SEBI tightens hold on stock exchanges for better compliance

Non-compliance should be reported using an ‘Exception Report’ which should be submitted to SEBI within 45 days of closing of the quarter

January 01, 1970 5:30 IST | India Infoline News Service
In order to ensure better compliance and monitoring under the Listing Agreements by the stock exchanges, SEBI (Securities and Exchange Board of India) has tightened its hold on the exchanges.

The Equity Listing Agreement mandates listed companies to make periodic and event based disclosures which are price sensitive in nature and which will have bearing on the performance / operations of the company, SEBI said in its circular on Monday.

Stock Exchanges should disseminate the information received from the listed companies on their respective websites after doing a preliminary check, as is being done presently.
According to the market regulator, the quality compliance with respect to Clause-35 should be monitored by comparing with the filings of the previous quarter. Such comparison should include changes, if any, in the names of the promoters, their shareholding, encumbered shares, etc, and ensure as to whether the
requisite disclosures have been made in compliance with SEBI regulations.

The disclosures with respect to Clause-41 (including handling of complaints relating to inadequate disclosures and non-compliances) and Clause 49 should be monitored for quality and substantive compliance and necessary action should be initiated, if found otherwise.

Non-compliance should be reported using an ‘Exception Report’ which should be submitted to SEBI within 45 days of closing of the quarter. Stock exchanges are also required to ensure better compliance of Clause 41 and Clause 49, which deals with corporate governance standards of board and the companies.

The regulator wants stock exchange to seek additional information if they are not satisfied, this should be sought within two days of the filing by the companies and the latter is required to ensure the information is provided within 5 days. A non-compliance empowers stock exchange to fine companies for delay and further initiate SOP or standard operating procedure to take regulatory action including shifting of the scrip to Z category.

SEBI also wants the exchanges to closely monitor compliance of Clause 36 - with respect to information provided by the listed companies. Exchanges have been empowered to seek further information which they feel need to be disclosed and is material in nature based on reports appearing in the media.

Though no specific timeline has been suggested, stock exchanges will be require to adhere to new guidelines at the earliest.

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