Fines for non-compliance with continuous disclosure requirements for issuers of listed Non-Convertible Debt Securities, NCRPS, Commercial Papers
CIRCULAR
November 13, 2020
To,
All Recognized Stock Exchanges
All Depositories
All issuers of listed Non – Convertible Debt Securities and/or Non – Convertible Redeemable Preference Shares
All Issuers of listed Commercial Papers
Sir/Madam,
1. SEBI has prescribed continuous disclosure norms for issuers of listed Non-Convertible Debt Securities, Non – Convertible Redeem able 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 is suers 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.
2. 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. 2
3. In respect of listed specified securities ( i.e. equity shares and convertible securities), SEBI issued circular no. SEBI/HO/CFD/CMD/CIR/P/2020/12, dated January 22, 2020, specifying a uniform structure for imposing fines for issuers not in compliance with certain provisions of SEBI LODR Regulations.
4. 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.
5. In view of the above , in the interests of investors and the securities market, the Stock Exchanges s hall 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.
6. 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.
7. The recognized stock exchanges shall take necessary st eps 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.
8. 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.
9. 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.
10. The recognized stock exchanges may keep in abeyance the action or withdraw the action in specific cases where specific exemption from compliance with the 3 requirements for continuous disclosures /moratorium on enforcement proceedings has been provided for under any Act, Court/Tribunal Orders etc.
11. The above provisions are without prejudice to the power of SEBI to take action under the securities laws.
12. 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.
13. This provisions mentioned in this circular shall come into force for compliance period ending on or after December 31, 2020.
14. This circular is issued in exercise of the powers conferred under sections 11(1) and 11A(2) of the Securities and Exchange Board of India Act, 1992 read with Section 9 and 21 of Securities Contracts (Regulation) Act, 1956.
15. The recognized stock exchanges may make consequent changes in their byelaws, if any, to implement this circular. 16. This circular is available on SEBI website at www.sebi.gov.in under the category “Legal”.
Yours faithfully,
Sabir Vasant Sawant
Deputy General Manager
Department of Debt and Hybrid Securities
Email id: sabirvs@sebi.gov.in
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