Sebi specifies fine, action to be taken in case of non-compliance by non-convertible securities issuers

Non-compliant entities have to ensure compliance with the requirements and pay fines within 15 days from the date of such notice.

Stock exchanges can deviate, if necessary, but only after recording reasons in writing.
Stock exchanges can deviate, if necessary, but only after recording reasons in writing.

Markets regulator Sebi on Wednesday came out with guidelines for levying fines and taking action for non-compliance with continuous disclosure requirements by the issuers of listed non-convertible securities and commercial papers.

The circular will come into force for the due dates of compliances falling on or after February 01, 2022.
The fines realised need to be credited to the Investor Protection Fund of the concerned stock exchange.

The fines will continue to accrue till the time of rectification of the non-compliance and to the satisfaction of the concerned recognised stock exchange.
“Such accrual shall be irrespective of any other disciplinary/enforcement action(s) initiated by recognised stock exchange(s)/SEBI,” it said.

Sebi has specified the fine amounts to be levied in case of violation of different provisions of Listing Obligations and Disclosure Requirements norms and the actions to be taken in case of non-compliance.

Stock exchanges can deviate, if necessary, but only after recording reasons in writing.

In case the non-compliant entity is listed on more than one stock exchange, the concerned exchanges shall take uniform action in consultation with each other.
The regulator said that every stock exchange will review the compliance status of the entities having listed their non-convertible securities and commercial paper and issue notices to the non-compliant entities within 30 days from the due date of the prescribed timeline.

Non-compliant entities have to ensure compliance with the requirements and pay fines within 15 days from the date of such notice.
In case entities fail to do so, exchanges will have to issue reminder notices and at the same time, send intimation to other exchanges where the non-convertible securities or commercial paper of the non-compliant entity are listed.

If the entity still fails to comply, the stock exchange and other entities allowed to act as electronic book provider (EBP), shall not allow issuance of any securities by such non-compliant entity on EBP Platform and also not allow further listing of non-convertible securities or commercial papers.

“The recognised stock exchange(s) shall also advise the non-compliant entity to ensure that the subject matter of non-compliance which has been identified and indicated by the recognised stock exchange(s) and any subsequent action taken by the recognised stock exchange(s) in this regard shall be placed before the Board of Directors of the entity in its next meeting. Comments made by the board shall be duly informed to the recognised stock exchange(s) for dissemination,” Sebi said.

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