Non compliance with sebi (issue of capital and disclosure requirements) regulations 2018 will attract higher fines compiled by CS Shubham Phule



SEBI Vide its Circular No SEBI/HO/CFD/DIL2/CIR/P/2019/94 dated August 19th, 2019 came out with higher penalties for non-compliance with certain provisions of SEBI ICDR Regulations 2009.

The Present Circular issued is in supersession of the circular no CIR/CFD/DIL/57/2017 issued dated June 15th, 2017 specifying the fines to be imposed by the stock exchanges for non-compliance with certain provisions of SEBI(ICDR) Regulations, 2009.

Regulations 297 and 298 of ICDR Regulations, 2018, interalia specify liability of a listed entity or any other person for contravention and actions taken by the respective stock exchanges,the revocation of suchactions and consequences to pay fine in the manner specified by SEBI.

Non Compliance with certain provisions of ICDR Regulations, Stock exchange will impose fines as under:

S.No

Violation

Regulation/Schedule

Fine

1)      

Delay in completion of bonus issue

 

a)     Within 15 days from the date of approval of the issue by the Board of Directors –in cases where shareholders approval for capitalization of profits or reserves for making the bonus is not required.

 

b)    Within 2 months from the date of meeting of board of directors wherein the decision was taken subject to shareholders approval- in cases where issuer is required to seek shareholder’s approval for capitalization of profits and reserves for making the bonus issue.

295(1)

Rs. 20,000/- per day of non-compliance till the date of compliance.

2)      

Listed entities not completing the conversion of convertible securities and allotting the shares,  within 18 months from the date of allotment of convertible securities.  

162

Rs. 20,000/- per day of non-compliance till the date of compliance.

3)      

As per Schedule XIX- Para (2)  under heading Application for listing, it is stated that:”The issuer shall make an application for listing , from the date of allotment within such period as may be specified by the Board from time to time, to one or more stock exchange(s)”.

 

In regard to the above, it is specified that  Issuer shall make an application to the exchange/s for listing in case of further issue of equity shares from the date of allotment within 20 days (unless otherwise specified.)  

Schedule XIX- Listing of Securities on Stock Exchange.

Rs. 20,000/- per day of non-compliance till the date of compliance.

4)      

Listed entities shall make an application for trading approval to the stock exchanges within 7working days from the date of grant of listing approval by the stock exchanges.

-

Rs. 20,000/- per day of non-compliance till the date of compliance.


Credit of Fine:

The amount of the fine realized above shall be credited to the “Investor Protection Fund” of the concerned stock exchange.

The recognized stock exchange shall disseminate on their website the names of non-compliant listed entities that are liable to pay fine, the amount of fine imposed, details of fines received etc.

The recognized stock exchanges shall issue notices to the non-compliant listed entities to ensure compliance and collect fines as per this circular within 15 days from the date of the notice.

If any non-compliant listed entity fails to pay the fine, the recognized stock exchange may initate appropriate enforcement action, including prosecution in furtherance of regulation 298 of SEBI ICDR, 2018.

Bonus Issue Delays: With respect to the bonus issue delays, it is clarified that:

  1. The approval of the listing and trading of promoters bonus shares may be granted by the Stock Exchange, only after payment of the requisite fine by the listed entity.
  2. The approvals for the listing and trading of bonus shares allotted to persons other than the promoters may be granted in the interest of the investors, subject to the compliance with other requirements.

Reference: Sebi Circular No SEBI/HO/CFD/DIL2/CIR/P/2019/94 dated 19th August, 2019.

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