Shouldn’t regulators practise what they preach? We asked Jamie Allen, co-author of the The India White Paper released on 19th January in Mumbai. The paper by the Hong Kong-based Asian Corporate Governance Association recommended that corporate websites must be used more efficiently as communication tools and need to be easy to access and search, with a stress on ‘consistency’ and ‘formatting’, especially with regard to cash flow statements and balance sheet details. This is because there is no central database to which all reports, announcements and circulars have to be submitted by companies. The authors, Allen and Sharmila Gopinath, recommend that the two existing corporate reporting systems—EDIFAR (electronic data and information filing and retrieval system) and CorpFiling (jointly set up by the BSE and the NSE)—must be merged into a single database. The structure must be that of EDIFAR which, according to Allen and Gopinath, is easier to access than CorpFiling which was set up by the bourses in 2007 after EDIFAR became defunct (around 2005). At Moneylife, we have repeatedly said that something as serious as corporate disclosures cannot be left to company websites or stock exchanges. We need statutory filing in a fixed format on an official website like the EDGAR (Electronic Data-Gathering, Analysis, and Retrieval) filings mandated by the US Securities Exchange Commission.
We have pointed out that SEBI’s own website was badly organised and information relevant to investors/researchers, especially with regard to consent orders or regulatory actions, was very difficult to search. We have suggested that the simplest solution would be for SEBI to revive EDIFAR and mandate corporate filing by listed companies in a specific format. We also pointed out that financial information and disclosures on corporate websites was erratic and insufficient. The authors agreed that it was, indeed, the most obvious solution. We wonder why then it does not occur to the regulator. And, more importantly, why it is not in a hurry to revive EDIFAR or something similar, but was in a tearing hurry to permit listed companies to issue abridged balance sheets with inadequate information.