To check possible misuse of money raised through public offers, Sebi on Tuesday proposed to make it mandatory for all companies to appoint a ‘Monitoring Agency’ to oversee orderly utilisation of such funds and to make public their observations on a quarterly basis.
Under the new framework, the Monitoring Agency Report would also need to list out all deviations from the fund utilisation objectives stated by the company at the time of public offer, as also the comments from their management and auditors on such matters. The Monitoring Agency, which can be a public financial institution or a scheduled commercial bank, would also grade the deviations observed in the utilisation of public offer proceeds, which their reports need to be made public through stock exchanges within 45 days of the end of every quarter.
Inviting public comments on these new norms by March 25, Sebi said necessary amendments would be made in the existing regulatory framework to bring about proposed changes. Currently, companies are required to appoint such Monitoring Agencies only for IPOs and other public issues worth Rs 500 crore or more. Also, these agencies are presently required to submit their reports on a half-yearly basis, while such reports are not made public under current regulations.