Sebi pushes for ease of doing business; clears relaxations for FPIs, AIFs, fund-raising entities

Mumbai: Regulator Sebi on Friday approved a raft of relaxations for foreign portfolio investors, alternative investment funds and entities seeking to raise funds through initial share sales, as part of facilitating the ease of doing business in the securities market.

Also, the board of Securities and Exchange Board of India (Sebi) gave its nod for a uniform approach for verification of market rumours by entities that have listed their equities.

In a move aimed at testing the feasibility of the optional T+0 settlement mechanism, a Beta version for a limited 25 scrips and limited brokers will be launched.

Sebi will continue to do further stakeholder consultation, including with the users of the Beta version. The progress will be reviewed at the end of three months and six months, after which further course of action will be decided, Sebi said in a release.

These proposals were cleared by the Sebi board at its meeting that ended late on Friday.

Among other measures, the regulator decided to exempt additional disclosure requirements for FPIs having more than 50 per cent of their India equity assets under management in a single corporate group, subject to certain conditions.

The Sebi board also decided to relax the timelines for disclosure of material changes by FPIs.

In a move aimed at ensuring compliance as well as providing ease of doing business, Sebi has mandated that an Alternative Investment Fund (AIF), its manager and key management personnel should carry out 'specific due diligence' of both their investors and investments.

Amid concerns about funding through AIFs, Sebi has come out with a measure to ensure that investors and investments do not circumvent any financial regulations.

''... verifiable compliance with such due-diligence requirements would provide the regulatory comfort necessary for the introduction of other Ease of Doing Business (EoDB) proposals/ measures relating to AIFs, to facilitate sustained capital formation,' the release said.

Under another proposal, objective and uniformly assessed criteria will be specified for rumour verification in terms of material price movement of equity shares of the listed entity.

'Considering unaffected price for transactions wherever pricing norms have been prescribed under Sebi regulations provided that the rumour pertaining to such transaction has been confirmed within twenty-four hours from the trigger of material price movement,' Sebi said.

To further improve the ease of doing business for companies coming for IPOs and fund raising, Sebi has decided to do away with the requirement of a 1 per cent security deposit in public/rights issue of equity shares.

'Promoter group entities and non-individual shareholders holding more than five per cent of the post-offer equity share capital to be permitted to contribute towards minimum promoters’ contribution without being identified as a promoter,' the release said.

Also, equity shares from the conversion of compulsorily convertible securities held for a year before filing the DRHP will be considered for meeting minimum promoters’ contribution requirement.

'The increase or decrease in size of offer for sale requiring fresh filing shall be based on only one of the criteria i.e. either issue size in rupees or number of shares, as disclosed in the draft offer document,' the release said.

To facilitate the ease of doing business for listed companies with respect to ongoing compliance requirements, the regulator has decided to make some changes.

Market capitalisation-based compliance requirements for listed entities will be determined on the basis of average market capitalisation of six months ending December 31, instead of single day’s (March 31) market capitalisation.

Further, a sunset clause of three years for cessation of applicability of market capitalisation-based provisions will also be introduced.

The regulator will extend the timeline from three months to six months for filling up vacancies of Key Managerial Personnel which require approval of statutory authorities.

Among others, the maximum permitted time gap between two consecutive meetings of the Risk Management Committee will be increased from 180 days to 210 days in order to provide flexibility to listed entities to schedule the meetings.

Another proposal approved by the Sebi board is providing a framework for issuance of subordinate units by privately placed InvITs (Infrastructure Investment Trusts).

Also, the regulator has decided to recognise a stock exchange as a Research Analyst Administration and Supervisory Body (RAASB) and 'Investment Advisers Administration and Supervisory Body (IAASB)'.

Further, the timeline for mandatory applicability of listing norms for High-Value Debt Listed Entities (HVDLEs) has been extended till March 31, 2025.

The board also approved Sebi's budget for the financial year 2024-25.