The Securities and Exchange Board of India on Tuesday proposed a stricter framework for tracking how listed companies use money raised from the public, including a fine of Rs 50,000 for every instance of non-cooperation with monitoring agencies.
The proposals are part of a consultation paper issued as the regulator reviews the Listing Obligations and Disclosure Requirements (LODR) Regulations, 2015. They follow recommendations from a working group chaired by former SEBI executive director V S Sundaresan.
Wider net for monitoring agencies
SEBI has proposed making the appointment of a monitoring agency mandatory for all public issues, irrespective of the size of the issue, excluding only the offer-for-sale component. Monitoring agencies, typically scheduled commercial banks or credit rating agencies, act as independent third parties verifying that companies deploy fresh issue proceeds in line with the objectives stated in their offer documents.
To strengthen oversight, the regulator wants monitoring agencies to submit their reports directly to stock exchanges when listed companies fail to furnish information or supporting documents within prescribed timelines. Such reports would be based on the best available information and accompanied by a "statement of non-cooperation". Stock exchanges would be required to prominently display these reports on their websites.
Graded enforcement, up to demat freezes
The enforcement framework escalates in stages. Stock exchanges would issue notices to non-compliant companies within 30 days of the monitoring report's due date. If the company fails to rectify the non-cooperation or pay the Rs 50,000 fine within 15 days of receiving the notice, exchanges would issue notices to its promoters. If the default persists for another 10 days, exchanges would inform depositories to initiate freezing of the promoters' demat accounts under the standard operating procedure.
SEBI has also proposed that companies be barred from terminating existing monitoring agency agreements, or appointing a replacement, once non-cooperation has been reported for one or more reporting periods.
Stakeholder comments on the consultation paper have been invited until November 3, 2026.
Sources:
Sebi proposes Rs 50,000 fine for firms not cooperating with monitoring agencies — The Economic Times
SEBI proposes mandatory monitoring for all public issues — The Hindu BusinessLine
The proposals are part of a consultation paper issued as the regulator reviews the Listing Obligations and Disclosure Requirements (LODR) Regulations, 2015. They follow recommendations from a working group chaired by former SEBI executive director V S Sundaresan.
Wider net for monitoring agencies
SEBI has proposed making the appointment of a monitoring agency mandatory for all public issues, irrespective of the size of the issue, excluding only the offer-for-sale component. Monitoring agencies, typically scheduled commercial banks or credit rating agencies, act as independent third parties verifying that companies deploy fresh issue proceeds in line with the objectives stated in their offer documents.
To strengthen oversight, the regulator wants monitoring agencies to submit their reports directly to stock exchanges when listed companies fail to furnish information or supporting documents within prescribed timelines. Such reports would be based on the best available information and accompanied by a "statement of non-cooperation". Stock exchanges would be required to prominently display these reports on their websites.
Graded enforcement, up to demat freezes
The enforcement framework escalates in stages. Stock exchanges would issue notices to non-compliant companies within 30 days of the monitoring report's due date. If the company fails to rectify the non-cooperation or pay the Rs 50,000 fine within 15 days of receiving the notice, exchanges would issue notices to its promoters. If the default persists for another 10 days, exchanges would inform depositories to initiate freezing of the promoters' demat accounts under the standard operating procedure.
SEBI has also proposed that companies be barred from terminating existing monitoring agency agreements, or appointing a replacement, once non-cooperation has been reported for one or more reporting periods.
Stakeholder comments on the consultation paper have been invited until November 3, 2026.
Sources:
Sebi proposes Rs 50,000 fine for firms not cooperating with monitoring agencies — The Economic Times
SEBI proposes mandatory monitoring for all public issues — The Hindu BusinessLine
