While elaborating on the decisions taken by the regulator in a press conference, SEBI Chairperson Madhabi Puri Buch also responded to questions raised on the Adani Group issue.
Here are the major takeaways for Dalal Street from the announcements by SEBI:
Adani Issue
Buch said it would not be appropriate to comment on a single entity especially when the matter is subjudice, and that it will submit an investigation report on the issues surrounding the group to the Supreme Court.
Disclosure Norms
* SEBI is introducing a quantitative threshold for determining ‘materiality’ of events or information.
* Within 30 minutes of the board meeting, a listed entity must disclose “material information” from the meeting, and all the material information within 12 hours
* With effect from October 1, 2023, the top 100 listed companies by market capitalization must provide clarification and confirmation on market rumours. For the top 250 listed entities, the rule will be applicable from April 1, 2024.
* Periodic approval of shareholders required for any director serving on the board of a listed entity in order to do away with the practice of permanent board seats.
* Companies must fill up the vacancy of directors, compliance officer, chief executive officer and chief financial officer within a period of 3 months from the date of such vacancy
Mutual Funds
* SEBI to amend mutual fund regulations to provide clarity on the roles and responsibilities of Trustees and board of asset management companies.
* SEBI allows private equity funds as sponsors of mutual funds. This is aimed at giving greater flexibility to the industry and enabling a diverse set of entities to become sponsors of MFs
Corporate Debt Market
* SEBI to set up “Corporate Debt Market Development Fund” (CDMDF) to act as a “backstop” facility to purchase investment grade corporate debt securities in times of stress
* CDMDF, based on a guarantee to be provided by National Credit Guarantee Trust Company (NCGTC), may raise funds to purchase corporate debt securities during market dislocation.
* SEBI has also extended the period of compliance for Large Corporates to raise 25% of their incremental borrowings through the debt market to a contiguous block of 3 years instead of the current 2 years
* SEBI has extended the ‘comply or explain’ period for High Value Debt Listed Entities (HVDLEs) with respect to corporate governance norms till March 31, 2024
ESG disclosures, ratings, investments
* On Environment Social and Governance (ESG) disclosures, SEBI has mandated introduction of BRSR (Business Responsibility and Sustainability Report) Core to enhance the reliability of disclosures.
*. The BRSR will contain a limited set of Key Performance Indicators (KPIs), for which listed entities will be required to obtain “reasonable assurance”.
* ESG Rating Providers (ERPs) will be required to consider India/emerging market parameters in ESG ratings considering that emerging markets have a different set of environmental and social challenges
* ESG schemes will be required to invest at least 65% of AUM in listed entities, where assurance on BRSR Core is undertaken
Stock Broker Regulations
* Introduction of a framework to provide for an institutional mechanism for prevention and detection of fraud or market abuse by stock brokers
* The approved amendments will come into effect from October 1, 2023
Regulatory Framework for Index Providers
* SEBI to regulate Index Providers to foster transparency and accountability in governance and administration of financial benchmarks in the securities market
* Providers of all indices that are used in India, including MSCI, will fall under SEBI norms
Alternative Investment Funds
* SEBI will provide guidance to Alternative Investment Funds (AIFs) towards a consistent and standardised approach for valuation of their investment portfolios
* To protect investors against operational risks and fraud, SEBI has mandated AIFs to dematerialise all units for all new schemes and existing schemes with a corpus of more than Rs 500 crore by October 31
* Existing schemes of AIFs with corpus less than Rs 500 crore shall dematerialise their units by April 30, 2024
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
