SEBI issues guidelines on the voluntary submission of the Integrated Report by top 500 listed companies
The Securities Exchange Board of India (“SEBI”) issued a Circular on 6th February, 2017, thereby providing guidelines for the preparation of an integrated annual report by listed entities under the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 (“LODR Regulations”).
Under regulation 34(2)(f) of the LODR Regulations, the top 500 listed entities are required to include in their annual reports, the Business Responsibility Report (“BRR”) describing the initiatives taken by them from an environmental, social and governance perspective.
Further, Regulation 4(1)(d) of the LODR Regulations require listed entities to provide adequate and timely information to recognized stock exchange(s) and investors.
Against this background, it is observed that the purpose of an integrated reporting will provide shareholders and interested stakeholders with relevant information that is useful for making investment decisions. In this regard, the International Integrated Reporting Council (‘IIRC’) has prescribed the following guidelines for preparation of an integrated report, specifying the content of the report and how information is to be presented:
i. Strategic focus and future orientation:
An integrated report should provide insight into the organization’s strategy and how it relates to the organization’s ability to create value in the short, medium and long term, and to its use of and effects on capital
ii. Connectivity of information:
An integrated report should show a holistic picture of the combination, interrelatedness and dependencies between the factors that affect the organization’s ability to create value over time
iii. Stakeholder relationships:
An integrated report should provide insight into the nature and quality of the organization’s relationships with its key stakeholders, including how and to what extent the organization understands, takes into account and responds to their legitimate needs and interests
An integrated report should disclose information about matters that substantively affect the organization’s ability to create value over the short, medium and long term
An integrated report should be concise
vi. Reliability and completeness:
An integrated report should include all material matters, both positive and negative, in a balanced way and without material error
vii. Consistency and comparability:
The information in an integrated report should be presented: (a) on a basis that is consistent over time; and (b) in a way that enables comparison with other organizations to the extent it is material to the organization’s own ability to create value over time.
Circular dated 6th February, 2017:
Pursuant to the IIRC guidelines principles, the SEBI has advised the following to the listed entities:
a. Integrated Reporting may be adopted on a voluntary basis from the financial year 2017-18 by top 500 companies which are required to prepare BRR.
b. The information related to Integrated Reporting may be provided in the annual report separately or by incorporating in Management Discussion & Analysis or by preparing a separate report (annual report prepared as per IR framework).
c. In case the company has already provided the relevant information in any other report prepared in accordance with national/international requirement / framework, it may provide appropriate reference to the same in its Integrated Report so as to avoid duplication of information.
d. As a green initiative, the companies may host the Integrated Report on their website and provide appropriate reference to the same in their Annual Report.