Capital, an investment banking firm.
Why is this rule significant for companies and investors?
An important aspect of this new rule on market rumour verification is that price calculations for corporate actions like share buybacks and open offers will exclude material share price movements caused by confirmed rumours.
How will it work in deals and share
