The Securities and Exchange Board of India (SEBI), in its board meeting approved an amendment to the SEBI (Collective Investment Schemes) Regulations, 1999 to strengthen the regulatory framework for Collective Investment Schemes (CIS) to bring them on with Mutual Fund (MF) regulations. This was the first major review of CIS regulations since their notification in 1999.
Key Amendments:
i.Enhancement of net-worth criteriaÂ
ii.Requirement of having track record in relevant field as an eligibility requirement for registration as a Collective Investment Management Company (CIMC).
iii.CIMC and its group/ associates/ shareholders will be restricted to 10% shareholding or representation on the board of another CIMC to avoid conflict of interest.
iv.There will be mandatory requirement of minimum number of investors, maximum holding of a single investor, and minimum subscription amount at the CIS level.
v.There has been rationalisation of fee and expenses to be charged to the scheme.
vi.There has been reduction of timelines for offer period of scheme, allotment of units, and refund of money to investors.
SEBI amends rules governing Listing Obligations and Disclosure Requirements
The board also approved a proposal to amend the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 to simplify procedure for transmission of securities, and to ensure uniform processes are followed by the Registrars to an Issue and Share Transfer Agents (RTAs)/ listed companies.
Key Amendments:
i.The existing threshold limit for simplified documents has been revised from Rs 2 lakh to Rs 5 lakh for securities held in physical mode per listed issuer, and Rs 5 lakh to Rs 15 lakh for securities held in dematerialised mode for each beneficiary account.
ii.The legal heirship certificate or its equivalent certificate issued by competent government authority will be an acceptable document for transmission of securities
SEBI amends rules governing Custodians
The board also approved the approved the amendments to the SEBI (Custodian) Regulations, 1996 to enable SEBI-registered custodians to provide custodial services in respect of silver or silver related instruments held by silver ETFs (Exchange Traded Funds) of mutual funds.
SEBI issues operational guidelines for covenant monitoring with DLTÂ
SEBI also issued the operational guidelines for security and covenant monitoring using Distributed Ledger Technology (DLT). With effect from April, 1 2022, the recording of asset details (and their verification), allotment, listing and payment of interest or redemption will be available in the DLT system.
Key Points:
i.Under the DLT, there will be system generated unique identifier (Asset ID) which will be allotted for each asset offered by Issuer as security for the non-convertible securities.Â
- For data exchange and verification across depositories, format for unique asset ID would be a 12-digit alphanumeric string.
ii.Issuer is mandated to update any event which reduces the security cover below the mandated/ stipulated limit, as per regulation 54 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, in the system.Â
iii.All issuers proposing to issue non-convertible securities on or after 1st April, 2022 should record the details in the system before activation of International Securities Identification Number (ISIN), a 12-digit alphanumeric code that uniquely identifies a specific security.
iv.For existing outstanding non-convertible securities, issuers will be required to enter the details into the DLT system on or before September, 30 2022 and Debenture Trustees (DTs) verify the same by November, 30 2022.
SEBI forms panel to review governance norms at MII; headed by Gurumoorthy Mahalingam
On April 4, 2022, SEBI formed an ad-hoc committee to review governance norms at Market Infrastructure Institutions (MII) such as stock exchanges. It will be a 6-member panel to be headed by Gurumoorthy Mahalingam, a former whole-time member of SEBI, and will include representatives from stock exchanges and depositories.
- It will suggest measures for strengthening the role played by the governing board and committees of MIIs to enhance accountability and transparency.
Other Members of Committee:
JN Gupta, MD of Stakeholders Empowerment Services; Aarti Nihalani, partner, Oliver Wyman; Sandip Bhagat, partner, S&R Associates; and Uttam Bagri, former chairman, BSE Brokers Forum; among others.MD&CEOs of NSE (Mr. Vikram Limaye), MD&CEOs of BSE (Shri Ashishkumar Chauhan), MD&CEOs of NSDL (Ms. Padmaja Chunduru)and MD& CEOs of CDSL (Nehal Vora)
Key Points:
i.The committee will review the requirements related to the appointment and role and responsibility of the board of directors and Key Managerial Persons (KMPs).
ii.The committee will develop effective metrics for monitoring various aspects of the functioning of MIIs and KMPs.
SEBI imposes penalties Rs 15 lakh on 3 entities for Non-Genuine Orders
- Sebi on imposed penalties totalling Rs 15 lakh on three entities for indulging in non-genuine trades in illiquid stock options on BSE. In three separate orders, the regulator slapped a fine of Rs 5 lakh each on Vinit Jagdishprasad Kedia, Shiv Kumar Sarda HUF and Bajrang Lal Dalmia HUF.
- By indulging in such trades in stock options, they violated the provisions of PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) regulations.
Two companies get SEBI nod for IPO
SEBI has approved Dharmaj Crop Guard Ltd, and Venus Pipes and Tubes Ltd for Initial public offerings (IPOs). These companies had filed their preliminary IPO papers with SEBI between December 2021 and January 2022.Â
- SEBI is yet to issue observations for 49 IPO papers.
Key Points:
i.The IPO of agrochemical company Dharmaj Crop Guard consists of a fresh issue of up to Rs 216 crore and an offer for sale (OFS) of up to 1,483,000 equity shares.
ii.The IPO of Venus Pipes and Tubes comprises 50,74,100 equity shares.
Recent Related News:
i.On December 22, 2021, SEBI has signed the Enhanced Multilateral Memorandum of Understanding (EMMoU) of the International Organization of Securities Commissions (IOSCO).
ii.SEBI has set up an Advisory Committee for Leveraging Regulatory and Technology Solutions (ALeRTS) to enhance technological capabilities and explore suitable technology solutions for the early detection of market anomalies. It is a 7-member committee headed by Madhabi Puri Buch.
About Securities and Exchange Board of India (SEBI):
Establishment– 1992
Headquarter– Mumbai, Maharashtra
Chairperson– Madhabi Puri Buch
