SEBI has mandated a four-step procedure for stock exchanges to take action against companies that do not comply with listing agreement norms culminating in the suspension of the scrip.
The aim is to protect the interest of non-promoters, as the exit route is closed for such investors after suspension of trading.
The market regulator has prescribed a standard operating procedure for consistency and uniformity of approach for taking such action for non-compliance regarding timely submission of annual reports, shareholding pattern, financial results and compliance of corporate governance.
Corporates would first be fined on a daily basis.
After two quarters of non-compliance, the company would be shifted to ‘Z’ Category, where the trades would be settled on a trade-to-trade basis.
Continued non-compliance would lead to freezing of shares of the promoters and promoter group.
This would be done before suspension of trading in shares of the company.
To provide an exit window for the non-promoters, after 15 days of suspension, trading in the shares of a non-compliant entity will be available on the ‘trade-for-trade’ basis, on the first trading day of every week for six months.