A listed entity that breaches the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is never exposed to a single, neatly bounded sanction. The same default - a late corporate-governance report, a missed financial result, an undisclosed material event - can simultaneously attract a flat exchange fine under the SEBI Standard Operating Procedure, an adjudicatory monetary penalty under the SEBI Act and the Securities Contracts (Regulation) Act, freezing of promoter holdings, suspension of trading, and, in the gravest cases, criminal prosecution. This chapter maps that layered enforcement architecture, identifies which statute supplies the penalty for which kind of default, and works through the case law that has fixed both the ceiling and the discretion that attaches to each route.
Why LODR non-compliance is a multi-forum problem
The LODR Regulations are subordinate legislation made under Section 11 and Section 30 of the Securities and Exchange Board of India Act, 1992 (SEBI Act) read with Section 31 of the Securities Contracts (Regulation) Act, 1956 (SCRA). Because the regulations draw their force from two parent statutes, a breach of a single listing obligation can be characterised, and penalised, under more than one head. The continuing obligations chapter that an entity violates - the disclosure norms in principles governing disclosures or the governance norms covered under board of directors composition - is enforced through three broadly distinct channels.
First, the recognised stock exchanges levy flat, formula-driven fines under Regulation 97 and Regulation 98 of the LODR read with SEBI's Standard Operating Procedure circular. Second, SEBI's adjudicating officers impose monetary penalties under the penal provisions of the SEBI Act (principally Section 15HB) and the SCRA (Sections 23A and 23E). Third, the Board may direct freezing of promoter holdings, suspension of trading, or, where the contravention is wilful, criminal prosecution under Section 24 of the SEBI Act. These channels are cumulative, not mutually exclusive, which is why a defaulting entity often faces an exchange fine and a SEBI penalty for the very same lapse. For the underlying obligations that trigger these consequences, see common obligations of listed entities.
Regulation 97: the exchange as front-line monitor
Regulation 97 of the LODR places the primary monitoring duty on the recognised stock exchanges. Sub-regulation (1) requires every recognised stock exchange to monitor the compliance by listed entities with the provisions of these regulations, and sub-regulation (2) obliges the exchange to report to SEBI any instance of non-compliance and the action taken in the manner specified by the Board. This makes the exchange, rather than SEBI, the first body to detect and act on a default. The architecture is deliberate: the LODR shifts much of the day-to-day surveillance of listed entities onto the exchanges, with SEBI retaining apex supervisory and adjudicatory power. The monitoring duty under Regulation 97 is the foundation on which the fine-levying power in Regulation 98 rests, because an exchange cannot impose a fine for a default it has not first detected and recorded.
Regulation 98: liability for contravention
Regulation 98 is the operative liability provision within the LODR. Sub-regulation (1) provides that a listed entity or any other person who contravenes any of the provisions of these regulations shall, in addition to liability for action in terms of the securities laws, be liable for the following actions by the recognised stock exchange in the manner specified by the Board: (a) imposition of fines; (b) suspension of trading; (c) freezing of the entire shareholding of the promoter and promoter group in the listed entity as well as all other securities held in the demat account of the promoter and promoter group, in coordination with depositories; and (d) any other action as may be specified by the Board from time to time. Sub-regulation (2) provides that the manner of revocation of the actions specified in clauses (b) and (c) shall be as specified in circulars or guidelines issued by the Board.
The phrase "in addition to liability for action in terms of the securities laws" is doctrinally important: it expressly preserves SEBI's parallel power to adjudicate and prosecute under the SEBI Act and the SCRA, confirming that exchange-level action does not exhaust the entity's exposure. The freezing of promoter holdings under clause (c) is among the most potent tools, because it directly disciplines the controlling shareholders who are usually responsible for governance lapses, rather than merely fining the corporate shell.
Regulation 99: cost recovery from defaulters
Regulation 99 of the LODR completes the in-house enforcement scheme by providing that the listed entity shall bear the expenses, if any, incurred by the recognised stock exchange in carrying out the actions under Regulation 98. The provision ensures that the cost of enforcement - for example the administrative cost of freezing demat accounts in coordination with depositories, or of processing suspension and revocation - is not subsidised by the exchange or by compliant entities, but falls on the defaulter. Read with Regulations 97 and 98, this rounds out a self-contained chapter on monitoring (97), sanction (98) and cost recovery (99) that operates independently of, and in addition to, SEBI's statutory penalty powers.
The Standard Operating Procedure and the structure of exchange fines
The fines contemplated by Regulation 98(1)(a) are not set by the exchanges at large but by a uniform SEBI circular. The currently operative regime flows from SEBI's circular dated 22 January 2020 (which superseded the earlier circular of 3 May 2018 and has since been consolidated into SEBI's LODR Master Circular), prescribing a uniform structure of fines for non-compliance and the Standard Operating Procedure (SOP) for suspension and revocation of trading in case of continuing or repetitive non-compliance. The circular took effect from compliance periods ending on or after 31 March 2020.
The fines are flat and formula-driven - typically a fixed rupee amount per day of non-compliance for each defaulting requirement - covering a schedule of provisions including Regulation 17(1) and 17(1A) (composition of the board), Regulation 18(1) (constitution of the audit committee, discussed under audit committee), Regulation 19 (nomination and remuneration committee), Regulation 27(2) (corporate governance report), Regulation 31 (shareholding pattern), Regulation 33 (financial results) and Regulation 34 (annual report), among roughly two dozen provisions. The SOP further provides that where non-compliance with specified governance requirements such as Regulation 17(1) or 18(1) continues into a second consecutive quarter, the entity's securities may be shifted to a separate trading group (the "Z" group) and become liable to suspension of trading. The freeze on the promoter's demat accounts is lifted only after the entity achieves compliance and pays the accumulated fines, giving the regime real coercive bite.
Section 23A SCRA: the penalty for disclosure and listing-agreement defaults
Where SEBI itself adjudicates a LODR breach concerning failure to furnish information, documents, returns or reports, the natural penal provision is Section 23A of the SCRA. Section 23A(a) provides that any person who fails to furnish any information, document, books, returns or report to a recognised stock exchange, or fails to maintain books of account or records as required, shall be liable to a penalty which shall not be less than one lakh rupees but which may extend to one crore rupees. This is the provision that captures most ordinary disclosure and periodic-filing failures under the LODR, because the LODR obligations are the modern successor to the old Listing Agreement, and breaches of those continuing disclosure norms are treated as failures to furnish information to the exchange.
The one-crore ceiling in Section 23A(a) is the key contrast with Section 23E, and the boundary between the two provisions has been the subject of important litigation, discussed below.
Section 23E SCRA: the twenty-five crore listing-conditions penalty
Section 23E of the SCRA is the most severe pecuniary provision in the listing context. It provides that if a company or any person managing a collective investment scheme, mutual fund, real estate investment trust, infrastructure investment trust or alternative investment fund fails to comply with the listing conditions or delisting conditions or grounds, or commits a breach thereof, it or he shall be liable to a penalty which shall not be less than five lakh rupees but which may extend to twenty-five crore rupees. The fifty-fold gap between the Section 23A(a) ceiling of one crore and the Section 23E ceiling of twenty-five crore gives the choice of provision enormous practical consequence.
For several years SEBI took the view that any post-listing breach of the Listing Agreement, and later of the LODR, amounted to a failure to comply with "listing conditions" and could therefore attract the twenty-five-crore Section 23E penalty. That expansive reading was decisively curtailed by the Securities Appellate Tribunal, as the next section explains.
Suzlon Energy v. SEBI: confining Section 23E to pre-listing conditions
The leading authority on the scope of Section 23E is Suzlon Energy Limited & Anr. v. SEBI, decided by the Securities Appellate Tribunal on 3 May 2021. SEBI's adjudicating officer had, by order dated 20 April 2018, imposed a penalty of five lakh rupees under Section 23A(a) of the SCRA, a further sum of one crore rupees under Section 23E of the SCRA, and five lakh rupees under Section 15HB of the SEBI Act, on Suzlon and its compliance officer for failures in making corporate announcements and related disclosure lapses.
On appeal, the Tribunal upheld the findings on merits and the penalties under Section 23A(a) of the SCRA and Section 15HB of the SEBI Act, but set aside the penalty imposed under Section 23E. The Tribunal held that the words "failure to comply with listing conditions" in Section 23E cannot be equated with a failure to comply with Clause 36 of the Listing Agreement or other post-listing continuing obligations. Section 23E, it held, is confined to conditions applicable prior to listing - that is, the conditions in Rules 19 and 19A of the Securities Contracts (Regulation) Rules, 1957, and the delisting conditions or grounds - whereas a post-listing disclosure default attracts Section 23A(a) with its one-crore ceiling. Suzlon therefore draws a bright line: ordinary LODR breaches are Section 23A(a) matters, and the twenty-five-crore Section 23E hammer is reserved for failures to meet the original conditions of listing or the conditions and grounds for delisting.
Section 15HB SEBI Act: the residuary penalty
Many LODR obligations have no bespoke penalty attached to them. For these, the SEBI Act supplies a residuary or catch-all provision in Section 15HB, which states that whoever fails to comply with any provision of the Act, the rules or the regulations made or directions issued by the Board for which no separate penalty has been provided shall be liable to a penalty which shall not be less than one lakh rupees but which may extend to one crore rupees. The minimum floor of one lakh was introduced by the Securities Laws (Amendment) Act, 2014, with effect from 8 September 2014.
Because the LODR Regulations are "regulations made" by the Board, and because most governance obligations - board composition, committee constitution, related-party-transaction approvals and similar requirements explored in specific listing obligations for equity - carry no provision-specific penalty, Section 15HB is in practice the most frequently invoked adjudicatory provision for LODR defaults. It is the SEBI Act counterpart to Section 23A(a) of the SCRA, and the two are often imposed together, as the Suzlon facts illustrate, where penalties under Section 23A(a) of the SCRA and Section 15HB of the SEBI Act were both imposed and both survived appeal.
A recurring practical question is whether the same default can attract penalties under both Section 23A(a) of the SCRA and Section 15HB of the SEBI Act without offending the bar on double jeopardy. Because the two provisions flow from distinct parent statutes and address conceptually distinct obligations - one the duty to furnish information to the exchange, the other the duty to comply with the regulations generally - SEBI's adjudicating officers and the Tribunal have treated concurrent imposition as permissible, provided the overall quantum remains proportionate to the gravity of the conduct as required by Section 15J.
Roofit, Pabari and the discretion to go below the minimum
The penal provisions discussed above all carry a statutory minimum, which raised an acute question: must an adjudicating officer always impose at least the floor, or may mitigating circumstances justify a lower or nil penalty? In SEBI v. Roofit Industries Ltd. (Supreme Court, 2015) the Court read Section 15A(a) of the SEBI Act strictly, holding that the prescribed penalty - one lakh rupees for each day of failure or one crore, whichever is less - was mandatory and inevitable, leaving the adjudicating officer no discretion to reduce it even in the absence of aggravating factors. The decision triggered a wave of large, flat penalties.
That position was overruled by a three-judge bench in SEBI v. Bhavesh Pabari, decided on 28 February 2019. The Court held that the factors listed in clauses (a) to (c) of Section 15J of the SEBI Act - the gain or unfair advantage made, the loss caused to investors, and the repetitive nature of the default - are merely illustrative and not exhaustive, and that the adjudicating officer retains a controlled discretion to consider other mitigating factors and, in an appropriate case, to impose a penalty below the statutory minimum. The discretion, the Court cautioned, must be exercised reasonably and with utmost care. Read together, Roofit and Pabari establish that LODR penalties are not mechanically computed: while the statute fixes a range, Section 15J as interpreted in Pabari allows calibration of the quantum to the gravity of the default. SAT has applied this calibration in practice, for instance reducing a twenty-five-lakh penalty to ten lakh where the LODR violations were found not to be of a serious nature.
Liability of directors and officers in default
LODR penalties do not stop at the corporate entity. Regulation 98 expressly extends liability to "any other person" who contravenes the regulations, and the LODR fixes specific personal compliance duties on directors, the compliance officer and the chief executive. The Supreme Court's decision in N. Narayanan v. Adjudicating Officer, SEBI (26 April 2013) is the locus classicus on directors' accountability for disclosure failures. The appellant, a whole-time director and promoter of Pyramid Saimira Theatre Ltd., was penalised by SEBI for fictitious accounting entries and false disclosures that misled investors. He argued that his functional role was confined to human resources and that he could not be held responsible for the financial misstatements.
The Court rejected the defence and upheld the penalty, holding that directors owe a fiduciary and statutory duty to ensure the integrity of the company's disclosures and cannot disclaim responsibility for governance failures merely by reference to an internal division of labour. The judgment underpins the modern enforcement practice of proceeding not only against the listed entity but also against its directors and compliance officer for disclosure and governance defaults under the LODR, and it explains why the SOP circular fixes penal consequences on the compliance officer personally as well as on the entity.
Freezing, suspension and compulsory delisting
Beyond monetary penalties, the LODR scheme provides escalating non-pecuniary consequences. Under Regulation 98(1)(c) read with the SOP, persistent non-compliance leads to freezing of the entire shareholding of the promoter and promoter group, lifted only on full compliance and payment of accumulated fines. Under Regulation 98(1)(b) and the SOP, continuing default in key governance norms results in the entity's securities being moved to a restricted trading group and ultimately to suspension of trading. The most extreme consequence is compulsory delisting of the securities, exercised by the exchanges under the SEBI (Delisting of Equity Shares) framework where non-compliance is chronic. These measures are calibrated to coerce compliance rather than merely to punish, and they sit alongside, not in place of, the fines and adjudicatory penalties already described.
Section 24 SEBI Act: criminal prosecution for grave defaults
At the apex of the enforcement pyramid is criminal prosecution. Section 24(1) of the SEBI Act provides that any person who contravenes or attempts to contravene or abets the contravention of the provisions of the Act or of any rules or regulations made thereunder shall be punishable with imprisonment for a term which may extend to ten years, or with fine which may extend to twenty-five crore rupees, or with both. Section 24(2) prescribes a minimum imprisonment of one month, extendable to ten years, with a fine up to twenty-five crore rupees, for failure to pay a penalty or to comply with a direction or order. Because the LODR Regulations are made under the SEBI Act, a wilful or egregious LODR contravention can in principle be prosecuted criminally, with cognizance taken only on SEBI's complaint and the matter tried by a designated Special Court.
In practice criminal prosecution is reserved for serious, fraudulent or persistent defaults rather than routine filing delays, which are dealt with through fines and adjudicatory penalties. SEBI also retains the power under Section 11 and Section 11B of the SEBI Act to issue directions in the interest of investors or the securities market, which can include directions to comply, debarment from the securities market, or restraint from holding the position of a director or key managerial person in a listed entity. These directive powers are frequently exercised in tandem with monetary penalties, so that a defaulting promoter may simultaneously face a fine, a freeze on holdings and a debarment order. The existence of the criminal route nonetheless underscores that LODR compliance is not a soft obligation; the same conduct, depending on its gravity and intent, can move from a flat exchange fine all the way to imprisonment.
Putting the penalty scheme together
The enforcement of the LODR Regulations is best understood as a graduated, multi-statute scheme. Routine periodic-filing and disclosure lapses attract flat exchange fines under Regulation 98(1)(a) and the SOP, and an adjudicatory penalty under Section 23A(a) of the SCRA (up to one crore) or the residuary Section 15HB of the SEBI Act (one lakh to one crore). Failures to meet the original conditions of listing or the grounds for delisting attract the far heavier Section 23E penalty (five lakh to twenty-five crore), now confined by Suzlon to genuinely pre-listing or delisting conditions. The quantum of any adjudicatory penalty is calibrated through Section 15J as liberalised by Pabari, displacing the rigid Roofit approach. Persistent default escalates to freezing of promoter holdings, suspension and compulsory delisting under Regulation 98(1)(b) and (c), while wilful contravention exposes the entity and its officers to criminal liability under Section 24 of the SEBI Act, with directors personally answerable on the N. Narayanan principle. To revise the obligations whose breach triggers all of this, return to the SEBI LODR Regulations hub and the chapter on introduction, scope and definitions.
Frequently asked questions
Can a listed entity be fined by the stock exchange and penalised by SEBI for the same default?
Yes. Regulation 98(1) of the LODR expressly makes exchange action "in addition to liability for action in terms of the securities laws." The flat fine levied by the exchange under the Standard Operating Procedure and an adjudicatory penalty imposed by SEBI under the SEBI Act or the SCRA are cumulative, not alternative, so a single lapse can attract both.
What is the difference between Section 23A and Section 23E of the SCRA for LODR breaches?
Section 23A(a) penalises failure to furnish information, documents or reports to the exchange, with a ceiling of one crore rupees, and captures ordinary post-listing disclosure defaults. Section 23E penalises failure to comply with listing or delisting conditions, with a ceiling of twenty-five crore rupees. In Suzlon Energy Limited v. SEBI (SAT, 3 May 2021) the Tribunal confined Section 23E to pre-listing conditions, so most LODR breaches fall under Section 23A(a).
When does Section 15HB of the SEBI Act apply to LODR non-compliance?
Section 15HB is the residuary or catch-all penalty - one lakh to one crore rupees - for failure to comply with any provision of the SEBI Act, rules or regulations where no separate penalty has been provided. Because most LODR governance obligations carry no provision-specific penalty, Section 15HB is the most commonly invoked adjudicatory provision for such defaults and was applied alongside Section 23A(a) in Suzlon.
Must SEBI always impose at least the statutory minimum penalty?
No, not after SEBI v. Bhavesh Pabari (Supreme Court, 28 February 2019), which overruled SEBI v. Roofit Industries (2015). The Court held that the factors in Section 15J of the SEBI Act are illustrative, not exhaustive, and that the adjudicating officer has a controlled discretion to consider other mitigating circumstances and, in a fit case, impose a penalty below the prescribed minimum, exercised reasonably and with care.
Can directors and the compliance officer be penalised personally for LODR defaults?
Yes. Regulation 98 extends liability to "any other person" who contravenes the regulations, and the SOP fixes penal consequences on the compliance officer. In N. Narayanan v. Adjudicating Officer, SEBI (Supreme Court, 26 April 2013) a whole-time director was held personally liable for false disclosures despite claiming his role was limited, the Court holding that directors owe a duty to ensure the integrity of corporate disclosures.
Can LODR non-compliance lead to criminal prosecution?
Yes, in grave cases. Because the LODR Regulations are made under the SEBI Act, Section 24(1) allows imprisonment up to ten years or a fine up to twenty-five crore rupees, or both, for wilful contravention, with Section 24(2) prescribing a minimum one-month term for failure to pay a penalty or comply with an order. In practice prosecution is reserved for fraudulent or persistent defaults rather than routine filing delays.