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Compliance with the provisions of Equity Listing Agreement by listed companies-Monitoring by Stock Exchanges: Sebi has vide its Circular CIR/CFD/POLICYCELL/13/2013 dated 18th November, 2013 raised concerns that even though listed companies make disclosures to Stock Exchanges within the timeframe stipulated under the Listing Agreement; the contents of the disclosures made by such companies are not adequate and accurate. Therefore, investors are unable to take informed investment decisions based on such disclosures.
Thus, it is felt that the current monitoring mechanism of Stock Exchanges to ascertain the adequacy and accuracy of disclosures made in compliance with the Listing Agreement need to be made more effective.
Accordingly, in continuation of SEBI Circular dated September 30, 2013 and pursuant to the discussions with the Recognized Stock Exchanges and market participants, in order to address the above mentioned concerns, the Recognized Stock Exchanges are advised to:
Put in place appropriate framework (including adequate manpower) to effectively monitor the adequacy and accuracy of the disclosures made by listed companies;
Devise the framework in such a way that it detects any non-compliance / violation of the provisions of Securities Contracts (Regulation) Act, 1956, Securities and Exchange Board of India Act, 1992, the Rules and Regulations made there under, Listing Agreement, and any other applicable laws.
Put in place an appropriate mechanism for handling complaints related to such inadequate and inaccurate disclosures and non-compliances.
Treat inadequacy and inaccuracy of disclosure as non-compliance, wherever applicable and proceed further as per the Standard Operating Procedure laid down by SEBI vide Circular No. CIR/MRD/DSA/31/2013 dated September 30, 2013;
Submit to SEBI an "Exception Report" in addition to the existing reporting requirements, with the details of companies which do not respond to the clarifications sought by them and/or where the response submitted by the company is not satisfactory in the opinion of the Stock Exchange.
Obtain the details of the promoters / directors and/or Key Managerial Personnel of the listed companies who shall be responsible for ensuring compliance with the provisions of the Listing Agreement and in case of defaults, disclose such details on its website.
SEBI has intimated that in order to enable the Recognised Stock Exchanges and the listed companies to put in place adequate infrastructure to ensure compliance with the requirements of this Circular, Recognised Stock Exchanges shall begin with monitoring the adequacy and accuracy of disclosures made by top 500 listed companies (by market capitalization as on March 31, 2013) in compliance with Clauses 35, 36, 41 and 49 of the Equity Listing Agreement for the quarter ending December 31, 2013.