In a significant development for listed companies, the Securities and Exchange Board of India (SEBI) has clarified that the mandatory disclosure of family settlement deeds and agreements among promoters will not impose any liabilities on the listed entities. This clarification comes in response to writ petitions filed by notable stakeholders including Atul Kirloskar and Rahul Kirloskar, who questioned the constitutional validity of Regulation 30(A) along with Clause 5A of Part A of Schedule III of the LODR Regulations.
The controversy arose over the requirement to disclose a family settlement agreement made in 2009 among members of the Kirloskar family in their personal capacities. In a statement, representatives from the Kirloskar group stated, “For the past several years, we have consistently maintained that mere disclosure of third-party agreements by listed entities under the SEBI regulations cannot bind these entities or imply that the listed entity acknowledges such agreements as enforceable, influencing its management or control.”
The new clarification from SEBI, communicated as Minutes of the Order to the Bombay High Court, seeks to offer much-needed clarity to corporate India regarding an issue that had raised significant apprehensions among listed firms. SEBI Counsel Birendra Saraf, also the Advocate General, remarked in court filings that while listed entities must disclose certain agreements, such disclosures do not signify that the company acknowledges these agreements as binding or that they rely on or create any liabilities against the company.
The Bombay High Court has now endorsed this perspective in light of SEBI’s clarification regarding the aforementioned regulations. This move allows listed entities across various sectors to make necessary disclosures under Regulation 30A without the concern that these filings could be construed as evidence of enforceable obligations. For shareholders, the ruling ensures their right to be informed about substantial agreements that might indirectly influence company operations.
Additionally, SEBI indicated that listed entities could include disclaimers as part of their disclosures. A formal order from the Bombay High Court regarding this matter is still anticipated.
Published on September 23, 2025.
