Listed company disclosures of impact of the Covid Crisis: Learning from global experience

Munmi Phukon & Ambika Mehrotra


The Securities and Exchange Board of India (SEBI) has issued an Advisory on 20th May, 2020[1] for listed entities  advising them to evaluate the impact of the COVID 19 pandemic on their business and disseminate the same to stock exchanges.

The COVID-19 disruption is a global pandemic due to which almost all nations on earth are affected, in varying degrees. Likewise, such a massive dislocation in daily lives also affects all companies – as all of them invariably interact with people. However, the impact of the crisis on different companies is not uniform. There are several businesses and sectors where the essential foundations of the business seek shaken. There are some who may possibly see rising sales in time to come. There are some, which were dependent on well-functioning export markets. There are some whose supply chains are affected. There are some where manufacturing operations have been affected or the migrant workmen may not return to join work. In essence, for each company, the impact of the crisis cannot be the same across companies.

It is unlikely that major companies have, by now, not done internal assessment of the risks and challenges caused by the crisis. However, the essence of symmetrical information flow to the stock exchanges lies in smoothly flowing information, and informed decision-making by the shareholders. Therefore, SEBI’s advisory on impact of the crisis cannot be seen as a plain non-substantive or vague statement, giving generalisations which do not convey anything beyond what is anyways well-known. The whole idea of the required disclosures is that companies should do a granular disclosure, specific for the company, allowing the investors to form perceptions about how the crisis affects different companies.

Of course, the crisis is still like a hazy scene on the horizon – no one knows how it will unfold in the time to come. However, the whole idea of periodical disclosures is that the investors know what insiders know.

In this write-up, we have tried to assimilate from global experiences as to how global companies are disclosing about the impact of the crisis.

Notably, the disruption disclosures are mandatory for all listed companies, and they are expected to be disclosed in line with Regulation 30 read with Schedule III of the Listing Regulations based on the guidelines for materiality and the materiality policy of the company. Ideally, this should be disclosed as soon as the management has done analysis of the impact of the crisis on the company. The determination of the impact maybe a stagewise discussion, where initially the KMP of the company or such other authority as may be authorized by the board in the materiality policy shall determine whether the qualitative and quantitative impact is at all considered material for the company. Thereafter, the discussion shall be brought before the board and the CFO to analyse the financial impact and future projections considering the different business segments and the areas in which the plants and factories of the companies are located.

Although, there is no specified timeline for such disclosures as provided in the Circular, but it is expected that the disclosures are done before/immediately after the board meeting held any time now where the company discusses the financial position of the company and the quantifiable impact on business due to the outbreak of this pandemic and the nationwide lockdown.

What do the Listing Regulations say about such disclosure?

A.    For entities having specified securities listed 

a. Under Regulation 30 read with Schedule III of the Regulations

Regulation 30 read with Schedule III of the Listing Regulations deals with the dissemination of material information to the stock exchanges promptly which shall, in no circumstances, be later than 24 hours of the occurrence of the event. While there are certain information/ events enlisted in Para A of Part A of Schedule III as ‘deemed material’, that is to say, such events require dissemination on the very moment of its occurrence, on the other hand, Para B provides for some items which can be considered material based on the application of the determining parameters/ criteria provided in sub- regulation (3). The policy framed by the companies usually provides for both qualitative and quantitative criteria for such determination.

Disruption of operations of any one or more units or division of a listed entity due to natural calamity (earthquake, flood, fire etc.), force majeure or events such as strikes, lockouts etc. is one of the events enlisted under Para B of Schedule III i.e. material events based on application of materiality criteria. Accordingly, disclosure of such an event is required only if the same is considered material after applying the materiality guidelines.

b. SEBI Circular dated 9th September, 2015

The aforesaid Circular provided two things for the listed entities, i.e. the details with respect to each of the events to maintain uniformity of disclosures and guidance on the time when an event/ information can be said to have occurred. As regards disruption of operations, the said circular requires disclosure of the details such as,

  1. expected quantum of loss/ damage caused at the time of occurrence of the event;
  2. actual amount of damage caused due to force majeure event and details of steps taken to restore normalcy and the impact of the event on production or service, financials of the entity regularly, till complete normalcy is restored.

Seemingly, the said Circular not only requires disclosure at the time of occurrence but also on a continuous basis till the normalcy of the situation.

B.    For entities having NCDs/ NCRPSs listed

Regulation 51(1) read with Part B of Schedule III of the Listing Regulations requires prompt dissemination to the stock exchange(s) of all information having bearing on the performance/ operation of the listed entity, price sensitive information or any action that shall affect the payment of interest or dividend.

It is to be noted that unlike Part A of Schedule III, disruption of operations due to natural calamity, force majeure etc. is not an enlisted item in Part B. However, considering the Regulation requires all information having bearing on the performance/ operation i.e. without any application of materiality guidelines, to be disclosed promptly, the current disruption caused by the pandemic should also get covered.

What does SEBI advisory cover?

The Advisory issued by SEBI provides for the following actionables for the listed entities:

  1. To evaluate the impact of the pandemic on the business, performance and financials-
    1. The evaluation to be made both qualitatively and quantitatively, as per the policy framed by the entities;
    2. The person responsible for such determination shall be the person(s) authorised by the Board or as mentioned in the policy;
  2. To disseminate the following information through stock exchanges:
    1. Impact of the pandemic on the business;
    2. Ability to maintain operations including factories/ units/ office spaces functioning and closed down;
    3. Schedule, if any for restarting the operations;
    4. Steps taken to ensure smooth functioning of the operations;
    5. Estimation of future impact on the operations;
    6. Details of impact on the listed entity’s
      1. capital and financial resources;
      2. profitability;
      3. liquidity position;
      4. ability to service debt and other financing arrangements;
      5. assets;
      6. internal financial reporting and control;
      7. supply chain
      8. 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;

8. Any other information as the entity may determine to be relevant and material;

3. To specify/ include the impact of the pandemic on the financial statements.

Given the unpredictability of the potential impact of the outbreak, there may be material uncertainties that cast significant doubt on the entity’s ability to operate under the going-concern basis. If the companies nevertheless, prepare the financial statements under the going-concern assumption, they should disclose these material uncertainties in the financial statements in order to make clear to readers that the going-concern assumption used by management is subject to such material uncertainties.

Further, it is to be noted that the aforesaid actionables are also applicable to the listed entities which have already made certain disclosures with respect to the impact or foreseeable impact of the lockdown on their respective businesses. Also, considering the shutdown scenario since past two months, the Circular also permits the listed companies to revisit previous their disclosures already made in this substantiating the impact on their business.

Global Insights

These proactive steps taken by the regulatory authorities are not limited to our nation only. The outbreak of COVID-19 has not only affected India, but countries around the globe. The fact that various countries have been in their shutdown mode since last three months has been a very strong reason to hit the global economy. In view of the same, the immediate measures by the market regulators and authorities have been in place to ensure an orderly and fair market for its customers and other stakeholders. Apart from various relaxations pertaining to the compliances, these authorities have also taken various steps to ensure transparency. Some of these are enlisted below:-

United States

The Securities Exchange Commission (SEC) in the United States had addressed the issue providing guidance regarding coronavirus disclosure dated January 30, 2020[2] and February 19, 2020[3]

Further, the SEC has also been closely monitoring the impact of this pandemic on investors and capital markets. In one of the press release dated March 4, 2020[4], the Chairman of SEC, Mr. Clayton stated that, “We also remind all companies to provide investors with insight regarding their assessment of, and plans for addressing, material risks to their business and operations resulting from the coronavirus to the fullest extent practicable to keep investors and markets informed of material developments.

As regards the disclosure requirements the release provides that, when companies do disclose material information related to the impacts of the coronavirus, they are reminded to take the necessary steps to avoid selective disclosures and to disseminate such information broadly. Depending on a company’s particular circumstances, it should consider whether it may need to revisit, refresh, or update previous disclosure to the extent that the information becomes materially inaccurate. In response to the same, companies have made the press releases to update the investors regarding the steps taken and the impact of the pandemic on their businesses.

United Kingdom (London Stock Exchange)

The Companies in UK, besides being granted a 3 month extension to their legal filing[5] had also been granted the support from the Financial Conduct Authority, Financial Reporting Council and Prudential Regulatory Authority which sets out a series of actions and statements designed to assist companies across UK markets in light of the unprecedented impact of the pandemic. Apart from the temporary relaxations[6]. Unlike US, the LSE did not suspend its trading and continued to operate as normal.

As regards ensuring the disclosures with respect to the impact of COVID-19, companies in UK (one such being Foxtons Group PLC vide an Update dated May 26, 2020[7]) have also made disclosures regarding the operation of business houses and their performances. The financial and operational impact is also being disclosed in various documents pertaining to the upcoming corporate actions by the companies, eg. The debt issuance programme by Barclays Bank PLC dated May 4, 2020[8].

This apart, a number of prudential and securities regulators, including the European Banking Authority, the European Central Bank, the European Securities and Market Authority and the Prudential Regulation Authority in the United Kingdom have published guidance on the regulatory and accounting implications of the outbreak.

China & Hong-Kong

The Securities and Futures Commission and the Hong Kong Stock Exchange have recently reminded issuers[9] that if their business operations, reporting controls, systems, processes or procedures are materially disrupted by COVID-19 or related restrictions, an assessment should be made as to whether any inside information has arisen, and if so, an inside information announcement should be made as soon as reasonably practicable. The press releases in this regard and the intimations required to be made to the stock exchange had been announced sice February, 2020[10] .

In addition, boards and audit committees should ensure that financial reporting contains appropriate discussions on the impact of COVID-19 to satisfy the relevant disclosure requirements under the Listing Rules, eg disclosing the principal risks and uncertainties facing the company and an indication of likely future development of the business. In view of the same, few issuers had discussed the specific effects of COVID-19 on their financial performance. While some had made general remarks on the likely short-term negative impacts on the global economy and their business performance, and many have also mentioned about the resumption of their operations in China.

Further, the Hong Kong Institute of Certified Public Accountants has also published guidelines in March 2020[11], in relation to the financial reporting implications of COVID-19.


The Canadian law requires disclosure of material change. A “material change” can be determined based on a two-part market impact test, which examines:

  • whether the material change significantly affects the market price or value of the issuer’s security; and
  • whether the material change is reasonably expected to have a significant effect on the market price or value of the issuer’s security.

Herein, it may be pertinent to note that a “material fact” is different from a “material change”. While COVID-19 may trigger new material facts applicable to any business (for example, a huge loss to the inventory or production or sales), such material facts may not have to be disclosed unless they result in a material change to the business and affairs of a company. Notably however, Canadian stock exchanges require immediate disclosure of “material information” of an issuer, which includes both “material changes” and “material facts”. Accordingly, while the Canadian Securities Administrators have granted various relaxations[12] amid COVID-19, as regards the disclosure requirements it is on the reporting issuers to be responsible for disclosing any material effects of the virus/pandemic on their businesses.

Nevertheless, as per various Canadian researchers (one such being Gowling WLG[13])Canadian companies have incorporated the disclosure regarding the coronavirus in their filings. Some companies have provided detailed disclosures of actual and potential impacts of the coronavirus on their operations and industries, while others have made general disclosures addressing general conditions and unforeseeable events.


As per the Japan Stock Exchange Market News dated March 18, 2020[14], Tokyo Stock Exchange Inc. (TSE) has also notified listed companies about handling of timely disclosure of the effects of coronavirus on their businesses. Based on the understanding that many companies have recognized it as a significant risk in their business operations and many might face difficulties to forecast the outlook, the companies need to disclose the recent emergence and spread of the pandemic and its impact on the economic activity. It also stated that the listed companies have to provide meaningful and substantial information proactively.

What way is the crises impacting?

The disclosures to be made to the stock exchange are not just a formal intimation. The companies are expected to be precise about the impact that the outbreak of the pandemic has caused on their businesses. This may not merely be forward looking or futuristic projections given by companies. Since different companies are impacted in different ways and to a different extent, the management must make estimates about how deeply is their company impacted.

Content of the disclosures made by corporates globally

Drawing inference from the disclosures made by corporates worldwide, the companies need to respond to certain questions like in what way is crises impacting? Is it killing companies’ business model or affecting sales in time to come? How and to what extent is it affecting the present business plans?

A snapshot of the content of some of these disclosures made by companies are mentioned below:-



Broad contents of disclosures


 Corporates in United Kingdom

SDI Group plc[15]
  • Capability to meet market profit expectations
  • Steps taken by the company against COVID
  • Cost cutting measures
  • Current trading and outlook
Foxtons Group PLC[16]
  • Status of closure and reopening of branches
  • Scenario analysis for Covid-19, liquidity and proposed placing
  • Steps taken to ensure liquidity
  • Business performance including impact on sales


Anexo Group plc[17]
  • Impact on working staff
  • Being categorised as essential businesses -Working on businesses supply and service
  • Current trading and outlook


 Corporates in United States



Press Release on Financial Impact[19]

  • Donations and steps taken to contribute
  • Closure of stores and business units in different parts
  • Financial reporting- forward-looking statements include Company’s expectations regarding the impact of the COVID-19 pandemic; anticipated revenue, gross margin, operating expenses, other income/(expense), and tax rate; and plans for return of capital
  • effect of the COVID-19 pandemic on the Company’s business, results of operations, financial condition, and stock price
  • Business continuity
  • Status in other countries where the company has business (China)
  • Areas of business most impacted
  • Steps taken to address the immediate impact and ensure future positioning
  • Steps taken to manage cost base- operating expenses (expenses on services, travel, meetings, etc)
  • System liquidity
  • Long term strategy and forward-looking projections
United Health Group[21]
  • Evaluation of the impact of COVID-19 across its balanced and diversified businesses.
  • Care of team members and contributions to others
  • Forward looking statements based on certain factors including: risks associated with public health crises, large-scale medical emergencies and pandemics

  Corporates in Japan

Intelligent Wave Inc.[22]
  • Measures for securing the employee safety and the business execution
  • Software development and system operation to ensure staff working remotely
  • business forecasts for the year
  • Capability to meet targets for the quarter
  • Net sales and liquidity position
Komatsu Group[23]
  • Effects on production and sales
  • Status of supply of products and service to customers in different operating units
  • Projections on business results
Dentsu Group[24]
  • initiatives to respond to COVID-19
  • response to changing needs of business partners’ and clients, supporting their growth
  • support to employees and local communities


Corporates in Canada

George Weston Limited[25]
  • Areas in which the company is operating
  • Companies response to changes in demand
  • Forward looking statements on risks and other uncertainties
  • Estimates on how the Company and each of its operating segments will perform for the remaining year
  • Withdrawal of the 2020 Outlook contained in its Management’s Discussion and Analysis for the year ended December 31, 2019
Fortis Inc.[26]
  • Impact on Sales
  • Impact on capital plans and material changes expected during the year
  • Impact on credit ratings
  • Corporation’s long-term outlook
  • Forward-looking information including significant risks, uncertainties and assumptions


Although the outbreak of COVID-19 has not only affected India, but countries worldwide, the impact caused by this pandemic may vary from organization to organisation. Considerably, the whole economy, in fact the global economy is hit by the current situation. Since, the lockdown is completely based on a situation which is a force majeure and on the instructions of the Central & State Governments and local bodies, it is possible that the companies might have not considered this separately as a material event to be specifically intimated to the stock exchange(s). Notwithstanding the same, there are various large listed entities in India as well, which had made the requisite disclosure regarding the temporary suspension of operations at its corporate offices, factories or plant locations until the situation normalises though the quantitative impact of the situation could not be assessed when the lockdown was initiated. While globally there have been a number of disclosures in this regard, now that SEBI itself has clarified its position with respect to the impact of these events on the company and its operations to be communicated  in a timely and  cogent manner to  its investors and stakeholders, which appears to emanate from various regulations globally, it becomes imperative for the listed entities to intimate the same as soon as may be possible.

Other reading materials on the similar topic:

  1. A Guide to Disclosure on COVID-19 related impacts can be viewed here
  2. ‘Listed company disclosures of impact of the Covid Crisis: Learning from global experience’ can be viewed here
  3. ‘Resources on virtual AGMs’ can be viewed here
  4. ‘COVID-19 – Incorporated Responses | Regulatory measures in view of COVID-19’ can be viewed here

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