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CS Professional · IFSCA - Regulations, Listing and Compliances · Listing and Issuance of Securities

Kaveri Infra Ltd is listed on an IFSC exchange. Its board approves a major acquisition that is likely to affect its share price materially. The company plans to wait until the next quarterly results to mention it. How should this be assessed?

The plan is not acceptable. A material event such as a significant acquisition must be disclosed to the exchange promptly, independent of periodic results. Waiting for quarterly results risks information asymmetry and unfair trading, and informing promoters first does not satisfy disclosure duties.

  1. AAcceptable, because disclosures are only tied to periodic results
  2. BAcceptable, provided the promoters are informed first
  3. CNot acceptable, because a material event must be disclosed to the exchange promptly rather than held back until periodic resultsCorrect
  4. DNot acceptable, but only if the acquisition exceeds the company's net worth

Explanation

Material events such as significant acquisitions require prompt event-based disclosure, independent of periodic reporting. Delaying until results risks selective information and unfair trading. Informing promoters first worsens the problem, and no net-worth threshold is the test here.

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