Putting in place a stronger mechanism to check non-compliance of listing conditions, Sebi today announced measures like suspension of trading, imposition of monetary penalties of up to Rs 1 crore and moving the securities to restricted trading category.
The Securities and Exchange Board of India (Sebi) said that recognised stock exchanges would use imposition of fines as action of first resort in case of non-compliances and invoke suspension of trading in case of subsequent and consecutive defaults.
Based on feed-back received from various stakeholders, Sebi has asked exchanges to impose penalties ranging from Rs 1,000 to Rs one crore depending on the violation of certain clauses of the listing agreement like non-submission or delay in submission of document related to the company's annual report, financial and shareholding details and corporate governance compliance report.
In order to ensure effective enforcement of listing conditions, Sebi has put in place an appropriate system to enforce the liabilities of listed entities and their promoters as disclosed to the concerned recognised stock exchange under the Listing Agreement.
It also said that in case relevant disclosures are not made, such promoters/promoter group should not exit from the listed entity.
"It has been decided that during the process of the suspension of the trading/revocation of trading as provided in the Standard Operating Procedure (SOP), the concerned recognised stock exchange shall intimate the details of the concerned non-compliant entity and its promoter /promoter group to the depositories," Sebi said.
"On receipt of such intimation, the depositories shall freeze or unfreeze, as the case may be, the entire shareholding of the promoter and promoter group in such entity," the regulator said in a circular.
Sebi asked stock exchanges to put in place the system to monitor and review the compliance of respective listing conditions by companies. It further said that each exchange, where the shares of the concerned entity are listed, would enforce the compliance of respective listing conditions.
The exchanges are required to disclose on its website the action taken against the listed entities for non-compliance of the listing conditions, including the details of respective requirement, amount of fine, period of suspension, freezing of shares among others.
The bourse is required to create a new category 'Z' for trading of shares of such non-compliant listed entities wherein trades would take place in 'trade for trade' basis.
