Key Approvals at SEBI’s 204th Board Meeting
The Securities and Exchange Board of India (SEBI) has introduced significant regulatory changes in its 204th meeting, aimed at increasing flexibility for Initial Public Offerings (IPOs), Alternative Investment Funds (AIFs), and Foreign Portfolio Investors (FPIs). These measures are designed to streamline processes and reduce burdens on investors and listed entities.
Detailed Measures Adopted
- Same Day Settlement Approval:
- SEBI has approved a T+0 settlement cycle for 25 scrips with select brokers, facilitating faster transaction settlements.
- Foreign Portfolio Investors (FPIs) Regulations:
- Disclosure Exemptions: FPIs owning over 50% of Indian equity in a group are exempt from additional disclosures if their stake in any listed company without a recognized promoter is below 3%.
- Relaxed Disclosure Timelines:
- Material changes must be reported within seven working days (Type I) or 30 days (Type II), with supporting documents provided within the respective deadlines.
- FPIs have 30 days post-registration expiry to reactivate, and 180 days to dispose of holdings, with unsold securities moved to escrow after 360 days.
- IPO Flexibility:
- Non-individual shareholders can now contribute to the minimum promoters’ contribution without being identified as promoters.
- Adjustments in offer size can be made based on either the rupee value or number of shares.
- Listed Entities Compliance:
- Market capitalization compliance for listed entities is now based on a six-month average as of December 31.
- SEBI will develop objective criteria for rumor verification related to share price movements.
- Alternative Investment Funds (AIFs) Enhancements:
- AIFs are permitted to encumber equity of investee companies, specifically in infrastructure sectors, to facilitate debt raising.
- Guidelines are set for handling unliquidated investments during the winding up of AIFs.
- Infrastructure Investment Trusts (InvITs):
- A new framework for the issuance of subordinate units by privately placed InvITs has been established to support infrastructure investment.
- Market Rumor Verification:
- A standardized approach for market rumor verification has been endorsed, involving the Industry Standards Forum (ISF) which includes ASSOCHAM, CII, and FICCI.
- Stock exchanges are now recognized as the administrative body for the supervision of research analysts and investment advisors.
SEBI’s Organizational Overview
- Chairperson: Madhabi Puri Buch
- Established: Statutory powers received in 1992 under the SEBI Act.
- Headquarters: Mumbai, Maharashtra
Conclusion
These updates by SEBI significantly liberalize norms around IPOs and investments, simplify compliance requirements for FPIs, and enhance the operational framework for AIFs and InvITs. The introduction of T+0 settlement for selected scrips marks a notable shift towards faster and more efficient market transactions. These reforms are expected to attract more investments and increase transparency and trust in the Indian securities market.
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