The Securities and Exchange Board of India (SEBI) has issued a new directive banning misleading or exaggerated forward-looking statements made by public limited companies in their disclosures, investor presentations, press releases, and earnings calls. The regulation, effective from May 1, 2026, is aimed at curbing speculative narratives that can mislead investors and distort stock valuations. This reform comes in the wake of increased market volatility triggered by aggressive revenue forecasts and growth projections that later failed to materialize, raising concerns about corporate accountability and investor protection.

Under the new guidelines, public companies are now required to clearly distinguish forward-looking statements from factual reporting and must support such projections with reasonable assumptions, risk disclosures, and historical performance context. Statements related to expected earnings, future projects, expansion plans, or market share ambitions must include cautionary language and be validated by the board or audit committee before release. SEBI will monitor such disclosures closely, and companies found to be making unsubstantiated or exaggerated claims may face fines, mandatory clarifications, and potential restrictions on future public communications.

To ensure consistent compliance, SEBI has instructed all listed entities to update their investor communication policies and train their spokespersons, CFOs, and investor relations teams on the new norms. The directive will also apply to companies preparing for IPOs, ensuring that draft red herring prospectuses (DRHPs) and roadshow materials remain factually grounded. Analysts and governance experts have praised the move as a necessary check on manipulative market behavior, reinforcing India’s capital markets as fair, transparent, and aligned with global disclosure standards. Companies are urged to review their communication strategies to avoid regulatory breaches and reputational risk.