Non-compliance with provisions related to continuous disclosures
Summary
This circular mandates a uniform structure for imposing fines on issuers of listed Non-Convertible Debt Securities, NCRPS, and Commercial Papers for non-compliance with continuous disclosure norms. It directs recognized stock exchanges to levy these fines as specified in Annexure I and II, ensuring effective enforcement of disclosure obligations. The provisions apply to compliance periods ending on or after December 31, 2020, and are issued under the powers conferred by the SEBI Act and SCRA. This section details specific penalty amounts for non-compliance with continuous disclosure requirements by issuers of listed Commercial Papers. It establishes a transition rule preventing double penalties for entities already penalized under previous circulars for similar violations. Furthermore, it outlines a procedural framework for stock exchanges to enforce compliance through notices, fines, and eventual restrictions on securities issuance.
Text
SEBI has prescribed continuous disclosure norms for issuers of listed Non-Convertible Debt Securities, Non-Convertible Redeemable Preference Shares (NCRPS) and Commercial Papers, which are as follows: (a) Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“SEBI LODR Regulations”) for issuers of listed Non-Convertible Debt Securities and/or NCRPS. (b) SEBI circular nos. SEBI/HO/DDHS/DDHS/CIR/P/2019/115 dated October 22, 2019 and SEBI/HO/DDHS/DDHS/CIR/P/2019/167 dated December 24, 2019 for issuers of listed Commercial Papers.
Further, the following provisions provide for monitoring of compliance and imposition of fines by stock exchanges: (a) Sub regulation (1) of Regulation 97 of SEBI LODR Regulations, provides for monitoring of compliance by listed entities with the provisions of the regulation by recognized Stock Exchanges. Further, sub regulation (1)(a) of Regulation 98 of SEBI LODR Regulations provides for imposition of fines by Stock Exchanges for contravention of provisions of the regulation by listed entities. (b) SEBI circular no. SEBI/HO/DDHS/DDHS/CIR/P/2019/115 dated October 22, 2019 provides for a framework for imposition of fine to be put in place by stock exchanges in cases of non-compliance and/ or inappropriate disclosures by issuers of listed Commercial Papers.
Accordingly, in order to ensure effective enforcement of continuous disclosure obligations by issuers of listed Non-Convertible Debt Securities or NCRPS or Commercial Papers, it has been decided to lay down a similar uniform structure for imposing fines for non-compliance with continuous disclosure requirements after discussion with market participants.
In view of the above, in the interests of investors and the securities market, the Stock Exchanges shall levy fine and take action in case of non-compliances with continuous disclosure requirements by issuers of listed Non-Convertible Debt Securities and/ or NCRPS and/ or Commercial Papers as specified in Annexure I and Annexure II of this circular respectively. Stock Exchanges may deviate from the above, if found necessary, only after recording reasons in writing.
In case 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.
The recognized stock exchanges shall take necessary steps to implement this circular and shall disclose on their website the action(s) taken against the entities for non-compliance(s); including the details of the respective requirement, amount of fine levied/ action taken etc.
The amount of fine realized as per the structure provided in Annexure I of this circular shall be credited to the "Investor Protection Fund" of the concerned recognized stock exchange.
The fines specified in Annexure I of this circular shall continue to accrue till the time of rectification of the non-compliance and to the satisfaction of the concerned recognized stock exchange. Such accrual shall be irrespective of any other disciplinary/enforcement action(s) initiated by recognized stock exchange(s)/SEBI.
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 for continuous disclosures /moratorium on enforcement proceedings has been provided for under any Act, Court/Tribunal Orders etc.
The above provisions are without prejudice to the power of SEBI to take action under the securities laws.
The recognized stock exchanges are advised to bring the provisions of this circular to the notice of issuers of listed Non-Convertible Debt Securities, NCRPS, Commercial Papers.
This provisions mentioned in this circular shall come into force for compliance period ending on or after December 31, 2020.
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Source: SecMarx — Non-compliance with provisions related to continuous disclosures. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.