Sebi proposes mandatory monitoring of IPO proceeds with fines and demat freezes

In a new consultation paper, the Securities and Exchange Board of India suggested a stricter regime for overseeing how companies spend IPO proceeds. A working group chaired by V S Sundaresan advises that all issuances, except offer-for-sale portions, must engage a monitoring agency. Non-cooperation would lead the agency to submit a report based on available data, accompanied by a statement of non-cooperation, and stock exchanges could impose a ₹50,000 fine per incident.

If fines remain unpaid, exchanges would issue notices to promoters, and after a further 10-day period, depositories could freeze promoters' demat accounts. Agencies may require advance fees and must refund any unused portion if the agreement ends early. Companies that later comply must have a complete report filed within 15 days, and they cannot change agencies until the default is cleared. The proposals also shift reporting timelines from the ICDR to the LODR regulations and cover only one chapter of the working group's broader recommendations.