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What SEBI wants you to disclose in your Research Reports

All individuals and entities who are engaged in providing recommendations to its clients by way of research reports are required be registered with SEBI under SEBI (Research Analyst) Regulations, 2014 (RA Regulations) and comply with the provisions of the said regulations.

A Research Analyst before issuing research report is required to disclose certain mandatory disclosures in its research reports as are specified under the RA Regulation.

In this article you will know about the mandatory points that SEBI wants you to disclose in your research report, but first let us understand what Research Report is.

“A research report as defined under RA Regulations means “any written or electronic communication that includes research analysis or research recommendation or an opinion concerning securities or public offer, providing a basis for investment decision…”

In other words, it is a written report on research analysis or buy/sell/hold recommendation or offering an opinion on securities that are listed in a stock exchange or to be listed in a stock exchange or any other mode that influences the investment decision will be considered as a research report.

Disclosures to be provided in a Research Report-

1. Usage of term ‘Research Analyst”-

A research analyst or the research entity must use the term Research Analyst after its name along with the SEBI registration number.

2. Material Information about the research analyst or research entity-

All the material information i.e., name of the entity/ individual research analyst, SEBI registration number, details of business activity, disciplinary history, the terms and conditions on which it offers research report, details of associates and any other information that is relevant for the clients to take investment decisions are to be disclosed in the research report.

3. Ownership and Material Conflict of Interest-

A research analyst or research entity should disclose in its research report whether he/she, research entity or his/her associates or relatives:

a. has any financial interest in the subject company and the nature of such financial interest;

b. have actual/ beneficial ownership of 1% or more of the subject company, at the end of the month immediately preceding the date of publication of the research report.

c. has any other material conflict of interest at the time of publication of research report.

4. Receipt of Compensation

A research analyst or research entity should disclose in its research report, whether it or its associates in the past 12 months-

a. have received any compensation from the subject company;

b. have managed or co-managed public offering of securities for the subject company;

c. have received any compensation for investment banking or merchant banking or brokerage services from the subject company;

d. have received any compensation or other benefits from the subject company or third party in connection with the research report.

5. Service to the Subject Company

A research analyst should disclose in its research report, whether he/she has served as an officer, director or employee of the subject company.

6. Market making activity for the Subject Company

A research analyst or research entity must disclose in its research report if he/she/it has been engaged in the marketing activity for the subject company.

7. Reliable information and defined terms

A research analyst or research entity needs to ensure that the facts in the research reports are taken from a reliable source and information. Further, the terms used to provide research recommendation should be well defined in order to avoid any ambiguity. The terms defined shall be consistently used in the research report.

The source from which the information is gathered for making the research report shall be well documented and maintained in records by the research entity or the research analyst.

8. Rating System including time horizon and benchmarks

Where the research analyst/ research entity uses rating system, they much clearly define the meaning of each such rating along with the time horizon and benchmarks on which the rating is based.

9. Price target for subject company’s securities

Where a research report contains either a rating or price target for subject company’s securities for at least one year then such reports should also provide the graph of daily closing of such securities for the period assigned or for three year period, whichever is shorter.

10. Third Party research reports

Where any third party research reports are being distributed, the research analyst or research entity should-

a. review the third party research reports for any untrue statement of material fact or any false or misleading information.

b. disclose any material conflicts of interest of such third party research provider or a web address shall be provided that directs a recipient to the relevant disclosures.

11. Research reports to be signed and dated

A research report should be duly signed and dated. It should be maintained either in physical or electronic form and shall be preserved for a period of 5 years. Where the reports are being maintained in electronic form, the report should be digitally signed.

Important Points to be noted while preparing the research report

1. A Research analyst/ research entity should not make any promise or assurance of favourable review in its research report to any company in order to influence a business relationship or for the receipt of compensation or any other benefits.

2. There should not be any inconsistency in the research reports issued by the Research Analyst. Where there are individuals employed as research analyst in research entity, a research report should be consistent with the views of such individuals employed as research analyst regarding any subject company.

3. A research report should be provided to all the clients who are entitled to receive the research reports. It should not be made available selectively to internal trading personnel or a particular client or class of clients in advance of other clients.

4. Research entity should ensure that the individuals employed as research analyst are separate from other employees who are performing sales trading, dealing, corporate finance advisory or any other activity that may affect the independence of its research report. However, these individuals can receive a feedback from sales or trading personnel of brokerage division to ascertain the impact of research report.

In case you have any queries or need assistance with regard to research reports, you may write to me at or reach out to me at +91 9148973085.

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