Compliance with the provisions of Equity Listing Agreement by listed companies – Monitoring by Stock Exchanges

CIR/CFD/POLICYCELL/13/2013 · 2013-11-18 · SEBI

Summary

This circular mandates Recognised Stock Exchanges to establish robust monitoring frameworks to ensure the adequacy and accuracy of disclosures by listed companies. It outlines specific procedural steps for handling non-compliances, including seeking clarifications within strict timeframes and treating inadequate responses as violations subject to fines. Additionally, it requires exchanges to submit periodic Exception Reports to SEBI detailing compliance status and enforcement actions taken.

Text

Recognised Stock Exchanges are advised to put in place appropriate framework to effectively monitor the adequacy and accuracy of the disclosures made by listed companies; devise framework to detect non-compliance/violation; put in place mechanism for handling complaints; treat inadequacy and inaccuracy of disclosure as non-compliance; submit Exception Report; obtain details of promoters/directors/KMP responsible for compliance.

Put in place appropriate framework (including adequate manpower) to effectively monitor the adequacy and accuracy of the disclosures made by listed companies;

Devise the framework in such a way that it detects any non-compliance / violation of the provisions of Securities Contracts (Regulation) Act, 1956, Securities and Exchange Board of India Act, 1992, the Rules and Regulations made there under, Listing Agreement, and any other applicable laws.

Treat inadequacy and inaccuracy of disclosure as non-compliance, wherever applicable and proceed further as per the Standard Operating Procedure laid down by SEBI vide Circular No. CIR/MRD/DSA/31/2013 dated September 30, 2013;

Submit to SEBI an "Exception Report" in addition to the existing reporting requirements, with the details of companies which do not respond to the clarifications sought by them and/or where the response submitted by the company is not satisfactory in the opinion of the Stock Exchange.

Obtain the details of the promoters / directors and/or Key Managerial Personnel of the listed companies who shall be responsible for ensuring compliance with the provisions of the Listing Agreement and in case of defaults, disclose such details on its website.

Recognised Stock Exchanges shall begin with monitoring the adequacy and accuracy of disclosures made by top 500 listed companies (by market capitalization as on March 31, 2013) in compliance with Clauses 35, 36, 41 and 49 of the Equity Listing Agreement for the quarter ending December 31, 2013.

Stock Exchanges shall disseminate the information received from the listed companies on their respective websites after doing a preliminary check, as is being done presently.

The quality and substantive compliance with respect to Clause-35 shall be monitored by comparing with the filings of the previous quarter. Such comparison shall include changes, if any, in the names of the promoters, their shareholding, encumbered shares, persons holding more than the required percentage in public category...

Stock Exchanges shall keep themselves informed of the updates in various media including print and mass media with respect to a listed company and while scrutinizing the disclosures made under Clause 36, ensure that any important information has not been omitted to be disclosed by the company.

Stock Exchanges shall follow up with the listed companies at every stage for the updates on material events reported, either suo moto or upon receipt of information from other sources.

In case there is any deficiency in the information / clarification provided by the listed company, Stock Exchanges shall seek further information / clarification from the company within such time as they may deem fit but not later than 2 working days from the date of the said disclosure.

Source: SecMarx — Compliance with the provisions of Equity Listing Agreement by listed companies – Monitoring by Stock Exchanges. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.