- July 29, 2017
- Posted by: suvanlaw
- Category: SEBI
- SEBI’s Board Meeting Held on 23.09.2016
A Press Release was issued by SEBI subsequent to its Board Meeting held on 23.09.2016, which covered various important decisions taken during the meeting which inter alia includes:
- Amendments will be made to the SEBI (Foreign Portfolio Investors) Regulations, 2014 for allowing the Foreign Portfolio Investors (“FPIs”) to trade directly in Corporate Bonds without a broker. Also, a proposal to amend Securities Contracts (Regulation) Rules, 1957 will be taken up with the Government of India for permitting FPIs to become a member of a Recognized Stock Exchange for the limited purpose of proprietary trading.
- SEBI Board approved the Amendments proposed to the SEBI (Infrastructure Investment Trusts) Regulations, 2014 and SEBI (Real Estate Investment Trusts) Regulations, 2014. The approved changes inter alia, include allowing Infrastructure Investment Trusts (“InvITs”) and Real Estate Investment Trusts (“REITs”) to invest in level-two SPV structure through Holding Company, removing the limit on the number of sponsors of InvITs and REITs and rationalizing the requirements for private placement of InvITs.
- SEBI has amended the Portfolio Managers Regulations, which inserts a separate Chapter II-A “Eligible Fund Managers” (“EFMs”). This will apply to EFMs, exclusively pertaining to their activities as portfolio managers to Eligible Investment Funds.
- The Board approved the proposals for issuing consultation papers for amendments to Listing Obligations and Disclosure Requirements Regulations and Listing Regulations to address corporate governance issues in compensation agreements in case of listed companies and to propose changes in the Investment Advisers Regulations.
- Permanent Registration status- The list of intermediaries granted permanent registration by SEBI inter alia includes, Merchant Bankers, Credit Rating Agency, Depository Participant, Portfolio Managers, and Investment Advisers etc.
- SEBI’s Recent Board Meeting
In its recent Board Meeting held on November 23, 2016, SEBI has approved to make certain key amendments to two SEBI Regulations. These regulations are SEBI (Alternative Investment Funds) Regulations, 2012 (“AIF Regulations”) and SEBI (Foreign Portfolio Investors) Regulations, 2014 (“FPI Regulations”).
Amendments in the AIF Regulations have been inter-alia approved in respect of increasing the upper limit in the number of angel investors in a scheme from 49 to 200, decreasing the minimum monetary investment requirement by Angel Funds in venture capital undertaking (VCU) from 50 lakhs to 25 lakhs, reduction in lock-in requirements of investments made by Angel Funds in the VCUs is reduced from 3 years to 1 year, allowing angel investors to make investments of upto 25% of their corpus in overseas VCUs.
With the approved amendments in the FPI Regulations, FPIs shall now be permitted to also invest in unlisted corporate debt securities issued by an Indian public or private company and securitized debt instruments upto the extent of Rs.35,000 Crore.
Further, while considering the corporate governance issues in compensation agreements, SEBI also approved a proposal for amending the Listing Regulations to enforce disclosures and shareholder approval for all compensation agreements including the existing agreements that extend beyond the date of the amendment. Accordingly, the proposed amendments make prior approval mandatory for entering into such agreements, provide information about all such existing agreements in the past three years to the stock exchanges for public dissemination, obtain approval of the shareholders for all such existing agreements and abstaining the interested persons from voting.
Interestingly, SEBI has recently issued a show cause notice (SCN) to PVR alleging that PVR has not informed the stock exchange about the incentive fee agreement entered between PVR, its Chairman and its Managing Director which was ancillary to preferential allotment made by PVR to some of its private equity investors, there by violating Clause 49(D) of the erstwhile Listing Agreement corresponding to Regulation 17(5) of Listing Obligations and Disclosure Regulations, 2015. This in effect implies that if any listed company discloses its compensation agreement executed in the past three years, as per the approved amendment to Listing Agreement once it comes into force, then the company may run the risk of receiving show cause notice by SEBI for not disclosing the compensation agreement when the compensation agreement was actually entered into.
- SEBI’s Board Meeting under the new chairman Ajay Tyagi evidenced major overhauls
SEBI, in its first Board Meeting held under the Chairmanship of Mr. Ajay Tyagi on April 26, 2017, had come up with number of significant decisions. SEBI has announced few remarkable changes in the norms relating to mutual funds, public issues, preferential allotments, debt securities, equity markets, commodity derivatives etc.
However, one of such noteworthy decisions taken is in respect with the investments and redemption in mutual funds. SEBI has allowed investments up to Rs. 50, 000 per F.Y. in mutual funds through e-wallet.
Also, resident individual investors can now instantly redeem liquid mutual funds up to Rs. 50, 000 a day, or 90% of the folio value, whichever is lower. Further, to strengthen the monitoring of issue proceeds raised in IPOs/FPOs/Rights Issues, SEBI has approved mandatory appointment of Monitoring Agency where the issue size (excluding offer for sale component) is more than Rs.100 crore.
SEBI has also allowed the integration of broking activities in equity markets and commodity derivatives markets, thereby enabling the stock brokers to deal in both securities and commodity derivatives without setting up a separate entity for each. For detailed information on all the reforms as approved by SEBI, please refer to the Article on Bar & Bench.