In order to help existing and prospective shareholders with accurate and relevant information about the financial and operating performance of the companies, Capital market regulator Securities and Exchange Board of India (SEBI) has proposed that listed firms should file an Annual Information Memorandum (AIM), on the lines of practices followed in the US and other large markets.
The memorandum, which is proposed to be filed by the top 200 companies by market capitalization from the next financial year beginning April 1 and by other firms from April 1, 2015, can also be used as a reference document while raising funds. However, the company wanting to use AIM as draft offer document for future capital raisings would be required to submit an auditor’s examination report along with AIM.
According to the regulator, companies must give complete details of capital structure, borrowings, lending, share pledge, specific mention of important changes in the business of the company during the financial year, information regarding legal cases on promoters, details of public issues such as convertibles and Foreign Convertible Bonds or FCCBs and the reason for un-utilized proceeds. Although, such information is available on stock exchanges in bits and pieces for secondary market participants, there is no single document which contains all subsequent updates of the company at one place. It is in view of this, SEBI is mulling consolidated 'annual info' filing by firms and floated draft proposal inviting public comments to be submitted to the regulator on ore before March 9, 2014.