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SEBI - Non-compliance provisions & Penalty Chart related to continuous disclosures

CS Lalit Rajput 
on 16 November 2020

LinkedIn


Overview

Securities and Exchange Board of India (SEBI) vide Notification/Circular No. SEBI/HO/DDHS/DDHS/CIR/P/2020/231 dated 13th November 2020, has published non-compliance with provisions related to continuous disclosures in the exercise of the powers conferred under sections 11(1) and 11A(2) of the SEBI Act, 1992 read with Section 9 and 21 of Securities Contracts (Regulation) Act, 1956.

The Circular is issued to

  1. All Recognized Stock Exchanges
  2. All Depositories
  3. All issuers of listed Non-Convertible Debt Securities and/or Non-Convertible
  4. Redeemable Preference Shares
  5. All Issuers of listed Commercial Papers

Applicability of the Provisions mentioned in this Circular

Shall come into force for a compliance period ending on or after December 31, 2020

Provisions of this Circular

Continuous disclosure norms as prescribed by SEBI for issuers of listed Non-Convertible Debt Securities, Non-Convertible Redeemable Preference Shares (NCRPS), and Commercial Papers:

SEBI - Non-compliance provisions and Penalty Chart related to continuous disclosures

Sl.

Regulation / Circular

Provisions - Continuous disclosure norms

Links

Monitoring Provisions

Penalty Provisions

1

SEBI (LODR) Regulations, 2015

For issuers of listed Non-Convertible Debt Securities and/ or NCRPS.

Click here

Reg. 97 (1)

Reg. 98 (1) (a)

2

SEBI circular nos. SEBI/HO/DDHS/ DDHS/CIR/P/2019/115 dated October, 22, 2019

for issuers of listed Commercial Papers

Click here

SEBI circular no. SEBI/HO/DDHS/DDHS/CIR/P/2019/115 dated October 22, 201 9

3

SEBI circular nos. SEBI/HO/DDHS/ DDHS/CIR/P/2019/167 dated December 24, 2019

for issuers of listed Commercial Papers

Click here

Kindly note that:

  • Stock Exchanges shall levy fine and take action in case of non-compliance with continuous disclosure requirements by issuers of listed Non-Convertible Debt Securities and/ or NCRPS and/ or Commercial Papers as specified in this Circular (Refer Annexure A below), in the interests of investors and the securities market and also may deviate from the fine / actions only after recording reasons in writing if found necessary.
  • 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.

Annexure A

Fine to be levied in case of non-compliances by issuers of listed Non- Convertible Debt Securities and/or Non-Convertible Redeemable Preference Shares

Sl. No.

Regulation

Fine payable and/or other action to be taken for non-compliance in respect of an entity having listed its Non- Convertible      Debt Securities and/or NCRPS

(a)

Applicable Regulations for Chapter III (Common obligations of listed entities) of SEBI LODR Regulations for which penalty has been specified vide SEBI circular no. SEBI/HO/CFD/CMD/CIR/P/2020/12 dated January 22, 2020, as amended from time to time.

Fine payable as per SEBI circular no.

SEBI/HO/CFD/CMD/CIR/

P/2020/12 dated January 22, 2020, as amended from time to time.

(b)

Regulation 50 (1)/ (3)

Delay in furnishing prior intimation with respect to date of payment of interest/redemption amount or intimation regarding board meeting affecting the rights or interest of holders of NCDs/NCRPS.

Rs. 1,000 per ISIN

(c)

Regulation 52(1)

Non-submission of the financial results within the period prescribed under this regulation.

Rs. 5,000 per day

(if already levied a penalty for non-compliance of Regulation 33 in terms of SEBI circular no. SEBI/HO/CFD/ CMD/ CIR /P/2020/12 dated 22.01.2020, then penalty shall not be imposed again for such violation.)

(d)

Regulation 52(4) / 52(6)

Non-disclosure of line items prescribed under Regulation 52(4) along with the half-yearly/annual financial results or non-disclosure of items pertaining to NCRPS as notes to financials prescribed under Regulation 52(6).

Rs. 1,000 per day

(e)

Regulation 52(5)

Non-submission of a Certificate signed by the Debenture Trustee taking note of the contents prescribed under regulation 52(4).

Rs. 1,000 per day

(f)

Regulation 52(7)

Non-submission of deviations/ variations in the utilization of issue proceeds.

Rs. 1,000 per day

(g)

Regulation 54 (2)

Non-disclosure of extent and nature of security created and maintained with respect to secured listed NCDs in the financial statements.

Rs.1,000 per day

(h)

Regulation 57(1)

Non-disclosure of information related to payment obligations.

Rs. 1,000 per day per ISIN

(i)

Regulation 59 (1)

Failure to obtain prior approval of stock exchange for any structural change in terms of NCDs/ NCRPS.

Rs. 50,000 per instance

(j)

Regulation 60 (2)

Delay in submission of the notice of record date.

Rs. 10,000 per ISIN

(k)

Regulation 62

Non-compliance with norms pertaining to functional website

Advisory/warning letter per instance of non-compliance per item

Rs. 10,000 per instance for every additional advisory/warning letter exceeding the four advisory/ warning letters in a financial year.

Annexure B: Fine to be levied in case of non-compliances by issuers of listed Commercial Papers

Sl. No.

Clause

Fine payable and/or other action to be taken for non-compliance in respect of an entity having listed Commercial Paper

(a)

Non-submission of financial results within the prescribed period

Rs. 5,000 per day

(b)

Non-disclosure of line items prescribed under Regulation 52(4) of SEBI LODR Regulations along with the half-yearly/annual financial results

Rs. 1,000 per day

(c)

Non-submission of certificate regarding fulfillment of payment obligations

Rs. 1,000 per day per ISIN

 

Annexure C: Action to be taken in case of non-compliance by issuers of listed Non-Convertible Debt Securities and/or Non-Convertible Redeemable Preference Shares and/or Commercial Papers

1. Every recognized stock exchange shall issue notices to the non-compliant entities within 30 days from the due date of the prescribed timeline.

2. If the non-compliant entity fails to comply with the Fine / Penalty requirement(s) and/or pay fine levied within the stipulated period as per the notice stated above, the concerned recognized stock exchange(s) shall, upon expiry of the period indicated in the notice, shall issue reminder notices to such non-compliant entities, to ensure compliance with the requirement(s) and pay fines within 10 days from the date of such notice.

3. If the non-compliant entity fails to comply with the Notice requirement(s) and/or pay fine levied within the stipulated period as per the notice, the concerned recognized stock exchange(s) shall send intimation to other recognized stock exchange(s) and all entities allowed to act as Electronic Book Provider, regarding the failure of compliance of such entity.

4. The recognized stock exchange(s) and/ or other entities allowed to act as Electronic Book Provider, thereafter, shall not allow:

(a) Issuance of any securities, as defined under SEBI circular no. SEBI/HO/DDHS/CIR/P/2018/05 dated January 05, 2018, by such non-compliant entity on EBP Platform;

(b) Further listing of Non-Convertible Debt Securities or NCRPS or Commercial Papers of such a non-compliant entity.

5. The recognized stock exchange(s) shall also advise the non-compliant entity to ensure that the subject matter of non-compliance which has been identified and indicated by the recognized stock exchange(s) and any subsequent action taken by the recognized stock exchange(s) in this regard shall be placed before the Board of Directors of the entity in its next meeting. Comments made by the board shall be duly informed to the recognized stock exchange(s) for dissemination.

Link: https://www.sebi.gov.in/legal/circulars/nov-2020/non-compliance-with-provisions-related-to-continuous-disclosures_48171.html

Disclaimer: Every effort has been made to avoid errors or omissions in this material. In spite of this, errors may creep in. Any mistake, error, or discrepancy noted may be brought to our notice which shall be taken care of in the next edition. In no event, the author shall be liable for any direct, indirect, special or incidental damage resulting from or arising out of or in connection with the use of this information.

 

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