Stories
SEBI Proposes Freezing Promoters Demat Accounts For Fund Monitoring Non-Cooperation
- •SEBI has proposed stricter penalties including freezing promoters demat accounts for listed companies that fail to cooperate with monitoring agencies tracking fund utilisation.
- •Stock exchanges would levy a fine of Rs 50000 for each instance of non-cooperation and notify depositories to freeze promoters accounts if compliance is not met.
- •The working group has proposed making the appointment of a monitoring agency mandatory for all issuances regardless of size excluding the offer-for-sale component.
- •Monitoring agencies would be empowered to submit reports directly to stock exchanges based on best available information accompanied by a statement of non-cooperation.
- •SEBI has invited public comments on these recommendations and proposed enforcement measures until November 3.
Key Questions Answered
SEBI has proposed stricter penalties, including a fine of Rs 50,000 for each instance of non-cooperation reported by a monitoring agency. If the non-compliance persists and the fine or complete report is not submitted, stock exchanges would inform depositories to initiate the freezing of promoters’ demat accounts.
SEBI's working group has proposed making the appointment of a monitoring agency mandatory for all public issuances regardless of issue size, excluding only the offer-for-sale component. Additionally, companies would be prohibited from terminating existing monitoring agency agreements or appointing new ones until any non-cooperation is fully rectified.
The working group responsible for recommending the harmonization of monitoring provisions under the ICDR and LODR frameworks was chaired by V S Sundaresan, a former executive director at SEBI.
