Securities and Exchange Board of India (SEBI) chairman Ajay Tyagi has highlighted the need for adequate level of disclosures, risk assessment, sound digital infrastructure and high standards of data protection as well as cybersecurity during the COVID-19 era.
Addressing a the 14th Corporate Governance summit organised by the Confederation of Indian Industry (CII) virtually, Mr. Tyagi said SEBI had issued an advisory providing an illustrative list of information that should be disclosed about relating to the impact of the COVID-19 crisis.
Companies must avoid selective disclosures while revealing disclosing material information, he said. “Since the onset of the COVID-19 pandemic, with its attendant uncertainties and accompanied restrictions, corporate boards across the world are facing complex new problems to tackle with,” he said. “Corporate governance discussions are increasingly being held on areas such as dealing with uncertainties, crisis management and sustainability,” he added.
“A critical area that emerged during this pandemic was the need to provide adequate level of disclosures to stakeholders about the health and performance of the company amid the uncertainty,” the SEBI chief said. “The company boards should ensure that adequate disclosures are provided timely to stakeholders and there is no asymmetry of information,” he said. Mr. Tyagi said disclosures should include the impact of COVID-19 on business, performance and financials. It is important to ensure that when listed entities disclose material information related to the impact of COVID-19, they should not resort to selective disclosures, keeping in mind the principles governing disclosures,” he added.
Stating that risk assessment had emerged as another prime issue, He said company boards must critically consider if they were looking at the right risks, by remaining active in their risk assessment activities.
“This includes paying attention to new emerging risks, reassessing resilience, and preparing the organisation for any future event that could result in similar business disruptions as the COVID-19 pandemic,” he said.
He said the constitution and role of the risk management committees (RMC) of the top 1,000 listed entities had also been revamped.
Underlying the idea for separation of the roles of chairperson of the board and MD/CEO of a listed company, he said it would provide a better and more balanced governance structure by enabling more effective supervision of the management and not to weaken the position of promoter.