Listed companies asked to make forensic audit info public

NEW DELHI:  In a bid to improve transparency in sharing information, markets regulator SEBI has mandated all listed companies to make disclosures about their forensic audit reports to stock exchanges.
“The listed entities will make disclosures about the fact of initiation of forensic audit along with the name of the entity initiating such audit and reasons for the same, if available, to stock exchanges,” the Securities and Exchange Board of India (Sebi) said in a notification on Thursday.

The move is expected to give a real picture of the finances of the company. Further, according to the mandate, companies will be required to disclose their final forensic audit report, other than the forensic audit initiated by regulatory or enforcement agencies, on receipt by the listed entity, along with comments of the management, if any.

Besides, listed entities will now have to maintain 100 per cent asset cover, or asset cover as per the terms of offer document, sufficient to discharge the principal amount at all times for the non-convertible debt securities issued. The regulator has removed the framework that said maintenance of 100 per cent asset cover will not be applicable in case of “unsecured debt securities issued by regulated financial sector entities eligible for meeting capital requirements as specified by respective regulators”. 

Furthermore, the listed entities will have to promptly forward to debenture trustees a half-yearly certificate regarding maintenance of 100 per cent asset cover, or asset cover as per the terms of offer document, in respect of listed non-convertible debt securities, by the statutory auditor along with the half-yearly financial results.

The submission of half-yearly certificates will be exempted only where bonds are secured by a government guarantee, Sebi said. The regulator has amended the Listing Obligations and Disclosure Requirements (LODR) regulation to make the above changes.