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As per schedule III, Part A, Para A, Point 1 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 [‘SEBI LODR’] disclosure of acquisition including incorporation of subsidiary, increase in stake of subsidiary etc needs to be disclosed to stock exchanges. It has been observed that many listed companies are not disclosing these details to stock exchange. This article highlights different practices observed in disclosure of details of incorporation to stock exchanges

Analysis of disclosures relating to incorporation

We analyzed disclosure of around 15 to 20 listed companies with respect to disclosure made regarding incorporation of companies. On analysis of these disclosures following practices were observed:

1. By listed company: Disclosures are given regarding incorporation of subsidiary, wholly owned subsidiary or associate company by listed company

2. By subsidiary or wholly owned subsidiary company of listed company: Disclosures are also made of incorporation of subsidiary, wholly owned subsidiary or associate company by wholly owned subsidiary or subsidiary of listed company. E.g. A ltd (‘listed company’) has B Ltd (‘wholly owned subsidiary’) then disclosures are given even if B Ltd has incorporated a wholly owned subsidiary.  It is observed that recently Red Tape Ltd[i], Trent Ltd[ii] and UPL Ltd[iii] has given disclosure of incorporations of such nature.

3. Incorporation in India or outside India: It is observed that details of incorporation of a subsidiary in India or outside India both are given by listed company or its subsidiary or wholly owned subsidiary. While disclosing that that subsidiary or wholly owned subsidiary is incorporated outside India then it is also disclosed as to who paid the initial subscription amount at the time of incorporation.

4. Change of name of subsidiary or associate company: It is observed that disclosure is given to stock exchange when there is change in the name of subsidiary or associate company or there is a change in nature of subsidiary or associate company. Viz. when the associate or subsidiary company becomes public company to private company or vice versa.

5. Disclosure of incorporation of as a material update: It is observed that disclosure of incorporation is given by giving reference to disclosure of board meeting outcome where in-principle was given by board of directors for incorporation of subsidiary. After this a material update is given stating that now the subsidiary is incorporated.

6. What all details of incorporation are given? Listed companies have been disclosing Corporate Identification Number (‘CIN’) of the newly incorporated entity. If the entity is based in foreign country, then the relevant registration number or identification number is disclosed to the stock exchange. If an entity is incorporated outside India listed companies have been giving disclosure as to when the disclosure was received from foreign country. As per Bombay Stock Exchange and National Stock Exchange Circular dt: July 14, 2023[iv] listed companies while giving disclosures shall also disclose the time when the disclosure was received and when the disclosure was made by the listed entity. Circular also states that if there is any delay in disclosure being made from the stated timeline then the disclosure shall also stated the reasons for delay.

7. Newly incorporated entity as a related party? Once an entity is newly incorporated either in India or foreign country then it becomes a related party for the listed entity. Whatever dealings are to be done with the newly incorporated entity would be considered as related party transactions. Listed companies would need to be aware of the fact whether requisite approvals have been approved before entering into the transactions with related party.

8. Disclosure within what time and when? Disclosure of incorporation of entity is given as soon as certificate of incorporation is received by the listed entity. Further at the time of disclosure if in the newly incorporated entity any director or promoter is going to take up the position of director then it is also being disclosed by listed entity. Further disclosure is also made if the director or promoter has subscribed to share capital of the newly incorporated entity.

9. Disclosure of additional investment made in subsidiary or wholly owned subsidiary: Whenever an additional capital funding is given to the subsidiary or wholly owned subsidiary listed companies have been disclosing details of the funding made. Also, in due to additional funding if the entity becomes a subsidiary company or wholly owned subsidiary company then the same is also stated in the disclosures.

10. It was also observed that entities have been disclosing objective as to why a new entity was incorporated.


Stock markets function on the basis of publicly available information. It is responsibility of listed companies to disclose details as specified by SEBI LODR in a timely and comprehensive manner. The above description of disclosures would help one strengthen its disclosure regime further to ensure fair play of all forces in the market.





This article is written by Ms. Vallabh M Joshi – Senior Manager –

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April 2024