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The Securities and Exchange Board of India (Sebi) has amended the listing agreement to improve transparency with regard to utilisation of issue proceeds. The market regulator has also made electronic filing through corporate filing and dissemination system (CFDS) compulsory for 100 companies to be shortlisted based on market capitalisation.

In a circular, Sebi has decided to amend clause 49 of equity listing agreement in its attempt to strengthen the provisions for monitoring of utilisation of issue proceeds. The amendments require the issuer company to place the monitoring report filed with it before its audit committee.

Currently, any company making a public or rights issue of more than Rs 500 crore has to appoint a monitoring agency to monitor the utilisation of issue proceeds that in turn files its report with the issuer company. With the latest amendments, the issuer company will have to place the monitoring report filed with it before its audit committee that will make appropriate recommendations to the board.

“Further, every issuer shall be required to inform material deviations in the utilisation of issue proceeds to the stock exchange and shall also be required to simultaneously make the material deviations/adverse comments of the audit committee/monitoring agency public through advertisement in newspapers,” added the Sebi circular.

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