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Disclosure in Research Reports mandated by SEBI

Ashish M. Shaji

| Updated: Aug 04, 2021 | Category: SEBI

Disclosure in Research Reports mandated by SEBI

Before issuing a research report, a Research Analyst should disclose certain mandatory disclosures in the research reports as provided under the RA regulations. Individuals and entities engaged in giving recommendations to its clients through research reports should register with SEBI and comply with its provisions. In this article, we shall discuss such disclosure in research reports as mandated by the capital markets regulator.

What is a Research Report?

As per SEBI (Research Analyst) Regulations, 2014[1], any written or electronic communication involving research analysis or research recommendation or an opinion in respect of securities or public offer, providing a basis for investment decision, is known as Research Report.

It is a written report prepared on research analysis or buy/sell/hold recommendation of providing an opinion on securities listed in a stock exchange or to be listed in a stock exchange or any other mode influencing the investment decision is termed as a research report.

Who is a Research Analyst?

He is a person who prepares or publishes content of the research report, provide research report, make buy/sell/hold recommendation.

Disclosure in Research Reports

The following disclosures should be made:

Disclosure in Research Reports
  • Use the term “Research Analyst”

A research analyst/research entity should use the term research analyst after its name with the SEBI registration number.

  • Material information

Material information, including the name of the entity/individual research analyst, SEBI registration number, business activity details, T&C, associate details, and such other information, should be disclosed, which will help clients to take investment decisions.

  • Ownership & Material Conflict of Interest

A research analyst/research entity is required to disclose if such analyst, research entity, or his/her associates/relatives has:

  1. Has a financial interest in subject company and its nature;
  2. Actual/beneficial ownership of 1% or more of the subject company at the months’ end immediately preceding the publication date of the research report.
  3. Any other material conflict of interest at the publication time of research report.
  • Received any Compensation

A research analyst/research entity is required to disclose whether it or its associates in the last 12 months have:

  1. Received any compensation from the subject company;
  2. Managed or co-managed public offering of securities for the subject company;
  3. Received any compensation for the investment banking/merchant banking/brokerage services from the subject company;
  4.  Received any compensation or any other benefits from the Subject Company or third party in relation to the research report.
  • Service to the Subject Company

This forms another part of disclosure in research reports where the research analyst should also disclose if they have served as an officer, director or an employee of the subject company.

  • Marketing activity

The research analyst should disclose if they have engaged in the marketing activity for the subject company.

  • Information from reliable source

The research analyst/research entity should ensure that the facts in the research report are taken from a reliable source. Additionally, the terms used to give research recommendation has to be well defined thus will help to avoid any ambiguity. The source of information for making the research report has to be well documented and maintained in records by the research entity or by the research analyst.

  • Rating system

If the research analyst/research entity uses the rating system, they are required to define the meaning of each rating with the time horizon and benchmarks on which the rating is used.

  • Price target for subject company’s securities

If a research report has a rating or price target for securities of the subject company for minimum one year, then such report should also contain the graph of daily closing of such securities for the period assigned or for 3 years period, whichever is shorter.

  • Signature

A research report has to be duly signed, and date should be mentioned. It can be maintained in electronic or physical form, and it shall be preserved for 5 years. If the reports are maintained in electronic form, then it must be signed digitally.

Research Reports: Dos and Don’ts

There are certain Dos & Don’ts that must be kept in mind:

  • Research analyst/research entity should not make a promise/assurance of favourable review in the research report to a company with a view to influence business relationship or to get compensation and such other benefits.
  • There should not be any inconsistency in such report. A research report has to be consistent with the views of individuals employed as research analyst regarding any subject company.
  • The Research report has to be given to all clients who are entitled to get research reports. It cannot be made selectively available to internal trading personnel or to a particular client/class of clients.
  • The research entity has to ensure that the individuals who are employed as research analyst differ from other employees who perform sales trading, dealing, corporate finance advisory or any other activity that can affect the independence of the research report.


The above-mentioned disclosure in research reports is essential and should comply with the SEBI regulations. Those individuals and entities who engage in extending recommendations to their clients through research reports should register with SEBI and comply with its provisions.

Read our article:Explaining Benefits of Listing a Company on the Stock Exchange

Ashish M. Shaji

Ashish M. Shaji has done his graduation in law (BA. LLB) from CCS University. He has keen interests in doing extensive research and writing on legal subjects especially on criminal and corporate law. He is a creative thinker and has a great interest in exploring legal subjects.

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