SEBI Proposes Monitoring Agency for All Public Issues

On 13 October 2026, the Securities and Exchange Board of India (SEBI) proposed making the appointment of a monitoring agency mandatory for every public issue, irrespective of issue size. The proposal excludes the offer-for-sale portion and forms part of a review of the Listing Obligations and Disclosure Requirements (LODR) Regulations, 2015. SEBI invited public comments on the proposals until 3 November 2026.

SEBI and listed-company regulation

SEBI is India’s securities-market regulator and was established under the Securities and Exchange Board of India Act, 1992. Its regulatory functions include investor protection and the regulation and development of the securities market. The LODR Regulations, 2015, set disclosure and compliance requirements for entities whose securities are listed on recognised stock exchanges. The proposed changes concern oversight of the utilisation of funds raised through public issues.

Monitoring of public-issue proceeds

A public issue is an offer of securities to the public, while an offer for sale involves existing shareholders selling their securities. Under SEBI’s proposal, the size of the offer-for-sale portion would not count towards the issue-size basis for appointing a monitoring agency. The agency would monitor the use of issue proceeds and report to stock exchanges on a quarterly or half-yearly basis, as applicable.

If a listed entity does not cooperate, the monitoring agency could send its report directly to the stock exchanges using the best available information. The report would include a statement of non-cooperation. If the entity later supplies complete information, the agency would have to submit a full report within 15 days and record that the non-cooperation had been rectified. Stock exchanges would prominently publish the reports and statements on their websites.

Proposed compliance and enforcement process

The proposals include a fine of ₹50,000 for each instance of non-cooperation recorded during the relevant reporting period. Stock exchanges would issue notices to non-compliant companies within 30 days of the monitoring report’s due date. If the default continued, notices could be issued to promoters, followed by freezing their demat accounts through depositories. A company would not be permitted to change its monitoring agency while recorded instances of non-cooperation remained unresolved.

Important Facts for Exams

• SEBI was established under the Securities and Exchange Board of India Act, 1992.
• The LODR Regulations, 2015, apply to listed entities and prescribe listing-related disclosure and compliance requirements.
• A demat account holds securities in electronic form, and depositories provide the framework for holding and transferring such securities.
• The proposals set a 15-day period for a monitoring agency to submit a full report after receiving complete information from a company.

The proposed fine is ₹50,000 for each instance of non-cooperation. The consultation period closes on 3 November 2026.