Sebi directs exchanges to be tough with companies on public shareholding norms
ET Bureau|
Updated: Oct 10, 2017, 09.27 PM IST
MUMBAI: The Securities and Exchange Board of India has directed stock exchanges to crack the whip on companies that do not comply with the minimum public shareholding requirements. The regulator has asked exchanges to impose a fine on non-compliant companies, freeze promoter shares and bar promoters from being promoters in other listed companies till they do not comply.
Stock exchanges will have to issue notices to the non-compliant entities within 15 days from the date of observation of non-compliance with the norms, SEBI said in a circular released on Monday.
Sebi said the stock exchange will impose a fine of Rs 5,000 per day in case a company is found to be in non-compliance with the minimum public shareholding norms and the fine will continue till the company complies. The exchange can also tell depositories to freeze the entire shareholding of a promoter or promoter group in the company.
“The above restriction shall not be an impediment for the entity for compliance with the minimum public shareholding norms through the methods specified/approved by SEBI,” the regulator said.
Till there is no compliance, promoter group and directors of any such company will not be allowed to hold any new position as director in any other listed company, SEBI said.
In cases where the listed company continues to be non-compliant with the minimum public shareholding norms for more than one year, the fine amount will increase to Rs 10,000 per day. The exchanges will also intimate depositories to freeze all the securities held in the demat account of the promoter and promoter group.
The recognized stock exchange may also consider compulsory delisting of the non-compliant listed entity, SEBI said.
Exchanges will have to periodically disclose names of the non-compliant entities, amount of fine imposed, freezing of shares held by the promoters and promoter group and other actions taken against the company as well as the status of compliance on their websites, the circular said.
"The recognized stock exchanges may keep in abeyance the action or withdraw the action in specific cases where specific exemption from compliance with MPS requirements under the listing regulations/ moratorium on enforcement proceedings has been provided under any Act, Court/Tribunal Orders etc," SEBI said.
Stock exchanges will have to issue notices to the non-compliant entities within 15 days from the date of observation of non-compliance with the norms, SEBI said in a circular released on Monday.
Sebi said the stock exchange will impose a fine of Rs 5,000 per day in case a company is found to be in non-compliance with the minimum public shareholding norms and the fine will continue till the company complies. The exchange can also tell depositories to freeze the entire shareholding of a promoter or promoter group in the company.
“The above restriction shall not be an impediment for the entity for compliance with the minimum public shareholding norms through the methods specified/approved by SEBI,” the regulator said.
Till there is no compliance, promoter group and directors of any such company will not be allowed to hold any new position as director in any other listed company, SEBI said.
In cases where the listed company continues to be non-compliant with the minimum public shareholding norms for more than one year, the fine amount will increase to Rs 10,000 per day. The exchanges will also intimate depositories to freeze all the securities held in the demat account of the promoter and promoter group.
The recognized stock exchange may also consider compulsory delisting of the non-compliant listed entity, SEBI said.
Exchanges will have to periodically disclose names of the non-compliant entities, amount of fine imposed, freezing of shares held by the promoters and promoter group and other actions taken against the company as well as the status of compliance on their websites, the circular said.
"The recognized stock exchanges may keep in abeyance the action or withdraw the action in specific cases where specific exemption from compliance with MPS requirements under the listing regulations/ moratorium on enforcement proceedings has been provided under any Act, Court/Tribunal Orders etc," SEBI said.
