NSE kicks off Prime to boost governance

The National Stock Exchange on Tuesday announced the launch of a new platform, NSE Prime.

This platform will host only companies that adhere to higher corporate governance standards like higher minimum public shareholding, additional financial disclosures and directors on board serving not more than five public limited companies, among others.

NSE Prime is a framework that prescribes higher standards of corporate governance for listed companies than those required by regulations, the NSE said.

Listed companies that voluntarily choose to be part of NSE Prime will need to comply with predefined norms and will be monitored by NSE.

Norms for NSE Prime will be published by the NSE and six months after that eligible companies on NSE mainboard can apply.

The governance and disclosure norms include minimum 40 per cent public shareholding compared to 25 per cent required by regulations.

There will be additional financial disclosures (quarterly) for finance companies—banks and NBFCs, like total nonperforming loans at the end of the quarter, capital adequacy ratio at the end of the quarter and return on assets during the quarter.

NSE Prime companies will have to make additional disclosures in annual reports like summary of all outstanding material litigations, and overdue and defaults against banks and financial institutions.

This will help investors identify companies which have higher governance standards and manage governance risk better.

Companies will have to sign a separate agreement with the NSE to be included in NSE Prime. They can also get cure time for non-compliance with one or more norms.