THE PRESSING NEED FOR STANDARDIZATION IN SECURITIES MARKET DISCLOSURES

The laws do not bestow on shareholders of a company an inherent right to participate in its management; it is the board with which governance and oversight of management is entrusted.

- DR.RANJITH KRISHNAN, USHA GANAPATHY SUBRAMANIAN

Shareholders, especially public shareholders, inevitably have to depend on the disclosures made by entities to the bourses.

When it comes to disclosures, comparability of information is an essential aspect to get a sense of the relative impact and implication. If divergent practices and interpretations exist, it could lead to misinterpretation of the available information. For example, when it comes to disclosure of material events, in respect of those events for which the boards need to apply the test of materiality, what is material for one company's board may not seem material for another even though they may belong to the same sector. Here is where standardization of practices could lead to better understanding of information.