1. Sebi mandates bourses to freeze non-compliant firms’ accounts

Sebi mandates bourses to freeze non-compliant firms’ accounts

To ensure effective enforcement of Listing regulations, markets regulator Sebi today decided to freeze holdings of promoters and promoter group entities of companies that fail to pay fines imposed by stock exchanges.

By: | New Delhi | Published: October 26, 2016 8:39 PM
While freezing the holdings, Sebi said that the stock exchange would have discretion in determining which of the securities and holdings of which promoter or promoter group entity are to be frozen. (Reuters) While freezing the holdings, Sebi said that the stock exchange would have discretion in determining which of the securities and holdings of which promoter or promoter group entity are to be frozen. (Reuters)

To ensure effective enforcement of Listing regulations, markets regulator Sebi today decided to freeze holdings of promoters and promoter group entities of companies that fail to pay fines imposed by stock exchanges.

The decision was taken in consultation with the stock exchanges.

“It has been observed that some of the non-compliant listed entities have not paid the fines levied by recognised stock exchange. In order to ensure effective enforcement, it has been decided in consultation with recognized stock exchanges to freeze the holdings of their promoters and promoter group entities,” Sebi said in a circular.

In case a company, non-compliant with Listing rules, failed to pay fine levied by the concerned exchange within the time-frame, that bourse can freeze holdings in other securities in the demat accounts of promoter and promoter group to the extent of liability which shall be calculated on a quarterly basis, Sebi said.

In case of non-compliance for two consecutive periods, and failure to comply with the notice issued by the concerned exchange within the requisite time-frame, the bourse “shall forthwith intimate the depositories to freeze the entire shareholding of the promoter and promoter group in such listed entity”.

“In addition to the freeze of shares in the non-compliant listed entity, the holdings in the demat accounts of promoter and promoter group in other securities shall also be frozen to the extent of liability which shall be calculated on a quarterly basis,” Sebi said.

While freezing the holdings, Sebi said that the stock exchange would have discretion in determining which of the securities and holdings of which promoter or promoter group entity are to be frozen.

The depositories, would have to furnish to the exchange upon receipt of request, all such information pertaining to holdings in the demat accounts of promoter and promoter group of such listed entities.

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