SEBI has proposed tougher IPO money tracking, meaning checks on how companies spend what they raise. Its consultation paper of 13 October suggests a ₹50,000 fine for each instance of non-cooperation with the monitoring agency and, if the lapse continues, a freeze on promoters' demat accounts. Public comments are open until 3 November 2026.
What is a monitoring agency?
It is an independent third party, usually a credit rating agency, that a company appoints to track how it uses the fresh money raised from the public. It reports on whether the cash went to the objects listed in the offer document. Livemint describes it as the body that tracks and verifies use of the fresh capital.
What SEBI is proposing
The paper comes from a working group chaired by V S Sundaresan, a former SEBI executive director, which is reviewing the LODR Regulations. The first report has three chapters. One of them covers monitoring and disclosure of issue proceeds. These are proposals only. Nothing is final.
| Proposal | What it would mean |
|---|---|
| Direct reporting | If a company does not cooperate, the agency files its report with the exchanges on the best available information, with a statement of non-cooperation |
| Revised report | Once the company supplies the data, the agency files a complete report within 15 days |
| Display | Exchanges show these reports and non-cooperation statements prominently on their websites |
| Fine | ₹50,000 for each instance of non-cooperation in a reporting period |
| Escalation | If the lapse or the fine stays unresolved, exchanges notify promoters. After 10 more days they ask depositories to start freezing promoters' demat accounts |
| Agency lock | A company cannot end its agency's contract or hire a new one while non-cooperation is unresolved |
| Scope | A monitoring agency for every issue, whatever its size, excluding the offer for sale part |
The paper also says that non-payment of the agency's fees would not, by itself, count as non-cooperation.
What our data shows
These reports are already being filed. For the IPOs we track, 40 monitoring agency reports were filed on BSE in the last 75 days, 30 for mainboard and 10 for SME issues. One flagged a deviation: Recode Studios, an SME issue, reported a deviation of up to 10% (₹0.08 crore) for the quarter ended 30 June 2026. Two more, Shree Ram Twistex and Vidya Wires, did not state the position in a form our system could read. That is not the same as a deviation. It means the report did not say clearly.
The point of the proposal is the gap such reports leave when a company withholds papers. Today a report can arrive thin. Under the plan it would arrive labelled, with a fine attached.
What happens next
Comments are accepted through SEBI's online portal until 3 November 2026. SEBI will then decide whether to turn the proposals into amendments. We will track the outcome on the IPO Guru news page, and you can see which issues are on the mainboard IPO list. The reporting is based on The Economic Times, Livemint and CNBC-TV18.
