Non-compliance with certain provisions of the SEBI LODR, 2015 and the Standard Operating Procedure for suspension and revocation of trading of specified securities.

SEBI vide circular dated 3^rd May, 2018 has specified penalties in case of non-compliance with provisions of SEBI (LODR) Regulations, 2015 (“Listing Regulation”). The circular also prescribes the standard operating procedure (SOP) to be followed in case of suspension and revocation of trading of specified securities. The circular shall come into effect from compliance periods ending on or after September 30, 2018.

SEBI had previously issued two circulars with respect to uniform structure for imposing fines as a first resort for non-compliance with SEBI LODR, 2015 dated 30^th November, 2015 and also advising the manner of freezing of holdings of the promoter and promoter group of a listed entity that failed to pay fines levied by the stock exchange dated 26^th October, 2016.

This circular dated 3^rd May, 2018 is in supersession of the above mentioned two Circulars.

The recognized stock exchanges shall take action for non-compliance with the provisions of the Listing Regulations by a listed entity as under:

Regulation	Fine payable/other action to be taken in case of non-compliance	Fine as per circular dated 30th November, 2015
Regulation 6(1) Non-compliance with requirement to appoint a qualified company secretary as the compliance officer	₹1,000 per day	-
Regulation 7(1) Non-compliance with requirement to appoint share transfer agent	₹1,000 per day	-
Regulation 13(1)/ 13(3) Failure to ensure that adequate steps are taken for expeditious redressal of investor complaints Non-submission of the statement on shareholder complaints within the period prescribed under this regulation or under any circular issued in respect of redressal of investor grievances	₹1,000 per day	-
Regulation 17(1) Non-compliance with the requirements pertaining to the composition of the Board including failure to appoint woman director	₹5,000 per day	-
Regulation 18(1) Non-compliance with the constitution of audit committee	₹2,000 per day	-
Regulation 19(1)/ 19(2) Non-compliance with the constitution of nomination and remuneration committee	₹2,000 per day	-
Regulation 20(2) Non-compliance with the constitution of stakeholder relationship committee	₹2,000 per day	-
Regulation 21(2) Non-compliance with the constitution of risk management committee	₹2,000 per day	-
Regulation 27(2) Non-submission of the Corporate governance compliance report within the period provided under this regulation	₹2,000 per day	₹1,000 per day of non-compliance till the date of compliance (1st non-compliance) ₹2,000 per day of non-compliance till the date of compliance (subsequent non-compliance)
Regulation 29(2)/29(3) Delay in furnishing prior intimation about the meeting of the board of directors	₹10,000 per instance of non-compliance per item	-
Regulation 31 Non-submission of shareholding pattern within the period prescribed	₹2,000 per day	₹1,000 per day of non-compliance till the date of compliance and If non-compliance continues for more than 15    days, additional fine  of 0.1  %  of  paid up    capital of    the entity   or ₹1 crore, whichever is less (1st non-compliance) ₹2,000 per day of non-compliance till the date of compliance and If non-compliance continues for more than 15 days, additional fine of 0.1 % of paid  up  capital of the  entity or ₹1 crore, whichever is less. (subsequent non-compliance)
Regulation 32(1) Non-submission of deviations/ variations in utilization of issue proceeds	₹1,000 per day	-
Regulation 33 Non-submission of the financial results within the period prescribed under this regulation	₹5,000 per day	₹5,000 per day of non-compliance till the date of compliance and If non-compliance continues for more than 15    days, additional fine of 0.1% of Paid Up   capital of    the entity  or ₹1crore,whichever is less. (1st non-compliance) ₹10,000 per day of non-compliance till the date of compliance and If non-compliance continues for more than 15 days, additional fine of 0.1 % of Paid Up capital*of the  entity or ₹1 crore, whichever is less (subsequent non-compliance)
Regulation 34 Non-submission of the Annual Report within the period prescribed under this regulation	₹2,000 per day	If non-compliance continues for more than 5 days, ₹1,000 per day till the date of compliance (1st non-compliance) ₹2,000 per day of non-compliance till the date of compliance (subsequent non-compliance)
Regulation 39(3) Non-submission of information regarding loss of share certificates and issue of the duplicate certificates within the period prescribed under this regulation	₹1,000 per day	-
Regulation 42(2)/42(3)/ 42(4)/42(5) Delay in/ non-disclosure of record date/ dividend declaration or non-compliance with ensuring the prescribed time gap between two record dates/ book closure dates	₹10,000 per instance of non-compliance per item	-
Regulation 44(3) Non-submission of the voting results within the period provided under this regulation	₹10,000 per instance of non-compliance per item	-
Regulation 46 Non-compliance with norms pertaining to functional website	Advisory/warning letter per instance of non-compliance per item ₹10,000 per instance for every additional advisory/warning letter exceeding the four advisory/ warning letters in a financial year	-

    Other Actions to be initiated by the Stock Exchange (SE) are as follows:

•        Display on its website non-compliance by the listed entity and details of fine levied/ action taken
•       Amount of fine realized shall be credited to IEPF of the concerned SE
•           The fines specified above shall continue to accrue:

o   till the time of rectification of the non-compliance or

o   till the scrip of the listed entity is suspended from trading for non-compliance with aforesaid provisions.

•  Review the compliance status of the listed entities within 15 days from the date of receipt of    information
•  Issue notices to the non-compliant listed entities to ensure compliance and collect fine as per this circular within 15 days from the date of such notice
• Send intimation of notice to other SEs where the shares of the non-compliant entity are listed.
• If the non-compliant listed entity fails to comply with the aforesaid requirement(s) and/or pay fine levied within the stipulated period the concerned SE shall,

o   upon expiry of the period, forthwith intimate the depositories to freeze the entire shareholding of the promoter and promoter group in such entity as well as all other securities held in the demat account of the promoter and promoter group.

• If the non-compliant listed entity subsequently complies with the respective requirement(s) and pays the fine levied, the concerned SE shall

o   Display on their website compliance and status of fines paid by the listed entity.

o   Simultaneously, intimate the depositories to unfreeze the entire shareholding of the promoter and promoter group in such entity as well as all other securities held in the demat account of the promoter and promoter group, after one month from the date of compliance.

•  May initiate appropriate enforcement action, if any non-compliant listed entity fails to pay the fine despite receipt of the notice.
• Advise the non-compliant listed entity to ensure that the subject matter of non-compliance which has been identified and indicated by SE and any subsequent action taken by SE in this regard shall be placed before the Board of Directors of the company in its next meeting.
•  Comments made by the board shall be duly informed to the SE for dissemination.

SEBI has also prescribed SOP to be followed in case of suspension and revocation of trading of specified securities in Annexure II of the circular

The circular can be downloaded from the following link:

https://www.sebi.gov.in/legal/circulars/may-2018/non-compliance-with-provisions-of-sebi-listing-obligations-and-disclosure-requirements-regulations-2015-and-standard-operating-procedure-for-suspension-and-revocation-of-trading-of-specified-securi-_38841.html