Calcutta, Nov. 26 (PTI): Companies and mutual funds failing to comply with securities market norms could be fined up to Rs 25 crore if the proposed amendment to the Companies Act is ratified by Parliament.
The maximum penalty that could be levied at present on companies not complying with the regulations laid down under the ‘listing agreement’ is a fine of Rs 10,000.
A new section is proposed to be introduced — section 23F — under which a fine of Rs 25 crore could be levied for dematerialising more shares than issued by a company or delivering shares not listed with stock exchanges.
“If any person dematerialises securities more than the issued securities (capital) of a company or delivers in stock exchanges securities not listed or permitted for trading, he shall be liable to a penalty not exceeding Rs 25 crore,” the proposed section 23F says.
The proposed amendment to the Companies Act also seeks to strengthen the arms of the Securities and Exchange Board of India (Sebi) — the market regulator — and tighten the regulatory control on stock exchanges.
“If a stock exchange fails to furnish periodical returns to Sebi or fails to amend its rules and bye-laws as directed by Sebi, it shall be liable to a penalty which may extend to Rs 25 crore,” section 23G says.
For offences not specified in the amended Act, the maximum penalty that could be imposed is a fine of Rs 1 crore.
The proposed amendment says Sebi shall appoint an officer “not below the rank of a division chief” to investigate and impose penalties after an investigation has been conducted in “the prescribed manner” and the offender has been given a “reasonable” hearing.