SEBI: SEBI changes many rules related to stock market, see the complete list here

Several major decisions were taken at the board meeting of SEBI, the regulator of the stock market. SEBI has also announced rules to give Rs 1 crore to insider trading informants. Apart from this, rules were also issued regarding mutual funds

New Delhi: Stock market regulator Sebi held a board meeting on Wednesday. The board meeting took several major decisions on the stock market, mutual funds and credit rating agency. Capital market regulator Sebi on Wednesday said various issues need to be looked into before taking steps to increase public shareholding in listed companies. 

The Securities and Exchange Board of India (SEBI) on Wednesday announced new rules regarding startups. This step has been taken to help startups move from the ‘Innovators Growth Platform’ of the stock markets to the main stock market. Under this, they will be allowed to go into regular business of the stock market and increase their base of shareholders to at least 200, after one year of joining IGP.

The company should have a track record of three years of profitability / net worth or 75% shareholding with eligible institutional investors. After a meeting of the board of directors, SEBI said that the minimum contribution of the promoter would be required to be 20 percent. For this, there will be a ‘lock in’ period of three years. If the six month ‘lock in’ period has been followed at the time of listing on the first startup platform, it will be removed from it.

  1. Officials said that the regulator is of the view that if companies listed on the IGP (Innovators Growth Platform) are allowed to trade in the regular category of the main stock market without following strict norms, it will allow them to enter the main stock market through IPO Strict procedures can be misused.
  2. Any company that wants to be listed on the main stock market for trading its shares, has to follow strict disclosure rules and eligibility rules and bring in an initial public issue. But the rules have been relaxed for startups that intend to be listed on IGP. Business activities on this platform are relatively limited.
  3. As per the approved rules, the company will have to be listed on the IGP for at least one year for transfer to the main stock market. There should be at least 200 shareholders at the time of transfer.
  4. Mutual funds should be given flexibility to invest in unlisted non-convertible debentures (NCDs). This investment can be up to 10 percent of the loan portfolio of a scheme. 
  5. Such investment should be done in unlisted NCDs with an accessible structure. These NCD ratings must be guaranteed with monthly coupons. It will be implemented in a phased manner by June 2020.
  6. Investing in risky debt securities has emerged as a major risk for capital market investors. There is also investment through mutual fund route. The regulator is trying to strengthen its regulatory ‘net’ against such risks.
  7. In the SEBI meeting, it was also proposed to reduce the limit of investment of mutual fund schemes in unrated debt products from 25 to five percent. In addition, it has been proposed to eliminate the ten percent limit of single issuers for investing in unrated debt products, an official said. A Sebi official said that the regulator would periodically review the proposed boundary based on market conditions. 
  8. Capital market regulator Sebi on Wednesday announced the relaxation of rules to issue municipal bonds (muni bonds) to help registered entities working in planning and urban development operations in cities, like smart cities and municipalities. Under this, these units will be allowed to raise funds and issue funds by issuing debt securities.
  9. The Securities and Exchange Board of India (SEBI) amended the listing and issue of debt securities (ILDM) regulation by municipal corporations five years ago. Seven municipal corporations have since raised about Rs 1,400 crore by issuing debt securities. Debt securities issued by municipal corporations are known as Muni Bonds.
  10. The market regulator has now decided to allow a large number of other units engaged in urban development works to use this route to raise funds. These units also include special purpose units set up under the ambitious Smart Cities Mission of the Central Government.
  11. Under the new rules, the regulatory monitoring agency will eliminate requirements such as submission of feasibility certificates or detailed project evaluation reports, setting up a separate project implementation cell and compulsory support of the state and central government.
  12. Following the information received from industry and market participants to amend the ILDM regulations, SEBI started a consultation process in June to amend these rules. After receiving suggestions and comments in this regard, the regulator decided to amend the regulation to provide flexibility in fund raising as well as strengthen investor protection.
  13. As of now, this way of raising funds is available only to those municipal corporations which are defined in the relevant articles of the constitution or the corporate municipal units which have been formed as a subsidiary of the municipal corporation for raising funds.
  14. SEBI has now decided to allow units like urban development authorities and city planning agency to issue Muni Bonds which act like municipal corporation for planning and implementing urban development projects. 
  15. SEBI on Wednesday simplified the KYC (Know the Customer) rules for foreign portfolio investors (FPIs), easing the regulatory regime for them. Also, securities transactions are also allowed outside the market.
  16. Under the new arrangement, foreign portfolio investors would be divided into two categories instead of three. The market regulator said in a release issued after the board meeting, “The documentation required for KYC has been made easy.”
  17. Former Deputy Governor of Reserve Bank of India H.D. R. The FPI rules have been redesigned based on the recommendation of the committee headed by Khan. Subscription and issuance requirements for derivatives products issued in foreign countries have also been rationalized.
  18. Foreign funds offered by mutual funds will be allowed to invest in the country after registering as FPIs. In addition, units established at the International Financial Services Center (IFSC) will have to follow the FPI norms. 
  19. Sebi said in a release, “FPIs will be allowed to transact (transfer) securities outside the market to domestic or foreign investors. These securities will be unlisted, suspended, not easily converted into cash. ‘
  20. Apart from this, the process of registration of Multi Investment Manager (MIM) has also been simplified. Central banks that are not members of the International Settlement Bank will be eligible to register as foreign portfolio investors. It aims to attract more and more foreign capital to the market. 
  21. Capital market regulator Sebi on Wednesday announced a new mechanism to bring out insider trading cases. Under this, those giving information about the insider business will get up to one crore rupees from market regulator SEBI as a reward.
  22. Hotline will be made available for sharing complete information while maintaining privacy. Also, in lieu of cooperation in investigation, provision has been made for forgiveness or disposal of minor irregularities.
  23. The detailed rules for the new information system were approved under the Prevention of Insider Trading (PIT) Regulation at a meeting of SEBI Board of Directors here. 
  24. However, this benefit will be available only to people and companies and professionals like auditors will not get this facility. The reason for keeping professionals out of its scope is that they are accountable for giving information about the mess.
  25. SEBI regulations prohibit insider trading to protect the interests of investors. Insider trading is called a case where securities are traded in securities, while keeping sensitive sensitive information related to price.
  26. Officials said that it is imperative for SEBI to use all legal measures to detect the insider trading and take action as soon as possible to maintain trust and market credibility among investors.
  27. The market regulator faces several challenges in connecting wires and gathering evidence while investigating insider trading cases. Due to this investigation of such cases takes a long time.
  28. As part of its investigation and enforcement of regulations, SEBI has plans to encourage those who have knowledge of insider trading cases and provide relevant information to the regulator. 
  29. In this, it will be mandatory to give information about the source of information and it must be given in writing that it has not received the relevant information from any person working in SEBI or other related regulator. 
  30. SEBI will set up Information Protection Office (OIP) which will be completely separate from the investigation unit or other departments. This office will be responsible for obtaining and processing VIDF. The OIP itself will decide on awarding information givers and will be a mediator between the informers and SEBI. He will set up a hotline to help those who give information.
  31. Under this system, reward will be given to those who give information. Under this, if SEBI manages to find at least one crore rupees wrongly earned, then those who give information will be rewarded. This reward will be 10 percent of the money received and a maximum of one crore rupees.
  32. Apart from this, there has been talk of giving amnesty for minor wrongs in return for cooperation in investigation. Under this, while considering the application given for disposal, cooperation in investigation will be considered while considering the action.
  33. Now it will be mandatory for companies to provide complete information related to loan default or default to rating agencies. This decision has been taken in such a situation when banks cite the confidentiality of their customers and refrain from giving information about delay or default in repayment of loan installments on behalf of companies.
  34. Amid concerns over this, the market regulator announced new rules on Wednesday. There have been many cases of default in loan payments of large companies. Apart from this, the case of Infrastructure Leasing and Financial Services (IL&FS) has also come up. This has also put the credit rating agencies in question. They have failed to detect potential risks to the securities or units rated by the rating agencies.
  35. However, rating agencies have blamed the companies for this and said that they are not provided with complete information about the delay or default in bank loan payments. 
  36. In such a situation, any listed or unlisted entity will have to give full information about their current and future debt and loan repayment delays or defaults before getting ratings. The regulator says that this will give the rating agencies timely information about the possible defaults. 
  37. This move will help the rating agencies to better assess the financial position of the rated units.
  38. The provisions of the rating agreement between the rating agency and its client or issuer of securities are monitored under SEBI (Credit Assessing Agencies) Regulations. This regulation was enacted in 1999.

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