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Non-compliance with certain provisions of SEBI (ICDR) Regulations 2018

Circular No. SEBI/HO/CFD/DIL2/CIR/P/2019/94 dated August 19, 2019 addressed to All the Recognized Stock Exchanges.—

Non-compliance with certain provisions of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 (“ICDR Regulations”)

1. SEBI issued a Circular bearing reference number CIR/CFD/DIL/57/2017 dated June 15, 2017, specifying the fines to be imposed by the Stock Exchanges for non-compliance with certain provisions of SEBI (ICDR) Regulations, 2009.

2. Present Circular is issued in supersession to the aforesaid Circular bearing reference number CIR/CFD/DIL/57/2017 dated June 15, 2017.

3. Regulation 297 and 298 of SEBI (ICDR) Regulations, 2018, inter alia specify liability of a listed entity or any other person for contravention and actions which can be taken by the respective stock exchange, the revocation of such actions and consequences for failure to pay fine in the manner specified by SEBI.

4. In pursuance of the above, for non-compliance with certain provisions of ICDR Regulations, stock exchanges shall impose fines on the listed entities, as under:

fines on the listed entities for non-compliance with certain provisions of ICDR Regulations

Credit of Fine:

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

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

7. The recognized stock exchange 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.

8. Needless to state, if any non-compliant listed entity fails to pay the fine, the recognized stock exchange may initiate appropriate enforcement action, including prosecution in furtherance of regulation 298 of ICDR, 2018.

Bonus Issue Delays:

9. With respect to bonus issue delays, it is clarified that:
 a) The approvals for 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.
 b) However, the approvals for the listing and trading of bonus shares allotted to persons other than the promoter(s) may be granted in the interest of the investors, subject to compliance with other requirements.

10. This circular will be applicable from the date of issue of the circular.

11. The Stock Exchange are advised to bring the provisions of this circular to the notice of listed entities and also to disseminate the same on its website.

12. This circular is issued under regulation 299 of ICDR Regulations and in exercise of power conferred under Section 11(1) of the Sebi Act 1992, to protect the interests of investors in securities and to promote the development of, and to regulate, the securities market.

13. This circular is available on SEBI website under the categories “Legal Framework/Circulars”.

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