INSUBCONTINENT EXCLUSIVE:
Markets regulator Sebi will discuss a slew of measures at its board meeting Wednesday for expanding its offer for sale framework to more
companies, relax its norms for clubbing of investment limits by established foreign investors and tighten insider trading rules, officials
A number of other important matters will also be discussed such as relaxations for new-age ventures in sectors like e-commerce, data
analytics and bio-technology to raise funds and get the shares of these new-age ventures traded on stock exchanges and creating a separate
category of 'difficult to recover' cases for optimal utilisation of its resources, they added
These proposals, along with several others, are likely to be discussed by Sebi's board at its meeting Wednesday
Officials said, the Securities and Exchange Board of India (Sebi) is also considering changes in its regulatory framework for debenture
Besides, it plans to allow custodial services in the commodity derivatives market to enable institutional participation
Another proposal involves enabling mutual funds to undertake 's ide pocketing' of debt and money market instruments in case of a credit
event while ensuring fair treatment to all unit holders
'Side pocketing' is a mechanism to separate distressed, illiquid and hard-to-value assets from other more liquid assets in a portfolio
It prevents the distressed assets from damaging the returns generated from more liquid and better-performing assets
As per one proposal to amend the insider trading norms, entities belonging to promoter group will need to make initial and continuous
disclosure about their shareholdings and the subsequent share transactions exceeding Rs 10 lakh
Currently, such disclosure requirements are mandatory for promoters, key management personnel and directors of a company, but there is no
obligation on entities belonging to promoter groups
Officials said, Sebi is also of the view that an earlier proposed exercise for determining a uniform bond valuation methodology to be
followed by all regulated entities across the financial sector may not be pursued
Such an exercise was suggested by a Working Group on Development of Corporate Bond market in India, chaired by H R Khan
However, Sebi will prescribe high-level principles to be followed uniformly across all mutual funds for strengthening the existing system
of valuation of corporate bonds for mutual funds
Regarding the pricing agencies, Sebi plans to evolve a supervisory and regulatory framework
In another key proposal, Sebi plans to relax is the norms for clubbing of investment limits for FPIs, officials said
Currently, the foreign portfolio investors are treated as part of the same investor group and the investment limits of all such entities
are clubbed for deriving the investment limit as applicable to a single FPI, in case of the same set of ultimate beneficial owners investing
through multiple entities
Under the proposed norm, multiple entities having common ownership, directly or indirectly, of more than 50 per cent would be treated as
part of the same investor group and their investment limits would be clubbed
Besides, the clubbing of investment limit would not be applicable in case of entities having common control, if the FPIs are appropriately
regulated public retail funds
Public retail funds typically include insurance companies, pension funds and mutual funds or unit trusts that are open for retail
Regarding the changes in the OFS framework, officials said the proposed changes have been formulated as per suggestions from the Department
of Investment and Public Asset Management (DIPAM) and other stakeholders
The OFS norms will be eased to allow this mechanism for all companies with market cap of Rs 1,000 crore and above, as against a current
limit of top 200 companies
Also, if the seller fails to get sufficient demand from non-retail investors at or above the floor price on the first day of offer, then
the seller may choose to cancel the officer post bidding in full (both retail and non-retail) on the first day itself and not proceed with
the offer to retail investors on the second day
Among other proposals, Sebi is looking at changes in norms requiring the filing of a fresh offer document in case of an OFS where there is
a change in the number of shares offered for sale or the estimated issue size by more than 50 per cent
Besides, norms would be eased for allocation in the net offer in fixed price issues in the SME segment
Also, housing finance companies and systemically important NBFCs may be exempted from disclosure of increase or decrease in shareholding
due to encumbrance or release of the encumbrance of shares
A similar exemption already available to scheduled commercial banks and public financial institutions
With regard to startups, the board will discuss renaming the 'Institutional Trading Platform' that the regulator had created for such
listings as 'Innovators Growth Platform', they said
It has been proposed that 25 per cent of pre-issue capital for at least two years should be with qualified institutional investors, a
family trust with networth of at least Rs 500 crore, well-regulated foreign investors and a new class of 'accredited investors'
The AIs can be an individual with a total gross income of Rs 50 lakh per annum and minimum liquid networth of Rs 5 crore, or any body
corporate with a net worth of Rs 25 crore, and they can hold up to 10 per cent stake before listing
The regulator is planning to create a separate category of 'difficult to recover' cases for optimal utilisation of its resources
However, Sebi can initiate or continue its prosecution proceedings against the defaulters even after such a segregation and recovery
procedure can be reopened in case there is any change in prevailing parameters regarding the defaulter, officials said
