SEBI's New Disclosure Requirements About Financial Impact of Covid-19

Author: thinkinglegal | May 22, 2020 - 13:59 | Tags: Regulatory Advisory & Dispute Resolution


On May 20, 2020, SEBI issued an advisory (the “Circular”) on disclosure of material impact of Covid-19 pandemic on listed entities under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR”). Despite the disruption caused due to lockdown being unforeseen, SEBI has emphasized that it is important for listed entities to ensure that all available information about the impact of these events on the company is communicated to its investors and stakeholders in a timely and cogent manner, to avoid distortions in the market.  

Further, SEBI noted that this Circular has been necessitated because there are only a few listed companies that have disclosed the financial impact of Covid-19. SEBI has also observed that listed entities around the world have been making disclosures regarding the impact of the pandemic, including that on financial  condition  and  results of operations,  future  operations, capital  and  financial  resources,  liquidity,  assets,  internal  financial  control  over  financial reporting   and  disclosure   controls  and   procedures,   demand   for  products/services etc.

Existing Provisions

In this regard, Regulations 30(3), 30(4), 51(1) and 51(2) of LODR require listed entities to disclose material events, which have a bearing on its performance/ operations. Schedule III of LODR specifically requires listed companies to make disclosures relating to “Disruption of operations of any one or more units or division of the listed entity due to natural calamity  (earthquake,  flood,  fire, etc.),  force  majeure or events such as strikes,  lockouts etc.

SEBI had provided further guidance on information that has to be disclosed in cases of disruptions of operations due to natural calamity, force majeure and other events in Annexure I to a circular dated September 9, 2015.

At the time of occurrence, the following information has to be disclosed:

  1. expected quantum of loss/damage caused;
  2. whether loss/damage covered by insurance or not including amount;
  3. estimated impact on the production/operations in case of strikes/lock outs;
  4. factory/unit where the strike/lock out takes place including reasons for such strike.

Regularly, till complete normalcy is restored, the following information has to be provided:

  1. insurance amount claimed and realized by the listed entity for the loss/damage;
  2. the actual amount of damage caused due to the natural  calamity or other force majeure events;
  3. details of steps taken to restore normalcy and the impact of the natural calamity/other force majeure events on production or service, financials of the entity.

New Disclosure Requirements

In addition to the existing disclosure requirements, SEBI has introduced certain new disclosure requirements for listed companies through this Circular. Listed companies are required to evaluate the impact of the Covid-19 pandemic on their business, performance and financials, both qualitatively and quantitatively, to the extent  possible  and  disseminate  the  same.

What has to be disclosed?

The Circular provides an illustrative (not exhaustive) list of information that listed entities may consider disclosing, such as:

  1. the impact of Covid-19 pandemic on the business,
  2. steps taken for restarting the operations,
  3. details of impact of Covid-19 on listed entity’s profitability, assets, liquidity position, estimation of future impact of Covid-19 on the listed company,
  4. estimation of the future impact of CoVID-19 on its operations
  5. existing contracts/agreements where  non-fulfilment  of  the  obligations  by  any  party will have significant impact on the listed entity’s business; etc.

Further, the Circular provides that while submitting their financial statements, listed entities may include the impact of Covid-19 pandemic on their financial statements, to the extent possible.

When do disclosures have to be made?

While there is no specific timeline provided in the Circular, we recommend that listed companies should make the disclosures in a reasonable time frame. Additionally, the Circular requires that listed companies have to provide regular updates as and when there are material developments. Listed companies are required to revisit, refresh or update previous disclosures from time to time.


There have been a lot of fluctuations in the stock market due to the Covid-19 pandemic and SEBI’s foresight in issuing this Circular is laudable. SEBI has issued this Circular to ensure that information regarding the financial impact of the Covid-19 pandemic becomes available to the public. The disclosure requirements outlined by SEBI, especially with respect to financials, will help investors in taking an informed decision. However, it may be difficult for listed companies to assess the future impact of the Covid-19 on its operations considering the uncertain times that we all live in.

This post has been contributed by Ms. Vaneesa Agrawal and Ms. Aditi Vatsa.

[DISCLAIMER:  This article is for academic purpose and is solely to provide readers with general information regarding developments in Indian law. The information contained herein does not constitute legal or a professional advice.]