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SEBI issues circular for effective enforcement of the Listing Regulations

CIRCULAR

SEBI/HO/CFD/CMD/CIR/P/2018/77

May 3, 2018

To, All the Recognized Stock Exchanges All Depositories

Dear Sir/Madam,

Sub: Non-compliance with certain provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the Standard Operating Procedure for suspension and revocation of trading of specified securities.

1. In exercise of powers under Section 11A(2) of the SEBI Act, 1992 read with Section 9 and 21 of the Securities Contracts (Regulation) Act, 1956 and read with regulation 98 of the the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“Listing Regulations”), SEBI had issued a Circular bearing reference number CIR/CFD/CMD/12/2015 dated November 30, 2015, specifying the uniform structure for imposing fines as a first resort for non-compliance with certain provisions of the Listing Regulations and the standard operating procedure for suspension of trading in case the non-compliance is continuing and/or repetitive.

2. Thereafter, SEBI had issued another Circular bearing reference number SEBI/HO/CFD/CIR/P/2016/116 dated October 26, 2016 advising the manner of freezing of holdings of the promoter and promoter group of a listed entity that failed to pay fines levied by the stock exchange(s).

3. On the basis of the experience gained and to streamline the process, to maintain consistency and to adopt a uniform approach in the matter of levy of fines for non-compliance with certain provisions of the Listing Regulations, the manner of suspension of trading of securities of a listed entity and the manner of freezing the holdings of the promoter and promoter group of a non-compliant listed entity, it has been decided to issue the present Circular, in supersession of the said Circulars bearing reference numbers CIR/CFD/CMD/12/2015 dated November 30, 2015 and SEBI/HO/CFD/CIR/P/2016/116 dated October 26, 2016.

4. Henceforth, the stock exchanges shall, having regard to the interests of investors and the securities market:
a) take action in case of non-compliances with the Listing Regulations as specified in Annexure I of this Circular, and.
b) follow the Standard Operating Procedure (“SOP”) for suspension and revocation of suspension of trading of specified securities as specified in Annexure II of this Circular.

Stock Exchanges may deviate from the above, if found necessary, only after recording reasons in writing.

5. In order to ensure effective enforcement of the Listing Regulations, the depositories, on receipt of intimation from the concerned recognized stock exchange, shall freeze or unfreeze, as the case may be, the entire shareholding of the promoter and promoter group in such non-compliant listed entity as well as all other securities held in the demat account of the promoter and promoter group. Further, if a non-compliant entity is listed on more than one recognized stock exchange, the concerned recognized stock exchanges shall take uniform action under this Circular in consultation with each other.

6. The recognized stock exchanges shall take necessary steps to implement this circular. The recognized stock exchanges shall disclose on their website the action(s) taken against the listed entities for non-compliance(s); including the details of the respective requirement, amount of fine levied, the period of suspension, details regarding the freezing of shares, etc.

7. The recognized stock exchanges may keep in abeyance the action or withdraw the action in specific cases where specific exemption from compliance with the requirements under the Listing Regulations/moratorium on enforcement proceedings has been provided for under any Act, Court/Tribunal Orders etc. 8. The above provisions are without prejudice to the power of SEBI to take action under the securities laws. 9. The recognized stock exchanges are advised to bring the provisions of this Circular to the notice of listed entities and the listed entities shall in turn bring the same to the notice of their promoter/promoter group.

10. This Circular shall come into force with effect from compliance periods ending on or after September 30, 2018.

11. This circular is available on SEBI website at www.sebi.gov.in under the category “Legal”.

Yours faithfully,
TVVPS Chakravarti T
Deputy General Manager
Compliance and Monitoring Division
Corporation Finance Department
chakravartit@sebi.gov.in

ANNEXURE-I

ANNEXURE-II

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