Sebi board clears key proposals on MF Light regulations, New Asset Class in first meeting since Hindenburg allegations

India’s capital markets regulator Securities and Exchange Board of India met on Monday to take a number of decisions, including the much-awaited nod to the proposed Mutual Fund Lite Regulations and New Asset Class to fill the gap between mutual funds and portfolio management services (PMS). ). This development confirmed the earlier exclusive news of Zee Business last week.

Here are some of the key decisions made by the board at its September 30 meeting:

Green light on MF Light Regulations: Considering the minimal risk involved in managing MF schemes that are regulated arbitrarily, the proposed MF Lite Regulations aim to reduce the compliance requirement, encourage innovation, promote competition, and promote ease of entry for MFs who are only interested in launching. passive schemes. The regulations are expected to promote ease of entry, encourage new players, reduce compliance requirements, increase penetration, facilitate investment diversification, increase market capitalization, and encourage innovation.

Moving forward with the New Asset Class proposal: A minimum investment of Rs 10 lakh has been proposed in this New Asset Class, which will be riskier than mutual funds and will not be allowed to be advertised as a mutual fund product, but will be eligible. for high-risk investors who have previously invested in the unregulated sector. Such investors may now find a well-managed business.

New rules for investment advisers and research analysts: The board approved certain rules for investment advisers and research analysts that are planned to remove the requirement to pass the basic certificate every three years and relax the existing requirements for registration as a post. – getting a degree.

Quick rights issues: Sebi aims to make fundraising easier for companies, reduce the role of bank dealers and reduce the timeline for post-board meeting to around 20 days. This will be a kind of combination of rights issues and preference issues. The idea is to make rights issues the preferred method of raising capital for companies.

Changes in ICDR and LODR norms: The proposed harmonization of ICDR and LODR norms has also been cleared by the market regulator. The ICDR rules apply to financial disclosure and disclosure requirements while the LODR norms include listing obligations and disclosure requirements regulations. This includes the review of regulations related to related transactions, classification of promoters, and a single system for filling IPOs in all stock markets, providing a three-month timeline for filling board vacancies and strengthening issues related to corporate governance on the part of the ICDR.

Rules relating to merchant banks: The Board reviewed certain rules applicable to merchant banks that define what activities they can perform.

Scope of connected persons expanded: With a view to addressing the ongoing problem of insider trading, the board has withdrawn the proposal to expand the scope of ‘connected persons’, noting that certain categories of people are excluded from the scope of work. the definition of ‘connected persons’ under the existing laws may also be in a position to get UPSI from ‘connected persons’ to the company, because of their close relationship with those ‘connected persons’. The credit for this proposition goes to the in-house trading environment of the Delhi-based business group.

Minor matters related to noncompliance to be brought to summary trial: The Board approved a motion to extend the arbitrator’s trial, in light of certain violations that are obvious in nature or accepted by the arbitrator or need. small documents or evidence that prove facts.

Top 500 companies by mcap to qualify for ‘T+0’ settlement scheme: The Board also cleared the proposal to make top 500 companies by market capitalization eligible for ‘T+0’ settlement scheme.

Simplifying the nomination area: The Board approved a proposal to simplify the existing nomination area.

Monday’s meeting proved to be important as it was the first time the board of directors had participated in discussions since the release of a report by US-based short-selling firm Hindenburg Research in August, which made serious allegations against chairman of the board Madhabi Puri Buch. The Sebi chief has repeatedly denied the allegations.

Serious issues like the Hindenburg report and the recent protest by a section of Sebi employees were not discussed in the meeting.