Key Details
SEBI’s 13 October 2026 consultation paper examines how listed companies account for money raised through securities issues and how independent agencies report on its use. The proposed changes are not yet in force; comments are invited until 3 November 2026.
Wider monitoring: Appoint a monitoring agency for issuances regardless of size. The requirement would exclude shares sold by existing shareholders through an offer for sale, because that money does not go to the issuing company.
Direct reporting: Have the agency send its report directly to stock exchanges, rather than depend on the listed company to forward it.
Missing information: If a company does not cooperate, the agency would report using the best available information and attach a statement of non-cooperation. Exchanges would display both prominently.
Corrections and penalties: Once complete information is supplied, the agency would have 15 days to file a complete report. Exchanges could impose ₹50,000 per reported instance of non-cooperation, followed by notices and, if the matter remains unresolved, possible freezing of promoters’ demat accounts.
Change of agency: A company could not replace its monitoring agency while a reported period of non-cooperation remains unresolved.
Investors Would Receive Reports Without Relying on the Company to Forward Them
A company raising money tells investors how it plans to use it. A monitoring agency independently examines whether the proceeds are used for those stated purposes. SEBI’s proposal would make this check applicable across issuances irrespective of the amount raised and give the agency a direct reporting route to the exchanges.
That route matters most when information is incomplete. The agency would still file a report based on what it can verify, clearly identifying the company’s non-cooperation. If the company later supplies the missing records, a subsequent complete report would close the information gap for investors.
Non-Cooperation Could Trigger a Sequence of Public and Financial Consequences
The consultation proposes more than a fine. Exchanges would publish the agency’s report and any statement of non-cooperation, issue a compliance notice and levy ₹50,000 per instance reported in a quarter or half-year. If the company does not resolve the matter or pay the fine, notices to its promoters could follow. Continued failure could lead to the freezing of promoters’ demat accounts under the proposed enforcement sequence.
SEBI draws a distinction between withholding information and not paying the monitoring agency’s fee: non-payment alone would not be labelled non-cooperation. The fee would instead be addressed through the company–agency agreement.
Reporting Duties Would Be Brought Into a Clearer Regulatory Framework
The proposals also address a practical gap when a monitoring-agency agreement ends before all the money raised has been used. Reporting would need to continue during the handover, and a company with unresolved non-cooperation could not switch agencies to avoid completing an outstanding report.
SEBI proposes aligning its rules on raising capital with its rules on listed-company disclosures. A separate provision in the Listing Obligations and Disclosure Requirements Regulations would deal with monitoring-agency reports, while another would cover utilisation statements for entities exempt from appointing an agency under the applicable capital-raising rules.
Policy Relevance
The proposal would make independent scrutiny routine even for smaller fundraises, increasing the number of companies and issues requiring monitoring. Direct exchange filing and visible reports could give investors earlier notice of missing evidence or departures from a company’s stated use of funds.
It would also change the responsibilities of exchanges and monitoring agencies: exchanges would need to publish and act on reports, while agencies would have to distinguish verified use of proceeds from conclusions drawn with incomplete information. That distinction is essential if a non-cooperation notice is to inform investors without being mistaken for proof that funds were misused.
Relevant Question for Policy Stakeholders: How should monitoring agencies report an incomplete account of fund use so investors can distinguish missing information from a verified diversion of proceeds?
Follow the Full Consultation Paper Here: SEBI’s Review of Monitoring and Disclosure of Issue Proceeds