Disclosure and Ethics
This domain tests continuous disclosure, financial reporting timelines and the ethical standards expected of market participants. Questions often ask what must be disclosed, when, and to whom.
Disclosure obligations
- LODR Regulation 30: material events disclosed to stock exchanges; 24 hours for specified events, 30 days for others after the board decision.
- Regulation 33: quarterly results within 45 days of quarter end; annual results within 60 days of financial year end.
- Shareholding pattern within 21 days of quarter end.
- Code of conduct for board and senior management; whistleblower policy; archival policy.
Ethics
- Avoid conflicts of interest; preserve confidentiality of UPSI; no front running.
- CSR under Section 135: 2% of average net profit of the preceding three years for companies meeting net worth, turnover or profit thresholds.
- Fair dealing with clients; disclosure of commissions and conflicts.
Worked example
A company's quarter ends 30 June. Under Regulation 33, results are due within 45 days, i.e. by 14 August. If the board approves them on 20 August, the company has breached LODR even if the results are accurate and posted on its website. The disclosure must go to the exchanges, not only to investors who attend the analyst call.
Traps
- Using 30 days for all Regulation 30 events; specified events need 24 hours.
- Treating a website posting as compliance with exchange disclosure.
- Assuming CSR is a voluntary donation; it is a statutory obligation when thresholds are met.
- Disclosing UPSI selectively to analysts before exchange dissemination.