SEBI specifies the structure for imposing fines for non-compliance with LODR regulations

The Securities and Exchange Board of India(SEBI) vide a Circular dated 22nd January 2020 has specified the uniform structure for imposing fines for non-compliance with certain provisions of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR Regulations) and the standard operating procedure for suspension and revocation of trading of specified securities. Prior to this circular, vide another circular dated 3rd May 2018, SEBI specified the structure for imposing fines for non-compliance, freezing of entire shareholding of the promoter and the standard operating procedure for suspension of trading in case of continuous/repetitive non-compliance.

However, pursuant to the amendments to LODR, and to streamline the procedure to deal with non-compliance, the present circular has been issued to modify the earlier circular dated 3rd May 2018. The main features of the Circular are as follows:

  1.  Stock Exchanges should, having regard to the interests of investors and the securities market, take action in case of non-compliances with the Listing Regulations as specified in Annexure I of the Circular.
  2.  Stock Exchanges should follow the Standard Operating Procedure for suspension and revocation of suspension of trading of specified securities as specified in Annexure II of the Circular.
  3.  In order to ensure effective enforcement, the depositories, on receipt of intimation from the concerned recognized stock exchange, should freeze or unfreeze, the entire shareholding of the promoter(s) who is non-compliant listed entity.
  4. If a non-compliant entity is listed on more than 1 stock exchange, the concerned stock exchanges shall take necessary action in consultation with each other.
  5. The recognized stock exchanges shall disclose in their website the action taken by them against non-compliant listed entity.
  6. The recognized stock exchanges may withdraw any action taken by them against non-compliant listed entity if specific exemption from compliance is granted to such listed entity under Listing Regulation/moratorium/or under any enforcement proceeding.
  7.  Every recognized stock exchange will review the compliance status of the listed entities and shall issue notices to the non-compliant listed entities within 30 days from the due date of submission of information. The non-compliant entity shall ensure compliance and pay fine within 15 days from the date of such notice.
  8.  If the non-compliant listed entity subsequently complies with the respective requirement(s) and pays the fine levied, in terms of the circular, the concerned recognized stock exchange(s) should display on their website details of compliance and fines paid by the listed entity.
  9. If a non-compliant listed entity fails to pay the fine, the recognized stock exchange may initiate appropriate enforcement action against such entity.

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