Sebi board rejigs rules on returns | Jobs Vox


As it works to create a fairer process for shareholders, the country’s market regulator will phase out share buybacks on the stock exchange by April 2025.

The Securities and Exchange Board of India (SEBI) will set up a separate window on the stock exchanges to carry out purchases until then. The regulator has raised the minimum leverage allocated to buybacks through the stock exchange from 50 per cent to 75 per cent.

“These reforms are aimed at facilitating the return process, creating a level playing field for investors and promoting ease of doing business,” Sebi Chairman Madhabi Puri Buch told reporters after the board meeting on Tuesday.

Sebi is reviewing several regulations and strengthening corporate governance norms as fraud and initial public offerings that hurt minority shareholders are on the rise.

The regulator has reduced the time for completion of buybacks through the auction line by 18 days. Sebi said the requirement to file the offer draft letter with the administrator will be removed, saving time for listed firms. “Over time, more and more companies are resorting to the tender offer route. Arguably, this is a fairer route and allows all shareholders to participate,” said Yash J., partner and head of capital markets at Cyril Amarchand Mangaldas law firm.

Sebi also approved the recommendations of a task force to improve governance standards on exchanges – new rules include increased accountability of directors, stricter investment policy and information sharing.

The SEBI Board has approved proposals designed to improve governance in market infrastructure institutions including stock exchanges, clearing corporations and depositories. These recommendations are particularly significant in light of the past failures and controversies related to the National Stock Market and the Multi Commodity Market (MCC).

According to Mr. Sebi, the activities of market infrastructure institutions should be divided into three important events. regulatory, compliance and risk management; and other activities, including business development. In the first two categories, key management personnel responsible for operations should have the same level of authority as those responsible for the third category, he said.

Regarding board management, he said the process of appointing Public Interest Directors (PIDs) will be streamlined by associating specific skills and knowledge with the PIDs. The regulator announced that an internal evaluation of the performance of market infrastructure institutions and their legal committees will be conducted every year.

He said that the agendas and minutes of the Board of Directors of the Market Infrastructure Institute should be disclosed on the websites in relation to the issues of control, compliance and risk management.

Sebi has approved the proposal to create execution-only platforms like Paytm and Groww for direct sale of mutual funds. Previously, there was no clear regulatory framework for performance-only platforms.

The framework of execution-only platforms aims to provide investors with greater convenience in investing.

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