Sebi proposes Rs 50,000 fine for firms not cooperating with monitoring agencies

Mumbai: Sebi on Tuesday proposed imposing a fine of ₹50,000 for every instance of non-cooperation by listed companies with monitoring agencies overseeing the utilisation of funds raised through public issues, along with stricter enforcement measures that could eventually lead to the freezing of promoters' demat accounts.

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The regulator said monitoring agencies would be empowered to submit their reports directly to stock exchanges if companies failed to provide information or supporting documents within prescribed timelines. Such reports would be based on the best available information and accompanied by a statement highlighting the company's non-cooperation, according to the proposal.


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Exchanges would be required to prominently display these reports on their websites to draw investors' attention to potential information gaps. They should also review compliance and issue notices to non-compliant companies within 30 days of the due date for submission of monitoring agency reports, it said.

If a company failed to rectify the non-cooperation or pay the prescribed fine within 15 days of receiving the notice, exchanges would have to issue notices to its promoters, as per the proposal. If the default persists for another 10 days, exchanges should inform depositories to initiate the freezing of promoters' demat accounts under the applicable standard operating procedure. The regulator also proposed that companies be barred from terminating their existing monitoring agency agreements or appointing a replacement if non-cooperation was reported for one or more reporting periods.

The restriction would remain until the company rectifies the issue and enables the agency to submit a complete report. However, Sebi clarified that non-payment of fees to a monitoring agency should not by itself constitute non-cooperation. Agencies may include contractual provisions requiring issuers to pay the entire monitoring fee in advance, it said.