Muscat: The delay and failure on the part of MSM-listed companies in disclosing material information is on the decline, with only 19 such cases reported in 2012, said top-level officials of the Capital Market Authority (CMA) here Wednesday."As much as 95 per cent of listed companies have disclosed material information on time, which is a healthy sign," Abdullah Salem Al Salmi, executive president of CMA, told 'Times of Oman'.
Only 19 companies have failed to disclose material information on time. These were mainly board decisions, tender-related information and resignation of top-level officials, added Ahmed Al Qassabi, director of Compliance and Disclosure at the CMA, after presenting a paper on role of transparency and disclosure in enhancing the securities market's efficiency at a seminar.
Al Salmi said there were no cases of insider trading (which is a criminal offence) on the local bourse last year. "We had few cases earlier." While penalty for a delay in submitting material information to the market is decided by the disciplinary committee of CMA, an insider trading case is referred to the commercial court. Al Salmi said the court will decide on the penalty, depending on the severity of the offence and the punishment could include imprisonment.
MSM-listed firms are generally required to disclose material information, immediately after the board takes a decision. In any case, the information has to be disseminated before the market opens for trading the following day. In the case of quarterly or annual financial results, companies are required to submit financial statements within the statutory period of 30 days from the last day of each quarter. However, in the case of holding companies, this period is 45 days.
Addressing the seminar earlier, Al Salmi said that in the absence of stringent disclosure and transparency, the stock market switches from an 'avenue for investment to a gambling place.' The introduction of disclosure norms are aimed at protecting small investors (who are not represented on the board) and bringing in efficiency in the market that in turn reduces systemic risks.
Information must be available for all investors simultaneously so that they can take wise investment decisions. The investors should not be fooled by others, and the stringent disclosure norms will eliminate rumours. The penalty for companies violating disclosure of timely information ranges from OMR500 to OMR50,000, depending on the magnitude of the offence. "The global financial crisis in the past has revealed that there is no short-cut to the principles of transparency and disclosure." The CMA chief also called for mutual cooperation among regulators to introduce best international practices in disclosure norms.