Under the proposed framework, if a listed entity does not cooperate, the monitoring agency would file its report based on the best available information, along with a 'statement of non-cooperation'. As reported by The Economic Times, CNBC TV18, The Hindu BusinessLine, and The Hindu, exchanges may be allowed to levy a ₹50,000 fine for each instance of non-cooperation reported by a monitoring agency in a reporting quarter or half-year. The enforcement mechanism includes a graduated approach where exchanges would issue notices to non-compliant companies within 30 days of the due date for submission of the monitoring agency's report. If the complete report is not filed or the fine is unpaid within 15 days of the notice, exchanges would issue notices to promoters. If the default continues for 10 days after that, exchanges would ask depositories to initiate the freezing of promoters' demat accounts under the standard operating procedure. Additionally, SEBI has proposed prohibiting companies from changing their monitoring agency while instances of non-cooperation remain unresolved.
The Securities and Exchange Board of India (Sebi) has proposed a stricter framework for monitoring how listed companies use money raised from the public. According to reports from Business Standard, The Economic Times, and The Hindu BusinessLine, the market regulator issued a consultation paper on Tuesday on recommendations from a working group set up to review the Listing Obligations and Disclosure Requirements (LODR) Regulations, 2015. The working group, chaired by V S Sundaresan, a former executive director of Sebi, has recommended making the appointment of a monitoring agency mandatory for all public issues, irrespective of their size, excluding the offer-for-sale portion. The consultation paper was issued on October 13, 2026, with public comments invited until November 3, 2026. These proposals are currently at the consultation stage and have not yet been finalised. The working group was constituted with the aim of streamlining the regulations, simplifying the structure and language, removing ambiguities and redundancy. The LODR Regulations were published in the Gazette of India on September 2, 2015, with the objective to consolidate, streamline, and harmonize various existing listing agreements into a single, unified framework.
Under the proposed framework, monitoring agencies would be empowered to submit their reports directly to stock exchanges within prescribed timelines if listed companies fail to cooperate during the monitoring process. As reported by CNBC TV18 and The Hindu BusinessLine, non-cooperation could include withholding information, delaying submissions or failing to provide adequate supporting documents. If a company subsequently provides the complete information, the monitoring agency must submit a revised, complete report to the stock exchanges within 15 days of receiving the required information, explicitly stating that the company has rectified its non-cooperation status. According to the consultation paper, monitoring agencies could seek the entire fee in advance and would have to refund the proportionate amount if the agreement ends before the proceeds are fully used. Stock exchanges would display the reports and any non-cooperation statements prominently on their websites to bring them to investors' immediate attention.
The working group has submitted its first report, which comprises three chapters addressing critical aspects of corporate governance. The first chapter deals with monitoring and disclosure of utilisation of issue proceeds, the second covers penal provisions and actions by stock exchanges for non-compliance by listed companies, and the third addresses clarifications on related-party transaction provisions. The consultation paper also identifies provisions under the Sebi (Issue of Capital and Disclosure Requirements) Regulations dealing with monitoring agencies for initial public offerings on the main board, rights issues, further public offers, preferential issues, qualified institutional placements and initial public offerings by small and medium enterprises. The regulator noted that the regulations have been amended periodically since 2015, which may have led to various interpretation issues arising out of multiple amendments. Stakeholders can submit comments through Sebi's online public comments portal or email to consultationcfd@sebi.gov.in with the specified subject line.
