CIRCULAR, CIR/MRD/ DSA / 31 /2013, dated September
30, 2013
Amendment to
bye-laws of recognised stock exchanges with respect to non-compliance of
certain listing conditions and adopting Standard Operating Procedure for
suspension and revocation of trading of shares of listed entities for such non
compliances
1. Based on general feed- back received
from various stakeholders, it has been decided to streamline the processes and
procedures with regard to actions for non compliances of certain listing
conditions which have so far been considered as grounds for suspension of
trading by the recognised stock exchanges. Accordingly, it has been decided
that recognised stock exchanges shall use imposition of fines as action of
first resort in case of such non compliances and invoke suspension of trading in
case of subsequent and consecutive defaults. In order to maintain consistency
and uniformity of approach in this regard, it has been decided to lay down, in
the bye –laws of the recognised stock exchanges, the following: -
(i). Uniform fine
structure for non-compliance of certain clauses of the listing agreement as per
Annexure I;
(ii). Standard
Operating Procedure (SOP) for suspension and revocation of suspension of
trading in the shares of such listed entities as per Annexure II.
2. Further, in order to ensure effective
enforcement of listing conditions, it is felt to bring in place 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. It is also felt desirable that while the relevant
disclosures are not made, such promoters/promoter group should not exit from
the listed entity. Accordingly, it has been decided that during the process of
the suspension of the trading/ revocation of trading as provided in the SOP,
the concerned recognised stock exchange shall intimate the details of the concerned
non-compliant entity and its promoter /promoter group to the depositories. On
receipt of such intimation, the depositories shall freeze or unfreeze, as the
case may be, the entire shareholding of the promoter and promoter group in such
entity.
3. Every recognised stock exchanges shall
put in place the system to monitor and review the compliance of respective
listing conditions by the listed entities. It is hereby further clarified that
each recognised stock exchange, where the shares of the concerned entity are listed,
shall enforce the compliance of respective listing conditions in terms of the
requirements of this circular.
4. The recognised stock exchanges shall
disclose on its website the action/s taken against the listed entities for
non-compliance/s of the listing conditions; including the details of respective
requirement, amount of fine, period of suspension, freezing of shares, etc.
5. In view of the above, the recognised
stock exchanges are advised to:-
(a)
make
necessary amendments to the their bye-laws, rules or regulations, for incorporation
of the above fine structure and SOP immediately;
(b) put in place
appropriate systems to monitor compliance with listing requirements and
disclosure of compliance status with respect to listing requirements on their
website;
(c)
bring
the provisions of this circular to the notice of its trading members and the
entities that have their listed shares on the concerned recognised stock exchange
and also to disseminate the same through their website ; and
(d) communicate to
SEBI, the status of implementation of this circular in the Monthly Development
Reports to SEBI.
6. Without prejudice to the provisions of
the Securities Contracts (Regulation) Act, 1956 and Securities Contracts
(Regulation) Rules, 1957, recognized stock exchanges may, having regard to the
interests of investors and securities market, take appropriate action in line
with the principles and procedures laid down in Annexure I and II and any
deviation therefore should not dilute the spirit of the policy contained
therein. Any necessary and reasonable deviation shall be on justifiable reasons
to be recorded in writing.
7. This circular is issued in exercise of
the powers conferred under sections 11(1) and 11A (2) of the Securities and
Exchange Board of India Act 1992, read with section 10 of the Securities
Contracts (Regulation) Act, 1956 in the interest of trade and public interest
and for the protection of the interests of investors in securities and to
promote the development of, and to regulate the securities market and shall
come into effect immediately.
8. This Circular is also available on SEBI
website at www.sebi.gov.in.
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