SEBI asks bourses to amend bye-laws to enforce listing conditions

The securities and Exchange Board of India (SEBI) has prescribed certain amendments to bye-laws of recognised stock exchanges regarding non-compliance of some of the listing conditions and adopting standard operating procedure for suspension and revocation of trading of shares of listed entities for such non-compliances.

SEBI said the decision to streamline the processes and procedures with regard to actions for non-compliance of certain listing conditions has been taken on the basis of feed- back received from various stakeholders.

Non-compliance of listing conditions has so far been considered as grounds for suspension of trading by the recognised stock exchanges.

Accordingly, it has asked recognised stock exchanges to impose fines as 'action of first resort' in case of such non-compliance and invoke suspension of trading in case of subsequent and consecutive defaults.

In order to maintain consistency and uniformity of approach, SEBI has prescribed the following additions to the bye-laws of the recognised stock exchanges: 

  1. Uniform fine structure for non-compliance of certain clauses of the listing agreement as per Annexure I; and
  2. Standard Operating Procedure (SOP) for suspension and revocation of suspension of trading in the shares of such listed entities as per Annexure II.

Further, to ensure effective enforcement of listing conditions, SEBI has decided to introduce appropriate system to enforce the liabilities of listed entities and their promoters / promoter group as disclosed to the concerned recognised stock exchange under clause 35 of the Listing Agreement.

"Since it is desirable that till all relevant disclosures are made, such promoters / promoter group should continue in the listed entity, the concerned stock exchange should intimate the details of the concerned non-compliant entity and its promoter / promoter group to the depositories during the process of the suspension or revocation of trading, after which the depositories should freeze or unfreeze, as the case may be, the entire shareholding of the promoter and promoter group in such entity," SEBI said.

The market regulator has asked stock exchanges to put in place a system to monitor and review compliance of respective listing conditions by the listed entities.

It has asked stock exchanges to enforce compliance of respective listing conditions and disclose on their web sites the action / s taken against the listed entities for non-compliance of the listing conditions, including the of respective requirement, amount of fine, period of suspension, freezing of shares, etc.

Stock exchanges have also been asked to make necessary amendments to the their bye-laws, rules or regulations, for incorporation of the regulations immediately and put in place appropriate systems to monitor compliance with listing requirements and disclosure of compliance status with respect to listing requirements on their web sites.