Disclosure Of Impact Of Covid-19 On Business Of Listed Entities – Sebi Guidance


Under the current scenario of COVID-19 pandemic and the consequent lockdown, various business organisations are facing severe impact on the performance as there is restriction on the operation of its activities.

SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 (“LODR”) requires listed companies to intimate the stock exchange,  the events or information which are deemed to be material (Para A of Part A of Schedule III) and the events which will be considered material based on the application of the criteria for determination of materiality of events/information (Para B of Part A of Schedule III).   

Disruption of operations of any one or more units or division of the listed entity due to natural calamity (earthquake, flood, fire etc.), force majeure or events such as strikes, lockouts etc., will be considered as a material event, based on the application of criteria of materiality.


One of the criteria for determination of materiality of an event is whether the omission of disclosure of an event or information is likely to result in significant market reaction if the said omission came to light at a later date.


Based on this, most of the listed entities have made disclosures, primarily intimating shutdown of operations owing to pandemic and resultant lockdowns. However, the listed companies have not disclosed the financial impact of the disruption in operations, which may be considered material based on the criteria specified above.

Also Para C of Part A of Schedule III requires the listed entity to disclose any information exclusively known to the listed entity, which may be necessary to enable the holders of securities of the listed entity to appraise its position and to avoid the establishment of a false market in securities.

The financial and operational impact of COVID-19 pandemic on a listed entity’s business, as and when it crystallises to the management, may be an information which is likely to result in a significant market reaction, if disclosed at a later date and hence the listed entity is advised to disclose the same, as and when the management becomes aware of the impact.


SEBI has issued an advisory on disclosure of material impact of COVID-19 to listed entities under LODR vide circular SEBI/HO/CFD/CMD1/CIR/P/2020/84 dated 20th May 2020 (“SEBI Circular”) encouraging them to evaluate the impact of the COVID-19 pandemic on their business, performance and financials, both qualitatively and quantitatively, to the extent possible and disseminate the same to the Stock Exchange, to ensure that all the investors have access to timely, adequate and updated information.

The SEBI Circular provides guidance on the matters which can be covered under disclosure with respect to impact of COVID-19 Pandemic:

  1. Impact of the CoVID-19 pandemic on the business;
  2. Ability to maintain operations including the factories/units/office spaces functioning and closed down;
  3. Schedule, if any, for restarting the operations;
  4. Steps taken to ensure smooth functioning of operations;
  5. Estimation of the future impact of CoVID-19 on its operations;
  6. Details of impact of CoVID-19 on listed entity’s –
    • capital and financial resources;
    • profitability;
    • liquidity position;
    • ability to service debt and other financing arrangements;
    • assets;
    • internal financial reporting and control;
    • supply chain;
    • demand for its products/services;
  7. Existing contracts/agreements where non-fulfilment of the obligations by any party will have significant impact on the listed entity’s business;

The Circular further suggests that the company may disclose further material updates on a regular basis and provide the impact of the COVID-19 on their financial statements along with the financial statements submitted with the Stock Exchange.


A listed entity, as and when it becomes aware of the impact of COVID-19 Pandemic on its financial position and business, is required to disclose the same to the stock exchanges and in this regard, SEBI has provided guidance on the matters which may be covered under disclosure with respect to impact of COVID-19 Pandemic.

Contributing Advisors