MUMBAI : The Securities and Exchange Board of India released a discussion paper suggesting implementation of stringent measures pertaining to monitoring agency reports and related disclosures.
SEBI has recently amended Issue of Capital and Disclosure Requirements Regulations, 2009, in order to ensure that proceeds from an issue are utilised as per the public offer document. The capital market regulator is now seeking to make it mandatory to appoint a monitoring agency for all issues, irrespective of their size. The monitoring agency will be required to submit a report on quarterly basis till funds raised are fully utilised.
“As per Clause 41 and 43 of the Listing Agreement, the company (raising funds) is required to quarterly disclose details of fund utilization and variations in such utilization,” SEBI said.
“For meeting such disclosure requirement, the company either obtains the information from monitoring agency or collates the information itself”.
The monitoring agency will also grade the deviation of funds from the stated ‘object of issue’ in the offer document on a two-digit scale. “The companies whose reports have first digit of code as 2 can be indicative of the possible deviation in utilization/ change of objects,” SEBI said. Moreover, the monitoring agency will be responsible for submitting its report on the utilisation of funds within 45 days from the end of the quarter to the stock exchanges, SEBI said.
The regulator has asked for public comments on this paper till Mar 25. -Cogencis