SEBI issues Consultation Paper on LODR Regulations proposing to amend monitoring agency related provisions

The Securities Exchange Board of India (”SEBI”) has issued a consultation paper on the recommendations of the Working Group constituted for review of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR Regulations”).The Consultation Paper invites comments/suggestions on proposal by November 3, 2026.

Key Proposals under the Consultation Paper:

1. Recommendations of the Working Group are –

1. The monitoring agency must directly submit its report to Stock Exchanges within prescribed timeline.

2. In the event of non-cooperation by listed entity, during the process of monitoring, the report directly submitted by monitoring agency to Stock Exchanges must be based on best available information and accompanied by “Statement of non-cooperation”.

3. Fine must be levied by stock exchanges, in case of non-cooperation by listed entity reported by monitoring agency.

4. In case of termination of agreement before hundred percent utilization of the issue proceeds, both the listed entity and existing monitoring agency must ensure timely submission of monitoring agency report to Stock Exchanges during the transition period.

5. Harmonization between the provisions of SEBI (Issue of Capital and Disclosure Requirements) Regulation, 2018 (“ICDR Regulations”) and LODR Regulations with respect to Monitoring and Disclosure of Utilization of issue proceeds, and certain other consequential amendments.

6. Mandatory appointment of monitoring agency, for all issuances irrespective of the size of the issue (excluding size of offer for sale).

7. Clarify the monitoring of gross issue proceeds and modify the existing format of the Monitoring Agency’s report.

8. Deletion of sub-regulation (5) of Regulation 262 of the ICDR Regulations and Modification in Regulation 262(6) of the ICDR Regulations which provides of Monitoring Agency.

9. Regulation 32 of the LODR Regulations to deal with ‘Statement of utilization including variation(s)’, if any and to be made applicable to listed entities which are exempt from appointment of Monitoring Agency under the relevant provisions of the ICDR Regulations.

10. Insertion of separate Regulation 32A under LODR Regulations, dealing with monitoring agency report related aspects.

2. Additional Recommendations of SEBI are –

1. The non-payment of fees will not constitute non-cooperation, and Monitoring Agencies may require advance payment of fees and refund the proportionate amount for the remaining monitoring period upon early termination of the agreement. In cases of non-cooperation, the Monitoring Agency must submit its report based on the best available information, accompanied by a statement of non-cooperation, and submit a complete report within 15 days of receiving complete information from the listed entity, explicitly confirming rectification. Stock Exchanges must prominently display the report and, where applicable, the statement of non-cooperation on their websites for investors’ attention.

1. The Stock Exchanges must levy a monetary fine of ₹50,000 per instance of non-cooperation, review compliance, and issue notices to non-compliant listed entities within 30 days from the due date for submission of the Monitoring Agency’s report. If the listed entity fails to rectify the non-cooperation status through submission of a subsequent complete report and/or pay the fine within 15 days of the notice, Stock Exchanges must issue notices to the promoters. If the non-compliance remains unresolved within 10 days of the promoter notice, Stock Exchanges must inform depositories to freeze the promoters’ demat accounts in accordance with the SOP.

1. In the event of non-cooperation reported by a Monitoring Agency for one or more reporting quarter(s), the listed entity will neither terminate its agreement with the existing monitoring agency nor appoint a new monitoring agency, until it rectifies the non-cooperation status and enables existing monitoring agency to submit a complete report for that reporting quarter.

1. In addition to amendments under ICDR Regulations suggested by Working Group (placed as Annexure II of the Report) the words “on a quarterly basis” may be omitted from the following Regulations under the ICDR Regulations dealing with monitoring agency:

1. Regulation 41(2)-IPO on Main Board
2. Regulation 82(2)- Rights Issue
3. Regulation 137(2)-Further Public Offer
4. Regulation 162A(2)-Preferential Issue
5. Regulation 173A(2)- Qualified Institutional Placement
6. Regulation 262(2)-IPO by SMEs.

The comments or suggestions, along with rationale, may be submitted through the following link: https://www.sebi.gov.in/sebiweb/publiccommentv2/PublicCommentAction.do?doPublicComments=yes. In case of any technical issue in submitting your comments through web based public comments   form,   you   may   send   your   comments   through   e-mail   to consultationcfd@sebi.gov.in with the subject  “Recommendations of the Working Group for review of SEBI  (Listing Obligations and Disclosure Requirements) Regulations, 2015: Review of framework for monitoring and disclosure of utilization of issue proceeds”.

Source: SEBI