Sebi plans tough norms to check listing rules

The Sebi plans to put in place a stronger mechanism to check non-compliance of listing conditions, wherein exchanges will have powers to freeze promoter shareholding and even delist the shares of such defaulting companies.

The proposal would be discussed at the board meeting of the Securities and Exchange Board of India (Sebi) this week, senior officials said. Under the proposed framework, exchanges would have the power to freeze the entire shareholding of the promoter and promoter group in non-compliant listed entity also holding in other securities, they added.

It has been further proposed that if non-compliance persists, it would lead to suspension, revocation of trading and delisting of the shares of such listed entities.

The proposed framework will put in place an appropriate system for effective enforcement of continuous compliance of requirements by listed entities and their promoters.

Grounds for suspension from listing include failure to comply with the board composition including appointment of women director and failure to constitute audit committee for two consecutive quarters; failure to submit information on the reconciliation of shares and capital audit report for two consecutive quarters.

The firms may be suspended for six months and subsequently, the process of compulsory delisting would be initiated.