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SEBi has put in place a stricter mechanism for non compliance of listing conditions. SEBI shall levy penalties upto Rs. 50000 if they are violated. As per the current regulations, upto Rs. 10000 penalties can be levied for every violation of listing norms. According to SEBI circular, exchanges can impose a fine of Rs.50000 per instance for non-compliance with respect to obtaining in-principle approval of bourses before issuance of securities.
If companies fail to disclose their dividend distribution policy in annual reports and their websites the bourses can levy a fine of Rs. 25000 each. It would also be applicable in the cases of non-convening of annual general meeting within a period of five Months from the close of a financial year and for not taking exchange’s approval before filing request for change of name with Registrar of Companies (RoC).
This change by SEBI shall be effective from compliance periods ending on or afte 31st March 2020. The main objective behind this circular is to maintaining consistency and adopting a uniform approach in the matter of levy of fines for non-compliance with certain provisions of listing regulations.
In addition to this, a penalty of Rs. 10000 can be levied for delay in furnishing prior intimation about the company’s board meeting as well as delay in non-disclosure of record date or dividend declaration, and non-compliance with norm pertaining to having a functional website.If companies fail to appoint women directors on the boards or comply with requirements pertaining to appointment or continuation or non-executive director who has attained the age of 75 years and fails to ensure adequate steps for expeditious redressal of investor complaints will attract fines ranging from Rs. 1000-5000 per day.
Apart from fines, bourses can move the stocks of non-compliant firms to restricted trading category and suspended trading in the shares of such entities. Also, exchanges need to issue notices to the non compliant listed entities to ensure compliance and pay fine within 15 days. If they do not pay , the exchange concerned shall initate enforcement action and prosecution.