The capital market regulator has issued directives to this effect last week. The move gains significance as Sebi relies on the listing agreement of companies with stock exchanges for making them observe norms of disclosure to investors, a most critical aspect of corporate governance. Sebi has no direct control on the operations of a company and hence the reliance on listing agreement.

In a letter to all stock exchange chiefs, Sebi has outlined the relevance of a listing agreement in protecting the interests of investors and creating a culture of corporate governance.

"It is therefore important that its compliance is monitored regularly by stock exchanges and appropriate action is taken for non-compliance and such non-compliance is also brought to the notice of Sebi," states the circular. "To increase theefficiency of stock exchanges in monitoring compliance of the listing agreement, stock exchanges would now be required to set up separate cells with identified staff for monitoring the compliance with listing agreement by all listed companies," the circular adds.

"The cells should be automated for on-line monitoring and cases of non-compliance should be attended to promptly and notices sent to the companies for appropriate action. The status report on compliance of listing agreement shall be placed before the governing boards/councils in every meeting," Sebi has mandated.

Sebi has virtually taken every action on corporates through the listing agreement. To start with, disclosure requirements have been incorporated as one of the clauses in a listing agreement. The scope of these disclosures was expanded last year in keeping with the Bhave committee recommendations to bring disclosure standards on par with the international norms.

However, there have been cases of companies not complying with these andstock exchanges have in certain cases stepped in and threatened a company with delisting. Even though delisting is not entirely the correct action considering that it harms the interests of investors, it is the fear of loss in reputation that has made companies fall in line.

Similarly listing agreements are playing a key role in identifying vanishing companies, an issue which is being closely monitored by the prime minister's office following the PM's assurance to book such companies. Once again the failure of a company to provide information under the listing agreement for prolonged periods of time is being deemed as it having "vanished".

"Just imagine the level of change that can be brought about if all details of a company could be available with the stock exchanges and the regulator on a floppy. The listing agreement is a critical tool the world over in bringing in corporate governance. This is an attempt to use it as an effective tool as well," said a top Sebi official.