SEBI Monitoring Agency Proposals: Issue Proceeds Under Review
October 18, 2026 · Other News Alerts / Articles
SEBI monitoring agency proposals of October 13, 2026: an agency for every issue and direct reports to stock exchanges. Comments are due by November 3, 2026.
The Securities and Exchange Board of India (SEBI) has proposed a stronger SEBI monitoring agency framework for the use of money raised by listed companies. In a consultation paper dated October 13, 2026, SEBI seeks public comments by November 3, 2026 on Working Group recommendations to amend Regulation 32 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR) and the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 (ICDR). The proposals would affect companies raising funds through IPOs, FPOs, rights issues, preferential issues and QIPs, including SME issuers.
As of October 18, 2026, these are proposals only. The existing provisions continue to apply until SEBI notifies amendments.
What has changed: SEBI monitoring agency proposals
The Working Group, chaired by Shri V S Sundaresan, Former Executive Director, SEBI, was set up to streamline the LODR Regulations. Its first report has three chapters. The October 13, 2026 consultation paper covers only Chapter I, on monitoring and disclosure of utilisation of issue proceeds.
Current position under ICDR and LODR
Under Regulation 41 of the ICDR (Main Board IPO), and similar provisions in Regulations 137 (FPO), 162A (preferential issue) and 173A (QIP), a monitoring agency is required where the issue size, excluding the offer for sale by selling shareholders, exceeds INR 100 crore. For SME IPOs under Regulation 262, the threshold is INR 50 crore. No threshold is prescribed for rights issues under Regulation 82.
Under Regulation 32 of the LODR, the listed entity submits the monitoring agency report to the stock exchanges within 45 days from the end of each quarter (half year for SME listed companies). The report is also placed before the audit committee.
Monitoring agency report to stock exchanges directly
The monitoring agency would submit its report directly to the stock exchanges within 45 days from the end of the reporting quarter (half year for SME listed entities), with a copy to the listed entity. The listed entity would no longer need to submit it. For the quarter ended March 31 (half year ended March 31 for SME listed entities), the Working Group suggests aligning the timeline with Regulation 33 financial results, that is, 60 days.
If the listed entity does not cooperate, the agency would report on the best available information, with a "Statement of non-cooperation". SEBI also proposes that stock exchanges display these prominently on their websites.
Monitoring agency for preferential issue and QIP of any size
The issue size threshold would be removed, so a monitoring agency would be mandatory for all issuances, irrespective of size (excluding the offer for sale). Monitoring would cover 100 per cent of gross issue proceeds (other than offer for sale proceeds of selling shareholders). This includes pre-IPO proceeds used for the stated objects, issue proceeds placed with scheduled commercial banks, issue-related expenses borne by the company and, where an object of the issue is investment in another entity, end use of proceeds by that investee.
Utilisation of issue proceeds under Regulation 32 and new Regulation 32A
Monitoring agency matters would move to a new Regulation 32A. Regulation 32 would be retitled "Statement of utilization including variation(s), if any", so a statement is filed even where there is no variation. It would apply only to entities exempt from appointing a monitoring agency, such as banks, public financial institutions and insurance companies.
Regulation 32(7A), on annual report disclosure of preferential issue and QIP funds, would be omitted. The annual report would instead give a web-link to the monitoring agency report or statement of utilisation.
Key dates and rates
Category
Current position
Proposed position
Effective from
Appointment of monitoring agency
Required where fresh issue exceeds INR 100 crore (INR 50 crore for SME IPO); no threshold for rights issues
Mandatory for all issuances, irrespective of issue size (excluding offer for sale)
Not yet notified; proposal as of October 18, 2026
Submission of monitoring agency report
Listed entity submits to stock exchanges within 45 days of quarter end
Monitoring agency submits directly within 45 days; 60 days for the March quarter
Not yet notified
Non-cooperation by listed entity
No specific penal action prescribed
Fine of INR 50,000/- per instance reported in a quarter (or half year), then SOP action
Not yet notified
Corrected report after rectification
Not specified
Monitoring agency files complete report within 15 days of receiving full information
Not yet notified
Public comments
Not applicable
Comments invited on the consultation paper
Last date November 3, 2026
Practical impact
For companies
Under the proposed SOP, the stock exchanges would issue notices within 30 days from the due date of the report. If, within 15 days of the notice, the company has not paid the fine and/or the monitoring agency has not filed a subsequent complete report confirming that the non-cooperation has been rectified, the exchanges would issue notices to the promoters. If, 10 days after the notice to promoters, the non-cooperation is still not rectified and/or the fine is still unpaid, the exchanges would ask the depositories to initiate freezing of the promoters' demat accounts under the SOP framework.
A company with reported non-cooperation could neither terminate its agreement with the existing monitoring agency nor appoint a new one until it rectifies the non-cooperation and enables the existing agency to submit a complete report for that reporting quarter. SEBI also proposes that non-payment of fees to the agency should not be a ground for reporting non-cooperation. Agencies could instead include clauses in their agreements for payment of the entire fee for the monitoring period in advance, if considered appropriate. If the agreement is then terminated before 100 per cent utilisation, the agency may be required to refund the proportionate fee for the remaining period.
For companies planning a fund raise
Under the proposed transitory provisions, where no funds have been raised before the amendments come into force, the amended Regulation 32 and new Regulation 32A would apply. This covers offer documents filed on or after that date and fund raises already started but not completed. Where funds are already raised and an agency is appointed, Regulation 32A would apply from the quarter after commencement. Companies that raised funds below the current thresholds would continue under existing provisions until full utilisation.
For individuals
Individual investors would see monitoring agency reports, and any statement of non-cooperation, on stock exchange websites. Individuals may also send comments to SEBI through its public comments portal by November 3, 2026.
For audit committees and auditors
Under the proposed Regulation 32A, the monitoring agency would first send a draft report to the listed entity. The audit committee would review it and give comments, and the draft would then go back to the agency and to the Board for information. For SME issuers, statutory auditors would no longer give the Regulation 262(5) utilisation certificate, which applies today where no monitoring agency is required. They would give the Regulation 262(6) working capital certificate (where the working capital object exceeds INR 5 crore) with half-yearly instead of quarterly results, if the proposals are adopted.
Frequently asked questions
What is a SEBI monitoring agency?
It is an independent agency, a credit rating agency registered with SEBI, that checks whether issue proceeds are used for the objects disclosed in the offer document. It reports quarterly (half-yearly for SME listed entities) until 100 per cent of the proceeds are used.
Is a monitoring agency now required for every preferential issue?
Not yet. As of October 18, 2026, the INR 100 cr