The Securities and Trade Board of India (Sebi) has modified the methodology for calculating market capitalisation-based rankings of listed firms.

As an alternative of a single-day market cap, the rankings will now be based mostly on the typical market cap for six months.

The regulator has directed inventory exchanges to do the computation on the finish of the calendar 12 months and put together the rankings based mostly on the typical market cap from July 1 to December 31.

Until now, the computation was accomplished on the premise of the market cap on March 31.

The rankings are necessary for compliance with a number of mandates and rules. For example, the highest 100 listed firms should adjust to hearsay verification norms from June 1, whereas the compliance deadline for the highest 250 is from December 1. Equally, for compliance with ESG-related norms and company governance issues, Sebi has a glide path for the highest 100, prime 500, and prime 1,000 listed firms based mostly available on the market cap-wise rating.

“Sebi obtained representations from market stakeholders that calculating the market capitalisation as of a single day and the ensuing utility of related Sebi Itemizing Obligations and Disclosure Necessities (LODR) Rules led to a rise in compliance burden for listed firms,” mentioned Abhimanyu Bhattacharya, accomplice, Khaitan & Co.

Following the brand new rankings, any firm that turns into relevant to adjust to any such mandate by the regulator for the primary time can be supplied a three-month window to conform.

“For such listed entities which stay outdoors the relevant threshold for a interval of three consecutive years when it comes to this regulation, the provisions that apply on the premise of standards of market capitalisation shall stop to use on the finish of the monetary 12 months following December 31 of the third consecutive 12 months,” mentioned Sebi within the notification.

First Printed: Could 21 2024 | 6:17 PM IST