Summary

  • SEBI’s 13 October working-group paper proposes a public reporting route for issue-proceeds monitors when a listed issuer does not supply the information needed for a complete report.
  • A non-cooperation statement, a 15-day correction path and a bar on replacing the incumbent monitor would make information access part of the compliance record; every measure remains a proposal.

The monitor’s report is only as useful as the route it can take when the issuer controls much of the underlying information. The Securities and Exchange Board of India has put that route into a wider consultation on its Listing Obligations and Disclosure Requirements regulations. The working group’s first report, published on 13 October, covers three subjects: monitoring and disclosure of issue proceeds; penalties and stock-exchange action for listed-company non-compliance; and clarifications to related-party transaction provisions. The comment deadline is 3 November 2026. The paper is a recommendation for consultation, not a rule already binding on issuers. SEBI’s consultation page

The proposed change is procedural but consequential. A monitoring agency would be able to send its report to the stock exchanges within the prescribed timetable. If a company did not cooperate, the agency would prepare a report from the best information available and attach a statement identifying the lack of cooperation. Exchanges would prominently publish both the report and that statement. The proposal changes where an incomplete record can go: a company’s failure to provide material would not, by itself, keep the monitor’s account from reaching the exchange and the market. The consultation paper PDF

The draft also describes a way to update that record. If the issuer later supplies complete information, the monitoring agency would have 15 days to submit a revised report. It would have to state that non-cooperation had been rectified for the relevant reporting period. That distinction matters. The first report would preserve what was missing at the deadline; the later report would show what arrived, when the gap closed and whether the account changed. The two records should be read together, not collapsed into a single clean outcome.

A further recommendation would stop the issuer from ending its current monitoring-agency agreement or appointing a replacement while non-cooperation remained unresolved and the existing agency could not yet file a complete report. Without this restriction, changing providers could interrupt the reporting sequence at the point of greatest dispute. With it, the first agency retains a route to complete the period’s record. That does not make the agency a regulator or an auditor. It keeps the evidence path intact while the exchange and SEBI retain their separate decision roles.

The working group also proposes a fine of ₹50,000 for each instance of non-cooperation reported during the relevant period. Under the process described in contemporaneous reporting on the paper, exchanges would review compliance and issue notices within 30 days of the report’s due date. If a company failed to rectify the issue or pay the fine, notices to promoters and a possible freeze of their demat accounts could follow under the applicable standard operating procedure. These steps are proposed consequences, not penalties currently imposed under this consultation. They also do not make non-cooperation equivalent to diversion or misuse of funds. Mint’s report on the proposed sequence

The scope could widen as well. SEBI’s historical decisions describe monitoring triggers based on issue size for public and rights issues, and later extensions to selected preferential issues and qualified institutional placements above ₹100 crore. The new working-group recommendation would require an agency for all issuances regardless of size, excluding the offer-for-sale portion, alongside a revised report format and alignment between LODR and the Issue of Capital and Disclosure Requirements regulations. That is a proposed expansion, not a description of one uniform threshold under every current instrument. SEBI’s 2017 Board note and 2022 memorandum

The governance test is not whether the word “independent” appears beside a monitor. It is whether a report can preserve its evidence trail when the reporting company and the reviewer do not have the same incentives. Direct filing and a public non-cooperation statement could make a missing-information problem visible. They cannot prove that money was diverted, that the monitor verified every transaction, or that the proceeds achieved the issuer’s stated objectives. Those questions still depend on the report’s evidence, scope and later review.

Sources