"Companies which fail to follow the newly-drafted corporate governance guidelines will not be allowed to list in any stock exchange," SEBI chairman D R Mehta told PTI.

"We think that most of the corporates would abide by the new code as they have done in disclosing their quarterly results," Mehta said, adding that in case of violation there would be punitive measures including financial penalties.

Mehta, however, said the financial penalty would be nominal and Sebi would leave it to the investors to decide on errant companies. "If the companies still find excuses to escape the new guideline, the market would punish them," Mehta said.

Asked whether such a move would reduce the number of companies listed in exchanges, the Sebi chief said, "if 300-400 companies adopt the corporate governance norms, it would cover 90-95 per cent of the market capitalisation, which would be a success to start with".

Although the corporate governance committee scheduled to meet in December this year, would not be empowered to decide on the punitive measures, the issue would be taken up, Sebi executive director Pratip Kar said. The Birla committee is also expected to come out with a draft report on insider trading guidelines by February-March next year.

Birla said some of guidelines like audit committee and compensation committee for directors would be made mandatory while others would be voluntary. The committee is also planning to make information shared by companies with institutional investors public.

Asked about the dispute resolution mechanism in the corporate governance code, the Sebi chief said let the draft be put through first and then we would take up other matters. The corporate governance code would include not only financial disclosures but also non-financial ones, Mehta said.