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Amendments in Securities Law

Amendments by SEBI in April 2024

1. Scores 2.0 New Technology to Strengthen SEBI Complaint Redressal System for Investors

SEBI vide a Press Release 06/2024 dated April 01, 2024, informed that a new version of the SEBI Complaint Redress System (SCORES 2.0) has been launched to protect the interests of investors in the securities market. SCORES 2.0 strengthens the investor complaint redress mechanism in the securities market by making the process more efficient through auto-routing, auto-escalation, monitoring by the Designated Bodies, and reduction of timelines. The new SCORES system has also been made more user-friendly.

SCORES is an online system where investors in the securities market can lodge their complaints through a web URL and an App. The Website URL for SCORES 2.0 from April 01, 2024 is https://scores.sebi.gov.in

Features of SCORES 2.0:

  1. Reduced and Uniform Timelines for redressal of investor complaints across the Securities Market i.e. 21 Calendar days from the date of receipt of the complaint;
  2. Auto-Routing of Complaints to the concerned regulated entity to eliminate time lapses, if any, in the flow of complaints;
  3. Monitoring of the timely redressal of the Investor’s Complaints by the Designated Bodies;
  4. Providing Two levels of Review:
    • Review by the Designated Body if the investor is dissatisfied with the resolution provided by the concerned regulated entity.
    • Review by SEBI if the investor is still dissatisfied after the first review.
  5. Introduction of Auto-Escalation of Complaint to the next level in case of non-adherence to the prescribed timelines by the regulated entity or the Designated Body as the case may be
  6. Integration with KYC Registration Agency database for easy registration of the investor onto SCORES.

Investors can now lodge new complaints only through SCORES 2.0 from April 01, 2024. However, Investors can check the status of their complaints already lodged and pending in old SCORES. Furthermore, the disposed of complaints filed in the old SCORES can be viewed at SCORES 2.0.

The link to the aforesaid Press Release is as follows:
https://www.sebi.gov.in/media-and-notifications/press-releases/apr-2024/scores-2-0-new-technology-to-strengthen-sebi-complaint-redressal-system-for-investors_82618.html

The link to the Circular issued by BSE is as follows:
https://www.bseindia.com/markets/MarketInfo/DispNewNoticesCirculars.aspx?page=20240408-5

The link to the Circular issued by NSE is as follows:
https://nsearchives.nseindia.com/web/sites/default/files/inline-files/NSE%20Circular.pdf

2. SEBI obtains ISO/IEC 27001:2022 Certification for its Information Security Management Systems

SEBI vide a Press Release 07/2024 dated April 04, 2024, informed that it has successfully obtained the ISO/IEC 27001:2022 certification for the following:

  1. Information Security Management System at the Primary Data Centre,
  2. Security Operations Control (SOC) and Network Operations Control (NOC) Operations and
  3. Information Security Management System at the Disaster Recovery site.

Further stated that the Certification was obtained after rigorous evaluation by the certification body under the accreditation of the National Accreditation Board for Certification Bodies (NABCB), a member of the International Accreditation Forum (IAF). International Organisation for Standardisation (ISO)/ International Electrotechnical Commission (IEC) 27001:2002 is an internationally recognized standard that enables organizations to identify, prevent, and defend potential security vulnerabilities.

The link to the aforesaid Press Release is as follows:
https://www.sebi.gov.in/media-and-notifications/press-releases/apr-2024/sebi-obtains-iso-iec-27001-2022-certification-for-its-information-security-management-systems_82722.html

3. Consultation on Draft Circular - Relaxation in requirement of intimation of changes in the terms of Private Placement Memorandum of AIF( Alternative Investment Funds) through Merchant Banker

In terms of SEBI Master Circular dated July 31, 2023, for Alternative Investment Funds (AIFs), intimation with respect to any change in the terms of the Private Placement Memorandum (PPM) is required to be submitted to SEBI through a merchant banker, along with a due diligence certificate from the merchant banker in a format specified by SEBI.

Such changes in the terms of PPM and the documents of the fund/scheme are required to be intimated to investors and SEBI on a consolidated basis, within 1 month of the end of each financial year.

To facilitate ease of doing business and to rationalize the cost of compliance for AIFs, a proposal has been made that certain changes in terms of PPM may not be required to be submitted through a merchant banker and may be filed directly with SEBI. Accordingly, those changes in the terms of PPM, as mentioned in Annexure A of the Circular, may not be required to be submitted through a merchant banker and may be filed directly with SEBI.

A proposal has also been made that the Large Value Fund for Accredited Investors (LVFs) shall be exempted from the requirement of intimating any changes in the terms of PPM through a merchant banker. LVFs may directly file any changes in the terms of PPM with SEBI, along with a duly signed and stamped undertaking by the CEO of the Manager of the AIF (or a person holding an equivalent role or position depending on the legal structure of the Manager) and the Compliance Officer of Manager of the AIF in a format as specified at Annexure B of the Circular.

The link to the aforesaid Consultation Paper is as follows:
https://www.sebi.gov.in/reports-and-statistics/reports/apr-2024/consultation-on-draft-circular-relaxation-in-requirement-of-intimation-of-changes-in-the-terms-of-private-placement-memorandum-of-alternative-investment-funds-through-merchant-banker_82788.html

4. Standardization of the Private Placement Memorandum (PPM) Audit Report

SEBI vide a Circular SEBI/HO/AFD/SEC-1/P/CIR/2024/22 dated April 18, 2024, standardized the Private Placement Memorandum (PPM) Audit Report.

AIFs are required to submit Annual PPM Audit Reports to the Trustee/Board of Directors/Designated Partners of the AIF, Board of Directors or Designated Partners of the Manager, and SEBI, within 6 months from the end of the Financial Year.

To have uniform compliance standards and for ease of compliance reporting, a standard reporting format for the PPM Audit Report applicable to various categories of AIF has been prepared in consultation with the pilot Standard Setting Forum for AIFs (SFA).

The said reporting format shall be hosted on the websites of the AIF Associations which are part of SFA within 2 working days of issuance of this circular. The associations shall assist all AIFs in understanding the reporting requirements and in clarifying or resolving any issues that may arise in connection with reporting to ensure accurate and timely reporting.

The PPM Audit Reports shall be submitted to SEBI by AIFs online on the SEBI Intermediary Portal (SI Portal) as per the aforesaid format. The reporting requirement shall be applicable for PPM audit reports to be filed for the Financial Year ending March 31, 2024 onwards.

The link to the aforesaid Circular is as follows:
https://www.sebi.gov.in/legal/circulars/apr-2024/standardization-of-the-private-placement-memorandum-ppm-audit-report_82938.html

5. Consultation Paper on “Framework for Price Discovery of Shares of listed Investment Companies & listed Investment Holding Companies”

SEBI on April 19, 2024, placed a consultation paper on the proposal to lay down a framework for price discovery of shares of listed Investment Companies (ICs) & listed Investment Holding Companies (IHCs) whose market price is at a significant discount to book value.

Currently, shares of a few listed ICs or IHCs are getting traded infrequently but at a price that is significantly lower than the book value disclosed by the listed entities in their last audited financial statements. These companies have no day-to-day operations and hold only investments in different asset classes including in other listed companies. It has come to notice that, the variance in the market price and book value of such companies is adversely affecting liquidity, fair price discovery, and the overall interest of investors of such ICs or IHCs.

Proposals:

  1. A special call-auction mechanism without a price band may be enabled for listed ICs and IHCs, whose shares are trading beyond a certain discount to their book value.
  2. Stock Exchanges shall co-ordinate amongst themselves and provide the special call-auction mechanism for such companies.
  3. Criteria for identification of ICs or IHCs eligible for special call-auction.
  4. Once the companies are identified, the stock exchanges shall initiate the process for special call-auction without price band for shares of such company(ies) with a 7-day prior notice.
  5. The special call-auction mechanism may be provided for the ICs or IHCs only once a year.

The link to the aforesaid Consultation Paper is as follows:
https://www.sebi.gov.in/reports-and-statistics/reports/apr-2024/consultation-paper-on-framework-for-price-discovery-of-shares-of-listed-investment-companies-and-listed-investment-holding-companies_82945.html

6. SEBI (Alternative Investment Funds) (Second Amendment) Regulations, 2024

SEBI vide Notification SEBI/LAD-NRO/GN/2024/168 dated April 25, 2024, notified the SEBI (Alternative Investment Funds) (Second Amendment) Regulations, 2024 amending the SEBI (Alternative Investment Funds) Regulations, 2015 (“Original Regulations”).

(a) New definitions of Dissolution Period and Encumbrance are inserted.

“Dissolution Period” means the period following the expiry of the liquidation period of the scheme for the purpose of liquidating the unliquidated investments of the scheme of the Alternative Investment Fund.

“Encumbrance” shall have the same meaning as assigned to it under Chapter V of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.

(b) A new proviso has been inserted in Regulation 16(1)(c) regarding investment conditions for all Category I Alternative Investment Funds (AIF) which reads as follows:

“Category I AIF may create an encumbrance on the equity of the investee company, which is in the business of development, operation, or management of projects in any of the infrastructure sub-sectors listed in the Harmonised Master List of Infrastructure issued by the Central Government, only for the purpose of borrowing by such investee company and subject to such conditions as may be specified by SEBI from time to time.”

(c) A new proviso has been inserted in Regulation 17(c) regarding investment conditions for all Category II AIF which reads as follows:

“Category II AIF may create an encumbrance on equity of the investee company, which is in the business of development, operation, or management of projects in any of the infrastructure sub-sectors listed in the Harmonised Master List of Infrastructure issued by the Central Government, only for the purpose of borrowing by such investee company and subject to such conditions as may be specified by SEBI from time to time.”

 (d) A new sub-regulation 20(20) with respect to General Obligations is inserted which reads as follows:

“Every AIF, Manager of the AIF, and Key Management Personnel of the Manager and the AIF shall exercise specific due diligence, with respect to their investors and investments, to prevent the facilitation of circumvention of such laws, as may be specified by SEBI from time to time.

Laws shall include Acts, Rules, Regulations, Guidelines, or Circulars framed thereunder that are administered by a financial sector regulator, including those administered by the Board.”

(e) New sub-regulations 29(9A) and 29(10) with respect to Winding Up are inserted which read as follows:

“(9A) If the liquidation period for a scheme of an AIF has expired or is expiring within 3 months from the date of notification of the SEBI (Alternative Investment Funds) (Second Amendment) Regulations, 2024, such schemes may be granted an additional liquidation period, subject to such conditions and in the manner as may be specified by SEBI:

 Provided that the additional liquidation period granted under sub-regulation (9A) shall be without prejudice to the issuance of any direction or measures in accordance with the provision of the Act and regulations framed thereunder.

 (10) If the scheme of an AIF enters into a dissolution period as provided under regulation 29B and the unliquidated investments of the scheme are not sold by the expiry of the dissolution period, such investments shall be mandatorily distributed in-specie to the investors, in the manner as may be specified by SEBI.”

 (f) New sub-regulations 29A(8) with respect to Liquidation Scheme is inserted which reads as follows:

“No AIF shall launch any new liquidation scheme under this regulation after the notification of SEBI (Alternative Investment Funds) (Second Amendment) Regulations, 2024:

Provided that any liquidation scheme launched by an AIF before the notification of SEBI (Alternative Investment Funds) (Second Amendment) Regulations, 2024 shall continue to be governed by regulation 29A and the other provisions of these regulations till such schemes are wound up.”

 (g) New sub-regulations 29B with respect to the Dissolution Period is inserted which reads as follows:

“(1) A scheme of an AIF may enter into a dissolution period in the manner and subject to such conditions as may be specified by SEBI.

(2) The scheme entering into a dissolution period shall file an information memorandum with SEBI through a merchant banker in the manner as may be specified by SEBI.

(3) The dissolution period of a scheme of an AIF shall not be more than the original tenure of the scheme and shall not be extended in any manner upon expiry of the dissolution period.

(4) The scheme of the AIF shall not accept any fresh commitment from any investor and shall not make any new investment during the dissolution period.”

 The link to the aforesaid Notification is as follows:
https://egazette.gov.in/(S(civj0ga1wyv5jon2sdwv2f5z))/ViewPDF.aspx

7. Flexibility to Alternative Investment Funds (AIFs) and their investors to deal with unliquidated investments of their schemes

SEBI earlier notified SEBI (Alternative Investment Funds) (Second Amendment) Regulations, 2024, to provide flexibility to AIFs and investors to deal with unliquidated investments of their schemes.

SEBI vide Circular SEBI/HO/AFD/PoD-I/P/CIR/2024/026 dated April 26, 2024, has now allowed one-time flexibility to AIF schemes whose liquidation period has expired to deal with unliquidated investments.

The Circular states the following:

  1. Dissolution Period
  2. Mandatory in-specie distribution of unliquidated investments
  3. One-time flexibility to schemes of AIFs whose Liquidation Period has expired, to deal with unliquidated investments
  4. Responsibility for compliance is with the manager, trustee, and key management personnel of AIF and manager
  5. Discontinuation of the option of launching Liquidation Scheme

The link to the aforesaid Circular is as follows:
https://www.sebi.gov.in/legal/circulars/apr-2024/flexibility-to-alternative-investment-funds-aifs-and-their-investors-to-deal-with-unliquidated-investments-of-their-schemes_83065.html

8. Framework for Category I and II Alternative Investment Funds (AIFs) to create an encumbrance on their holding of equity of investee companies

SEBI vide Circular SEBI/HO/AFD/PoD1/CIR/2024/027 dated April 26, 2024, issued a Framework to provide ease of doing business and flexibility to Category I and II AIFs to create an encumbrance on their holding of equity in investee companies to facilitate the raising of debt by such investee companies.

The Framework talks about the following:

  1. Existing schemes of Category I or II AIFs who have not on-boarded any investors prior to April 25, 2024, may create an encumbrance on equity of the investee company for borrowing of the said investee company, subject to explicit disclosure with respect to the creation of such encumbrance in this regard and disclosure of associated risks in their Private Placement Memorandums (PPMs).
  2. Any encumbrances already created by a scheme of Category I or II AIF prior to April 25, 2024, on the securities of the investee company to borrow from such investee company, may continue if such encumbrances were created after making an explicit disclosure in the PPM of the scheme.
  3. Category I or II AIFs shall ensure that the borrowings made by the investee company against the equity investments encumbered by the AIFs are utilized only for the purpose of development, operation, or management of the investee company, and not utilized otherwise including to invest in another company. The aforesaid limitation on the usage of borrowing shall be included as one of the terms of the investment agreement entered between the AIF and the investee company.
  4. The duration of encumbrance created on the equity investments shall not be greater than the residual tenure of the scheme of the Category I or II AIFs.
  5. In case of default by the borrower investee company, Category I or II AIF shall ensure that the fund or its investors are not subject to any liability over and above the equity of the borrower investee company encumbered by the AIF.
  6. The flexibility of creating encumbrance on equity investment shall not be interpreted as allowing schemes of Category I and II AIFs to extend any form of guarantee for the investee company.
  7. Schemes of Category I or Category II AIFs shall not create an encumbrance on their investments in foreign investee companies.

The link to the aforesaid Circular is as follows:
https://www.sebi.gov.in/legal/circulars/apr-2024/framework-for-category-i-and-ii-alternative-investment-funds-aifs-to-create-encumbrance-on-their-holding-of-equity-of-investee-companies_83067.html

9. Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) (Amendment) Regulations, 2024

SEBI vide Notification SEBI/LAD-NRO/GN/2024/171 dated April 26, 2024 notified the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) (Amendment) Regulations, 2024. A new Regulation 38A with respect to the Administration of specified intermediaries has been inserted as follows:

“Notwithstanding anything contained in these regulations, with the approval of SEBI, the activities of administration and supervision over specified intermediaries may be carried out by a recognized stock exchange on such terms and conditions and to such an extent as may be specified.”

The link to the aforesaid Notification is as follows:
https://egazette.gov.in/(S(jehqd0b0kq2tgmmtm4gzaddw))/ViewPDF.aspx

10. SEBI (Research Analysts) (Amendment) Regulations, 2024

SEBI vide Notification SEBI/LAD-NRO/GN/2024/170 dated April 26, 2024, notified the SEBI (Research Analysts) (Amendment) Regulations, 2024 to further amend SEBI (Research Analysts) Regulations, 2014 (“the Original Regulations”).

The following amendments are made to the Original Regulations:

A new sub-regulation 6(xi) with respect to the consideration of application and eligibility criteria is inserted which reads as follows:

“(xi) whether the applicant is enlisted with a body or body corporate recognized under regulation 14:

 Provided that the existing research analysts and research entities shall be deemed to be enlisted with such a body or body corporate from the date of recognition of such a body or body corporate:

 Provided further that the applicant whose application is received before the date of recognition of the body or body corporate as provided under regulation 14 and who is granted the certificate after the date of recognition of such body or body corporate shall also be deemed to be enlisted with such a body or body corporate.”

Regulation 14 with respect to the recognition of body or body corporate for regulation of research analysts is substituted as follows:

“(1) The Board may recognize a body or body corporate for administration and supervision of research analysts to such extent and on such terms and conditions as may be specified by SEBI.

(2) SEBI may specify that no person shall act as a research analyst unless such a person is enlisted with the recognized body or body corporate and in such an event, the provisions of these regulations and the specified provisions of the bye-laws or articles of such a body or body corporate shall apply to the research analyst.”

Schedule II with respect to Fees payable by the Applicant on application and registration and by the Research Analyst to keep his registration in force is substituted as specified in the Notification.

The link to the aforesaid Notification is as follows:
https://egazette.gov.in/(S(tzgtbmpimhzvb5c2sfi3dj24))/ViewPDF.aspx

11. SEBI (Investment Advisers) (Amendment) Regulations, 2024

SEBI vide Notification SEBI/LAD-NRO/GN/2024/169 dated April 26, 2024, notified the SEBI (Investment Advisers) (Amendment) Regulations, 2024. They shall come into force with effect from July 24, 2024.

Regulation 6(n) with respect to matters relevant to the grant of Certificate of Registration which includes applicants enlisted with a body or body corporate has been replaced as follows:

 “Whether the applicant is enlisted with a body or body corporate recognized under regulation 14:

 Provided that the existing investment advisers shall be deemed to be enlisted with such a body or body corporate from the date of recognition of such body or body corporate.

Provided further that the applicant whose application is received before the date of recognition of the body or body corporate as provided under regulation 14 and who is granted the certificate after the date of recognition of such body or body corporate shall also be deemed to be enlisted with such a body or body corporate.”

Regulation 14 with respect to recognition of body or body corporate for regulation of investment advisers has been replaced as follows:

 “(1) The Board may recognize a body or body corporate for the purpose of administration and supervision of investment advisers to such extent and on such terms and conditions as may be specified by the Board.

 (2) The Board may specify that no person shall act as an investment adviser unless such a person is enlisted with the recognized body or body corporate and in such an event, the provisions of these regulations and the specified provisions of the bye-laws or articles of such a body or body corporate shall apply to the investment adviser.”

A new Regulation 30A with respect to Savings has been inserted as follows:

“Prior to the commencement of SEBI (Investment Advisers) (Amendment) Regulations, 2024, any action taken or purported to have been taken or any action that may be taken against any person in relation to the membership of the body or body corporate recognized under regulation 14 shall be deemed to have been done or taken or may be taken under the corresponding provisions of these regulations.”

The link to the aforesaid Notification is as follows:
https://egazette.gov.in/(S(jehqd0b0kq2tgmmtm4gzaddw))/ViewPDF.aspx

12. Relaxation in requirement of intimation of changes in the terms of Private Placement Memorandum (PPM) of Alternative Investment Funds (AIF) through Merchant Banker

SEBI vide a Circular SEBI/HO/AFD/PoD/CIR/2024/028 dated April 29, 2024, relaxed the requirement of intimation of changes in the terms of PPM of AIFs through Merchant Banker.

The requirement to submit changes in the terms of the PPM through a merchant banker has been waived. Companies can now file these changes directly with SEBI.

Large Value Funds for Accredited Investors (LVFs) are exempt from the obligation to notify changes in terms of PPM through a merchant banker. Instead, LVFs can directly submit any changes in terms of the PPM to SEBI.

This submission must include a signed and stamped undertaking by the CEO of the AIF Manager (or equivalent role) and the Compliance Officer of the AIF Manager.

The link to the aforesaid Circular is as follows:
https://www.sebi.gov.in/legal/circulars/apr-2024/relaxation-in-requirement-of-intimation-of-changes-in-the-terms-of-private-placement-memorandum-of-alternative-investment-funds-through-merchant-banker_83091.html

13. Master Circular for Listed Companies

NSE vide Circular NSE/CML/2024/10 and BSE vide Notice 20240430-5 dated April 29, 2024, issued a Master Circular for all Listed Companies to enable them to have access to the applicable circulars in one place and to facilitate the Listed Companies to comply with the regulatory requirements, the Exchange has prepared a Master circular for Listed Companies.

Listed Companies are hereby informed that the Master Circular consists of Two parts:

Annexure A: Details of Relevant circulars/guidelines relating to Listing Approvals i.e. Initial Public Offer (IPO), Further Issues, Scheme of arrangement, Debt Listing, Social Stock Exchange, etc.

Annexure B: Details of Relevant circulars/guidelines relating to Listing Compliance i.e. Listing Regulations (Equity and Debt), SAST and PIT

This Master Circular is a compilation of relevant and updated circulars/guidelines issued by the Exchange on April 29, 2024, and which are operational as of the date of this circular. With the issuance of this Master Circular, the circulars/guidelines contained in the circulars listed out in the respective annexures to this Master Circular shall stand rescinded.

The link to the aforesaid NSE Circular is as follows:
https://www.nseindia.com/companies-listing/circular-for-listed-companies-equity-market

The link to the aforesaid BSE Notice is as follows:
https://www.bseindia.com/markets/MarketInfo/DispNewNoticesCirculars.aspx?page=20240430-5

14. SEBI Board Meeting

The SEBI Board met on April 30, 2024, where it, inter-alia, approved the following:

a. Amendments to SEBI (Infrastructure Investment Trusts) Regulations, 2014 and SEBI (Real Estate Investment Trusts) Regulations, 2014 to provide a framework for Unit Based Employee Benefit (UBEB) Scheme:

SEBI approved the proposal to provide a framework for UBEB Schemes for the employees of the investment manager/manager of InvIT/REIT.  The investment manager/manager may receive the units of InvIT/REIT in lieu of management fees, to provide unit-based employee benefits. Such units shall be allotted directly to the Employee Benefit Trust so that these units are used exclusively for the UBEB scheme.

b. Flexibility to Venture Capital Funds (VCF), registered under the erstwhile SEBI (Venture Capital Regulations), 1996 (‘VCF Regulations’), to deal with unliquidated  investments  of  their  schemes  upon  expiry  of  tenure  by opting to migrate into SEBI (Alternative Investment Funds) Regulations, 2012 (‘AIF Regulations’)

To address the issues faced by VCFs registered under the erstwhile VCF Regulations concerning their inability to fully liquidate the investments of their schemes within the tenure of the scheme, SEBI has approved a proposal to provide an option to such VCFs to migrate into AIF Regulations and avail the facilities available for AIFs to deal with unliquidated investments. The option to migrate shall be available for 12 months from the date of notification of amendment to AIF Regulations in this regard.

Salient features of the framework are as under:

  • There will be a separate sub-category under Category I AIF -VCFs called as “Migrated VCFs”.
  • VCFs registered under the erstwhile VCF Regulations may opt to register themselves as Migrated VCFs. No application fee or registration fee will be levied for the same. Migrated VCFs shall not be subject to any additional investment conditions that did not apply to them under the erstwhile VCF Regulations.
  • Migrated VCFs can avail the flexibilities under AIF Regulations with respect to the extension of tenure, liquidation period, and Dissolution Period, to deal with unliquidated investments.
  • Schemes of VCFs whose tenure has expired and opt for migration shall be provided an additional year for the liquidation, as long as they do not have any investor complaint about non-receipt of funds or securities.

c. Amendments to SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021 to modify provisions relating to disclosure of financial results in the offer documents, record date, due-diligence certificate, and reduction in the face value of debt securities and Non-convertible Redeemable Preference Shares

  • Facilitating listed entities to disclose audited financials for the last 3 years in the offer document through the insertion of a web link and QR code of the stock exchange website, where such financials are hosted
  • Standardization of record date for identifying eligible holders to pay interest (or dividend)/ repay the principal of debt securities/ non-convertible redeemable preference shares which shall be 15 days prior to the due date of such payment.
  • Alignment of the formats specified under SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021 in line with that specified in the Master Circular for Debenture Trustees
  • Reduction in the denomination of face value to Rs.10,000/- for privately placed debt securities (NCDs) and Non-Convertible Redeemable Preference Shares (NCRPS) at the option of the Issuer, subject to the appointment of the Merchant Banker.

d. Amendments to SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 for providing flexibility regarding the publication of financial results in newspapers for entities that have listed only Non-Convertible Securities

The above option can be exercised by the issuers as under:

  • For outstanding non-convertible securities, the listed entity shall obtain prior approval of the Debenture Trustee.
  • For future issuances, the listed entity has to either make a disclosure in the offer document or obtain prior approval from the Debenture Trustee.

e. Flexibility for increased participation by Non-Resident Indians (NRIs), Overseas Citizens of India (OCIs), and Resident Indian (RIs) individuals in SEBI registered Foreign Portfolio Investors (FPIs) based out of International Financial Services Centres (IFSCs) in India and regulated by the International Financial Services Centres Authority (IFSCA)

SEBI approved a regulatory framework for providing flexibility for increased contribution by NRIs, OCIs, and RI Individuals, in the corpus of certain FPIs based out of IFSCs in India and regulated by IFSCA. The flexibility for such increased participation shall be subject to certain conditions to manage regulatory risk.

f. Streamlining of prudential norms for passive schemes with respect to exposure to securities of group companies of the sponsor to facilitate a level playing field for mutual funds

SEBI approved the amendment to SEBI (Mutual Funds) Regulations, 1996 allowing equity passive schemes, on indices as specified by SEBI, to take exposure up to the weightage of the constituents in the underlying index. This exposure would, however, be subject to an overall cap of 35% investment in the group companies of the Sponsor.

g. AMCs to have structured institutional mechanisms for identification and deterrence of potential market abuse including front-running and fraudulent transactions in securities

SEBI approved amendments to:

  • enhance responsibility and accountability of the management of AMCs for institutional mechanism; and
  • foster transparency by requiring the AMCs to have a whistle-blower mechanism.

h. Ease of Doing Business for Market Infrastructure Institutions (MIIs)

To ease compliance requirements and remove redundant provisions applicable to MIIs, under the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018, SEBI approved the proposal that the MIIs disclose their shareholding pattern in the format applicable to listed companies and no longer additionally require to disclose it in a separate format.

Other decisions related to ease of doing business like issuance of Consolidated Account Statement in electronic form by default, rationalization of inspection period of commodity warehouses, etc. will be issued by way of circular(s).

The link to the aforesaid Press Release is as follows:
https://www.sebi.gov.in/media-and-notifications/press-releases/apr-2024/sebi-board-meeting_83115.html

15. Ease of doing business- Fund manager for Mutual fund schemes investing in commodities and overseas securities

SEBI vide a Circular SEBI/HO/IMD/IMD-PoD-2/P/CIR/2024/30 dated April 30, 2024, amended its Master Circular for Mutual Funds dated May 19, 2023, as follows to promote ease of doing business for mutual funds.

The Circular states that:
For commodity-based funds such as Gold ETFs, Silver ETFs, and other funds participating in the commodities market, the appointment of a dedicated fund manager shall be optional. However, the person appointed as fund manager of such funds should have adequate expertise and experience to manage investments in the commodities market. Further, the appointment of a dedicated fund manager for making overseas investments shall be optional. However, the person appointed as fund manager of such funds should have adequate expertise and experience to manage investments in overseas securities. The Board of the AMCs shall be responsible for ensuring compliance and reporting regarding the same to trustees, periodically.

The link to the aforesaid Circular is as follows:
https://www.sebi.gov.in/legal/circulars/apr-2024/ease-of-doing-business-fund-manager-for-mutual-fund-schemes-investing-in-commodities-and-overseas-securities-_83120.html

16. Nomination for Mutual Fund Unit Holders– exemption for jointly held folios

SEBI vide a Circular SEBI/HO/IMD/IMD-PoD-1/P/CIR/2024/29 dated April 30, 2024, provided exemption from the requirement of nomination to jointly held mutual fund unit holders.

Clause 17.16 of Master Circular No. SEBI/HO/IMD/IMD-PoD-1/P/CIR/2023/74 dated May 19, 2023, for Mutual Funds (‘Master Circular’) read with Circular dated September 27, 2023 and December 27, 2023, inter alia, prescribes the requirement for nomination/opting out of nomination for all the existing individual unit holder(s) holding Mutual Fund units either solely or jointly, by June 30, 2024, failing which the folios shall be frozen for debits.

To simplify, ease, and reduce the cost of compliance, it is provided that the requirement of nomination specified above for Mutual Funds shall be optional for jointly held Mutual Fund folios.

All other provisions related to the requirement of nomination as provided in aforesaid SEBI Circulars shall remain unchanged.

The link to the aforesaid Circular is as follows:
https://www.sebi.gov.in/legal/circulars/apr-2024/nomination-for-mutual-fund-unitholders-exemption-for-jointly-held-folios_83122.html

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