India’s markets regulator has proposed tougher oversight of how listed companies use money raised from investors, including direct reporting to stock exchanges, fines for non-cooperation and possible freezing of promoters’ demat accounts.
India’s markets regulator has proposed a tougher framework for tracking how listed companies spend money raised from investors, in a move designed to strengthen disclosure and improve accountability around public issues. According to a consultation paper issued by the Securities and Exchange Board of India, monitoring agencies would be able to send their reports directly to stock exchanges, while companies that do not cooperate could face explicit non-cooperation findings and financial penalties.
The proposals come from a working group set up to review the Listing Obligations and Disclosure Requirements, or LODR, Regulations 2015. LiveMint reported that the plan would require monitoring agencies to prepare reports using the best information available if a company does not provide the necessary details, and to attach a statement flagging the failure to cooperate. If the issuer later supplies the missing information, the agency would have to file a revised report within 15 days and note that the issue has been resolved.
The consultation paper also calls for stock exchanges to display monitoring agency reports prominently on their websites, including any non-cooperation statements. The Economic Times said Sebi has invited comments on the broader review of the disclosure framework, with responses due by 3 November 2026. In a separate report, Business Standard said Sebi chairman Tuhin Kanta Pandey has argued that transparency should be judged not by how much a company discloses, but by whether the information helps investors understand what matters.
Among the sharper enforcement tools under consideration is a fine of ₹50,000 for each instance of non-cooperation reported during the relevant period. The working group has also suggested that stock exchanges should review compliance within 30 days of a report becoming due, issue notices where needed, and, if the default is not remedied, escalate the matter to promoters. Moneycontrol reported that this could ultimately lead to freezing of promoters’ demat accounts under the prescribed procedure.
The review goes further than enforcement alone. According to LiveMint and Business Standard, Sebi is considering mandatory monitoring agency appointments for all issues, rather than only larger fundraisings, excluding offer-for-sale transactions. It is also examining whether a company should be prevented from replacing a monitoring agency or ending an agreement early when non-cooperation has been reported, until the matter is fixed and a complete report can be filed. Earlier reporting by Business Standard suggested Sebi was already weighing broader tightening of oversight across IPOs, qualified institutional placements and rights issues, reflecting concern over delays, weak disclosures and possible misuse of proceeds.
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