Penalties Under SEBI (LODR) Regulations, 2015 w.e.f. 30.09.2018 By CS Lalit Rajput


SEBI (Securities Exchange Board of India), the Compliance Regulatory Authority for Stock/Securities Market has issued Circular No.  "SEBI/HO/CFD/CMD/CIR/P/2018/77 dated 03rd May, 2018"       
                          

On SUBJECT: ACTION TO BE TAKEN AGAINST LISTED COMPANIES IN CASE OF NON-COMPLIANCES:
The recognized stock exchanges shall take action for non-compliance with the provisions of the Listing Regulations by a listed entity as under:
 
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Regulation(s) No.  Of SEBI (LODR) Regulations, 2015 Applicability of the Penalties Regulation Time Period  Fine payable and/or other action to be taken for non- compliance in respect of listed entity Exception to the said Regulation(s)
1. Regulation 6(1)
Compliance Officer
w.e.f. compliance periods ending on or after 30.09.2018
Non-compliance  with  requirement to   appoint   a   qualified   company secretary as the compliance officer
Date on which Company got status of Listed (In case where shares of the Company were listed on the Recognized Stock Exchange(s)) ` 1,000 per day In the case of units issued by mutual funds which are listed on recognised stock exchange(s) but shall be governed by the provisions of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996.
2. Regulation 7(1)
Share Transfer Agent
w.e.f. compliance periods ending on or after 30.09.2018
Non-compliance  with  requirement to appoint share transfer agent
Note : In-house share transfer facility : as and when the total number of holders of securities of the listed entity exceeds (1,00,000) one lakh.
Change or appointment of a new share transfer agent - Intimation to Stock Exchange with in 7 days of Enetering into Agreement (Reg7(4) and 7(5) ` 1,000 per day In the case of units issued by mutual funds that are listed on recognised stock exchange(s).
3. Regulation 13(1)/ 13(3) :
Grievance Redressal Mechanism.
w.e.f. compliance periods ending on or after 30.09.2018 Failure  to  ensure  that  adequate steps   are   taken   for   expeditious redressal of investor complaints

Non-submission  of  the  statement on  shareholder  complaints  within the  period  prescribed  under  this regulation  or  under  any  circular issued  in  respect  of  redressal  of investor grievances
within twenty one days from the end of each quarter ` 1,000 per day  
4. Regulation 17(1)
Board of Directors
w.e.f. compliance periods ending on or after 30.09.2018 Non-compliance         with         the requirements   pertaining   to   the composition of the Board including failure to appoint  woman director :

- (Reg17(1)(a)) : at least one woman director and not less than fifty per cent. of the board of directors shall comprise of non-executive directors
(Note : Top 500 listed entities shall have at least one independent woman director by April 1, 2019 and the Board of directors of the top 1000 listed entities shall have at least one independent woman director by April 1, 2020)
- (Reg17(1)(a)) : in case chairperson of the board of directors is a non-executive director, at least one-third of the board of directors shall comprise of independent directors and where the listed entity does not have a regular non-executive chairperson, at least half of the board of directors shall comprise of independent directors:
  ` 5,000 per day Pursuant to SEBI(LODR) (Third Amendment) Regulations, 2015 dated 31st May, 2018, the provisions as specified in regulation 17 shall not be applicable during the insolvency resolution process period in respect of a listed entity which is undergoing corporate insolvency resolution process under the Insolvency Code.

However, the role and responsibilities of the board of directors as specified under regulation 17 shall be fulfilled by the Interim Resolution Professional or Resolution Professional in accordance with sections 17 and 23 of the Insolvency Code.
5. Regulation 18(1)
Audit Committee
w.e.f. compliance periods ending on or after 30.09.2018
Non-compliance with the constitution of audit committee:

(Reg. 18(1) (a) : The audit committee shall have minimum three directors as members.
(Reg. 18(1) (b) : Two-thirds of the members of audit committee shall be independent directors.
(Reg. 18(1) (c) : Members of audit committee shall be financially literate and at least one member shall have accounting or related financial management expertise
  ` 2,000 per day Pursuant to regulation 15(2B) of SEBI(LODR) (Third Amendment) Regulations, 2015 , the provisions as specified in regulation 18, 19, 20 and 21 shall not be applicable during the insolvency resolution process period.
Further, the role and responsibilities of the Board of Directors as specified under regulation 17 has been fulfilled by the resolution professional in accordance with sections 17 and 23 of the Insolvency Code.
6. Regulation 19(1)/ 19(2)
Nomination and Remuneration Committee
w.e.f. compliance periods ending on or after 30.09.2018
Non-compliance         with         the constitution   of    nomination   and remuneration committee
Reg. 19(1) :
(a) the committee shall comprise of at least three directors ;
(b) all directors of the committee shall be non-executive directors; and
(c) at least fifty percent of the directors shall be independent directors.
Reg 19(2) :
Chairperson shall be an independent director.
Reg 19(2A) : (Inserted by the SEBI (LODR) (Amendment) Regulations, 2018, w.e.f. 1.4.2019.)
Quorum : shall be either two members or one third of the members of the committee, whichever is greater, including at least one independent director in attendance.
  ` 2,000 per day Pursuant to regulation 15(2B) of SEBI(LODR) (Third Amendment) Regulations, 2015 , the provisions as specified in regulation 18, 19, 20 and 21 shall not be applicable during the insolvency resolution process period.
Further, the role and responsibilities of the Board of Directors as specified under regulation 17 has been fulfilled by the resolution professional in accordance with sections 17 and 23 of the Insolvency Code.
7. Regulation 20(2)
Stakeholders Relationship Committee
w.e.f. compliance periods ending on or after 30.09.2018
Non-compliance         with         the constitution        of        stakeholder relationship committee
Chairperson : shall be a non-executive director.
Reg 20 (2A) :  (Inserted by the SEBI (LODR) (Amendment) Regulations, 2018, w.e.f. 1.4.2019.)
 At least three directors, with at least one being an independent director, shall be members of the Committee
  ` 2,000 per day  
8. Regulation 21(2)
Risk Management Committee
w.e.f. compliance periods ending on or after 30.09.2018
Non-compliance  with the constitution  of   risk  management committee

The majority of members of Risk Management Committee shall consist of members of the board of directors
Reg. 21 (3A) : (Inserted by the SEBI (LODR) (Amendment) Regulations, 2018, w.e.f. 1.4.2019.)
The risk management committee shall meet at least once in a year
  ` 2,000 per day Applicable to the top 100 listed entities only
(shall be applicable to top 500 listed entities, determined on the basis of market capitalisation, as at the end of the immediate previous financial year.- w.e.f 01.04.2019)
9. Regulation 27(2)
Corporate Governance Requirements
w.e.f. compliance periods ending on or after 30.09.2018
Non-submission  of  the  Corporate governance    compliance    report within  the  period  provided  under this regulation
within fifteen days from close of the quarter ` 2,000 per day  
10. Regulation 29(2)/29(3)
Prior Intimations
w.e.f. compliance periods ending on or after 30.09.2018
Delay in furnishing prior intimation about the meeting of the board of directors:
Reg. 29(2): The intimation required under 29(1), shall be given at least two working days in advance, excluding the date of the intimation and date of the meeting and intimation under 29(1)(a), to be discussed at the meeting of board of directors shall be given at least five days in advance (excluding the date of the intimation and date of the meeting), and such intimation shall include the date of such meeting of board of directors.
Reg. 29(3) :The listed entity shall give intimation to the stock exchange(s) at least 11 working days before any of the following proposal is placed before the board of directors -
(a)    any alteration in the form or nature of any of its securities that are listed on the stock exchange or in the rights or privileges of the holders thereof
(b)   any alteration in the date on which, the interest on debentures or bonds, or the redemption amount of redeemable shares or of debentures or bonds, shall be payable
Reg. 29(1)(a) : At least 2 days in advance
Reg. 29(2) : At least 2 working days in advance excluding the date of intimation and date of meeting
Reg. 29(3) : At least 11 working days in advance
` 10,000 per instance of non- compliance per item  
11. Regulation 31
Holding of specified securities and shareholding pattern.
w.e.f. compliance periods ending on or after 30.09.2018 Non-submission   of   shareholding pattern within the period prescribed :
1. The listed entity shall submit to the stock exchange(s) shareholding pattern within the following timelines -
(a) 01 day prior to listing of its securities on the stock exchange(s);
(b) on a quarterly basis, within 21 days from the end of each quarter; and,
(c) within 10 days of any capital restructuring of the listed entity resulting in a change exceeding two per cent of the total paid-up share capital.
in case of listed entities which have listed their specified securities on SME Exchange, the above statements shall be submitted on a half yearly basis within twenty one days from the end of each half year.
2. 100% of shareholding of promoter(s) and promoter group is in dematerialized form.
3. comply with circulars or directions issued by the SEBI.
4. All entities falling under promoter and promoter group shall be disclosed separately in the shareholding pattern appearing on the website of all stock exchanges having nationwide trading terminals where the  pecified securities of the entity are listed, in accordance with the formats specified by the Board (applicable w.e.f. 16.11.2018)
Reg. 31(1)(a) - In case of listing of Securities : 1 day prior
Reg. 31(1)(b) - In case already listed : with in 21 days from the end of each quarter
Reg. 31(1)(c) -In case Capital Restruturing (change exceeding 2% of the total paid-up share capital) : with in 10 days
` 2,000 per day  
12. Regulation 32(1)
Statement of deviation(s) or variation(s).
w.e.f. compliance periods ending on or after 30.09.2018
Non-submission     of     deviations/ variations   in   utilization   of   issue proceeds :
The listed entity shall submit to the stock exchange the following statement(s) on a quarterly basis for public issue, rights issue, preferential issue etc. ,-
(a) indicating deviations, if any, in the use of proceeds from the objects stated in the offer document or explanatory statement to the notice for the general meeting, as applicable;
(b) indicating category wise variation (capital expenditure, sales and marketing, working capital etc.) between projected utilisation of funds made by it in its offer document or explanatory statement to the notice for the general meeting, as applicable and the actual utilisation of fund.
Quarterly basis ` 1,000 per day  
13. Regulation 33
Financial results
w.e.f. compliance periods ending on or after 30.09.2018
Non-submission   of   the   financial results within the period prescribed under this regulation
Reg. 33(1) : preparation conditions for financial results
Reg. 33(2) : Manner for approval and authentication of the financial results
Reg. 33(3) : Manner for submition of the financial results
Reg. 33(4) : Applicable formats of the financial results
Reg. 33(5) : Requirement of submitting ‘year-to-date’ financial results shall not be applicable for a listed entity which has listed their specified securities on SME Exchange.
Reg. 33(6) : Review by the stock exchange
Reg 33(8) : The statutory auditor of a listed entity shall undertake a limited review of the audit of all the entities/ companies whose accounts are to be consolidated with the listed entity as per AS 21 in accordance with guidelines issued by the Board on this matter.(Applicable w.e.f. 01.04.2019)
Reg. 33(3)(a) : The listed entity shall submit quarterly and year-to-date standalone financial results to the stock exchange within 45 days of end of each quarter, other than the last quarter.
Reg. 33(d) : The listed entity shall submit [annual] audited standalone financial results for the financial year, within 60 days from the end of the financial year along with the audit report and [Statement on Impact of Audit Qualifications (applicable only] for audit report with modified opinion)
` 5,000 per day  
14. Regulation 34
Annual Report
w.e.f. compliance periods ending on or after 30.09.2018
Non-submission   of   the   Annual Report within the period prescribed under this regulation
Reg. 34(1) : The listed entity shall submit to the stock exchange and publish on its website -   (w.e.f. year ended March 31, 2019 and thereafter)
(a) a copy of the annual report sent to the shareholders along with the notice of the annual general meeting not later than the day of commencement of dispatch to its shareholders;
(b) in the event of any changes to the annual report, the revised copy along with the details of and explanation for the changes shall be sent not later than 48 hours after the annual general meeting.
` 2,000 per day applicable for Annual report filed for the year ended March 31, 2019
15. Regulation 39(3)
Issuance of Certificates or Receipts/Letters/Advices for securities and dealing with unclaimed securities
w.e.f. compliance periods ending on or after 30.09.2018
Non-submission    of    information regarding loss of share certificates and     issue     of     the     duplicate certificates     within     the     period prescribed under this regulation
The listed entity shall submit information regarding loss of share certificates and issue of the duplicate certificates, to the stock exchange within two days of its getting information. ` 1,000 per day  
16. Regulation 42(2)/42(3)/ 42(4)/42(5)
Record Date or Date of closure of transfer books
w.e.f. compliance periods ending on or after 30.09.2018
Delay in/ non-disclosure of record date/ dividend declaration or non- compliance    with    ensuring    the prescribed  time  gap  between  two record dates/ book closure dates
Reg. 42(2) : The listed entity shall give notice in advance of atleast seven working days (excluding the date of intimation and the record date) to stock exchange(s) of record date specifying the purpose of the record date.
Reg. 42(3) : The listed entity shall recommend or declare all dividend and/or cash bonuses at least five working days (excluding the date of intimation and the record date) before the record date fixed for the purpose.
Reg. 42(4) : The listed entity shall ensure the time gap of at least thirty days between two record dates.
Reg. 42(5) : Provided that the listed entity shall ensure that there is a time gap of atleast thirty days between two dates of closure of its transfer books.
` 10,000 per instance of non- compliance per item  
17. Regulation 44(3)
Meetings of shareholders and voting (w.e.f. 01.04.2019)
(Substituted for “Voting by shareholders”)
w.e.f. compliance periods ending on or after 30.09.2018
Non-submission    of    the    voting results  within  the  period  provided under this regulation
Reg. 46(3) : details regarding the voting results after General Meeting of the Company
within 48 hours of conclusion of its General Meeting ` 10,000 per instance of non- compliance  
18. Regulation 46
Website
w.e.f. compliance periods ending on or after 30.09.2018
Non-compliance with norms pertaining to functional website
Reg. 46(1) : maintain a functional website
Reg. 46(2) : informations required to be disseminated (w.e.f. 1.4.2019)
Reg. 46(3) : Correctness of the website contents
any change in the content on website shall be intimated within two working days from the date of such change. Advisory/warning letter per instance of non-compliance per item
` 10,000 per instance for every additional advisory/warning letter exceeding the four advisory/ warning letters in a financial year
 
19. Regulation 99
Failure to pay fine.
Already applicable Failure to pay fine :
If listed entity fails to pay any fine imposed on it within such period as specified from time to time, by the recognised stock exchange(s), after a notice in writing has been served on it, the stock exchange may initiate  action.
     
Notes :
1  Concerned  recognized  stock  exchange(s)  shall  display  on  their  website non-compliance by the listed entity and details of fine levied/ action taken.
2 The amount of fine realized as per the above structure shall be credited to the "Investor Protection Fund" of the concerned recognized stock exchange.
3 The fines specified above shall continue to accrue till the time of rectification of the non-compliance to the satisfaction of the concerned recognized stock exchange or till the scrip of the listed entity is suspended from trading for non-compliance   with   aforesaid   provisions.   Such   accrual   shall   be irrespective  of  any  other  disciplinary/enforcement  action(s)  initiated  by recognized stock exchange(s)/SEBI.
4 Every recognized stock exchange shall review the compliance status of the listed entities within 15 days from the date of receipt of information and shall issue notices to the non-compliant listed entities to ensure compliance and collect fine as per this circular within 15 days from the date of such notice. While issuing the said notice, the recognized stock exchange shall also send intimation of notice to other recognized stock exchange(s) where the shares of the non-compliant entity are listed.
5 If any non-compliant listed entity fails to pay the fine despite receipt of the notice as stated above, the recognized stock exchange(s) may also initiate appropriate enforcement action.
6 The  recognised  stock  exchange(s)  shall  also  advise  the  non-compliant listed 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 company in its next meeting.  Comments  made  by  the  board  shall  be  duly  informed  to  the recognised stock exchange(s) for dissemination.

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