If corporate India were handed an award for creative writing, “unforeseen circumstances” would surely top the bestseller list. Last week, the Securities Appellate Tribunal (SAT) delivered a gentle but pointed reminder that stock exchanges are not literature festivals.
Upholding the market regulator’s ₹5-lakh penalty on Som Distilleries & Breweries, SAT ruled that vague phrasing cannot pass for meaningful disclosure. Investors, it implied, deserve more than a shrug in prose.
Som Distilleries had cancelled an extraordinary general meeting (EGM) that was to approve a ₹100-crore fund raise. The official explanation to the exchanges: “unforeseen circumstances.”
Only weeks later, during an investor call, did the company concede that the fund requirement had turned out to be lower than expected. SAT was unimpressed. The tribunal held that the company failed to provide clear and accurate disclosure, leaving investors guessing in the interim.
Few market watchers were surprised
Few market watchers were surprised. Senior lawyers say such linguistic gymnastics are hardly rare. The reasons vary: the relatively modest cost of penalties, commercial sensitivities, evolving boardroom decisions, or simply the temptation to buy time.
When the downside risk is a ₹5 lakh-₹10 lakh fine, some large listed entities may view it as a modest toll charge on the highway to delayed transparency.
Indeed, India Inc’s disclosure lexicon is rich with protective euphemisms. “Unavoidable reasons.” “Unforeseen events.” “External challenges.” “No material impact.” “Temporary disruption.” They sound reassuring, almost poetic — until one looks for the footnotes and finds none.
Regulators, lawyers suggest, may now have to weed out such generical buzzwords and mandate greater granularity in disclosures. Companies, in turn, may need to tighten their language and move from form to substance.
Some believe the Som Distilleries case will now set a precedent. “Many generic terms like these may now be avoided since the issue is now in the open,” Paras K. Parekh, partner at CMS INDUSLAW, said. He added that there may be more mindfulness at the level of regulators on surveillance. Regulators, he suggested, may even need to upgrade systems with proficient artificial intelligence to weed generical buzzwords in disclosures.
The practice of legalistic obfuscation, market observers admit, is no longer confined to a handful of participants. A “compliance by form, not substance” approach has quietly become the status quo for many — though certainly not all.
Recent regulatory action underscores the point
Recent regulatory action underscores the point. Varun Beverages had terminated its share purchase agreement with Tanzania Bottling Co. S.A. in March 2025, but the details were buried deep in the notes to quarterly financial statements rather than disclosed separately. In January, SAT ruled that such a camouflaged disclosure is “no disclosure at all”.
Gretex Corporate, too, was penalised ₹15 lakh for widespread deficiencies and delays in regulatory disclosures. The company maintained that the failures were procedural and had not had “any material impact” on its merchant banking assignments or investor interests.
“There is a prevailing gamble that as long as a disclosure is made, the regulator might treat it as a technical lapse rather than a substantive non-compliance,” Abhiraj Arora, partner at Saraf and Partners, said. For a large listed entity, a ₹5 lakh-₹10 lakh penalty is often viewed as a “mere processing fee for delaying the market’s reaction to negative news,” he added, noting that such penalties “barely scratches the surface of a listed entity’s balance sheet.”
Under the Listing Obligations and Disclosure Requirements (LODR) framework, specific phrases are not prohibited. What is required under Regulation 4 and Regulation 30 is that disclosures be adequate, accurate, and not misleading.
“Generic language, if used at all, should be accompanied by specific disclosure sufficient to allow shareholders to understand the real nature of the development,” Nirali Mehta, partner at Mindspright Legal, said.
The regulator, for its part, has struck a firm note. When asked about such not-so-investor-friendly disclosures, Securities and Exchange Board of India (Sebi) Chairman Tuhin Kanta Pandey told FE, “Disclosures must be accurate, and false disclosures will be dealt with firmly.” He also said that there is scope for greater clarity in the LODR framework.
For markets built on trust, ambiguity is expensive — even if the fine is not. Investors can handle bad news; what they struggle with is news dressed up as a mystery novel. If SAT’s ruling achieves anything, it may be this: fewer plot twists, more plain English, and a reminder that in capital markets, clarity is not optional — it is capital itself.