Pursuant to the coming into force of the SEBI (Listing
Obligations and Disclosure Requirements) Regulations, 2015
("Listing Regulations") on December 1,
2015, SEBI issued a circular on November 30, 2015
("SOP Circular") to set out a uniform
structure for imposition of fines and a standard operating
procedure for suspension and revocation of trading of specified
securities, for non-compliance with the provisions of the Listing
Regulations. As per the SOP Circular, depositories on receipt of
intimation from the concerned stock exchange, of any non-
compliance by a listed entity, can freeze or unfreeze, as the case
may be, the entire shareholding of promoters/ promoter group of
such listed companies which are non-compliant with the Listing
Regulations ("Non-Compliant Companies"). Stock exchanges
will be required to disclose on their website the names and the
actions(s) taken against Non-Compliant Companies, along with
To maintain consistency and uniformity of approach, the
principles and procedures to be followed by the stock exchanges for
taking action(s) against Non-Compliant Companies have been laid
down. As a first resort, stock exchanges shall use imposition of
fines in case of such non compliances and invoke suspension of
trading in case of subsequent and consecutive defaults. Fines for
non-compliance may range from ₹1,000 (Indian Rupees One
thousand) to ₹10,000 (Indian Rupees Ten
thousand) or 0.1% (point one percent) of the paid up
capital, as the case may be, for each day of non-compliance of
obligations under certain regulations of the Listing Regulations.
Stock exchanges will have the right to initiate appropriate
enforcement action, including prosecution, if Non-Compliant
Companies fail to pay the fine, for non- compliance, despite the
receipt of notice.
The shareholding of the promoter/ promoter group can remain
frozen for up to a period of 3 (three) months from the
date of revocation of a suspension. Moreover, trading in the shares
of the Non-Compliant Company may be stopped completely if the
entity remains non-compliant for 6 (six) months. The SOP
Circular provides for the procedure for notifying the Non-Compliant
Companies and criteria under which trading in the shares of the
Non-Compliant Companies can be suspended. The suspension of trading
in the shares of a Non-Compliant Company may be revoked in the
event that the entity complies with the requirements under the
Listing Regulations and pays the applicable fine(s) within 3
(months) from the date of such suspension. However, if the entity
complies with the requirements and pays the applicable fine(s)
beyond the period of 3 (three) months, the suspension may
be revoked, while the trading in shares will be limited to a
"trade for trade" basis for a period of 3
(three) months from the date of revocation.
The Listing Regulations were issued by SEBI to simplify and
consolidate the procedure for listing of securities on relevant
stock exchanges. The mechanisms put in place by the SOP Circular
will ensure uniform approach by the stock exchanges for imposition
of fines and penalties for non- compliance with the Listing
Regulations, thereby requiring timely adherence of the Listing
Regulations by listed entities.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The Ministry of Corporate Affairs notified on June 5, 2015 that certain provisions of the Companies Act, 2013 shall not apply to private limited companies or shall apply with such exceptions or modifications as directed in the notification.
Whilst trade and barter have existed since early times, the modern practice of forming business relationships through the means of contract has come into existence only since the industrial revolution in the West.
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