12.3 Institutional Arrangement For Non Listed Companies
12.3 Institutional Arrangement for Non-Listed Companies
12.3.1 Information on a number of Listed Companies is accessible through Bombay Stock Exchange Official Directory, CMIE’s PROWESS, Capital Line 2000, etc. It should be underlined that even these sources do not cover the entire listed segment possibly due to non-availability of Annual Reports, cost considerations and heavy emphasis on companies attracting the investor’s interest. For instance, while there are a little less than 10,000 listed companies as per SEBI, the number of companies for which some minimum financial data are available in PROWESS for the years 1996-97, 1997-98 and 1998-99 ranges between 5,000 and 6,000 (including foreign banks and some unlisted companies). If one wishes to study a common sample for all the three years, the number falls to a little less than 4,000. The number of companies shrinks further if a longer period is considered. Indeed, data on all the listed companies is not available from any single source. Even more problematic is getting the information on closely-held Public Limited Companies and Private Limited Companies. Further, in the liberalized Foreign Direct Investment (FDI) regime, a number of companies, even though possessing a substantial turnover and scale of operations, do not get listed and operate as closely-held companies. The passenger car and household appliances industries offer excellent examples in this regard. Detailed data on the operations of many important companies in these industries remain virtually inaccessible to policy planners, researchers and industry analysts. There is a need to define a new criterion to identify important companies that may be treated as deemed widely-held irrespective of their listing on the stock exchange, as is being practised in the US, and therefore suitable for detailed disclosures.
12.3.2 The Commission, therefore, recommends that:
Companies having assets or sales over, say, Rs. 50 crores (on the lines of deemed public company in the Companies Act), or having a market share of over 10 per cent in a particular market segment, or those with controlling foreign interest should be brought under some legal obligations to provide for necessary disclosure of annual reports and their accessibility to the public. Such transparency with regard to reporting and disclosure requirements should be adequate, even if not necessarily on par with listed companies.
The DCA should have the primary responsibility of bringing out basic statistics in respect of such companies.