SEBI

Key Highlights of the SEBI Board Meeting (SEBI Press Release Dated 25 March 2021)

The Securities and Exchange Board of India met in Mumbai to conduct its board meeting, and the board took some major decisions and approved a variety of proposals. Those members of the board who were out of station took part in the meeting through video conferencing. In this article, we shall look at some of the significant decisions taken by the board in the SEBI board meeting.

Major Decisions taken in the SEBI Board Meeting

Some of the decisions include the following:

Review of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015

The SEBI board approved a variety of amendments to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, which covers the requirement for formulation of dividend distribution policy to 1000 top listed companies based on market capitalization.

Where the board meeting is held for more than a day, financial results should be disclosed by the listed entities within 30 minutes after the end of the board meeting for the day wherein the financial results are considered.

The timeline for periodic reports submission viz. Statement of the investor complaints, corporate governance report, and shareholding pattern would be harmonized to 21 days from the end of each quarter.

The need to constitute a risk management committee is extended to the top 1000 listed entities by market capitalization from the extant top 500 listed entities.

Review of the SEBI (Delisting of Equity Shares) Regulations, 2009

The SEBI board approved many amendments in the SEBI Board meeting to the SEBI (Delisting of Equity Shares) Regulations, 2009^[1] with a view to make the delisting process more transparent and efficient that covers that promoter/acquirer would be needed to disclose their intent to delist the company by making an initial public announcement.

 The committee of independent directors are needed to provide their reasoned recommendations on the delisting proposal. Further, the timelines for completion of different activities forming part of the delisting process is introduced/revised to make the process increasingly efficient. The role of merchant banker involved in the process of delisting has been elaborated.

Review of framework of Innovators growth platform

The SEBI board has approved numerous changes to the framework for the listing on the Innovators growth platform under SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, with an objective to make the platform increasingly accessible to companies due to the evolving start-up system. 

In the SEBI Board meeting, the board decided to reduce the period of holding of 25% pre-issue capital of issuer company by eligible investors to one year from two years.

Present Innovators growth platform provisions don’t permit the issuer company to make discretionary allotment. In the board meeting, it was decided to permit issuer company to allocate up to 60% of the issue size on discretionary basis before issue opening to eligible investors with a lock-in of 30 days on such shares.

Business Responsibility and Sustainability Reporting (BRSR) by listed entities

SEBI has introduced new requirements for sustainability reporting by listed entities. The new reporting shall be called the Business Reporting, and Sustainability Report would replace the existing Business Responsibility report.

It may be noted that the Business Reporting and Sustainability Report shall be applicable to top 1000 listed entities (by market-capitalization) for reporting on voluntary basis for the Financial Year 2021-22 and on a mandatory basis from Financial Year 2022-23.

The Business Reporting and Sustainability Report lays emphasis on quantifiable metrics that permits easy measurement and comparability across companies, sectors, and time periods. 

The new reporting requirements are expected to bring about increased transparency.

Amendment to SEBI (Alternative Investments Funds) Regulations, 2012

The SEBI board has approved amendments in SEBI (Alternative Investments Funds) Regulations, 2012, which covers the removal of restricted activities or sectors from the definition of Venture Capital Undertaking in order to give flexibility to Venture Capital Funds that are registered under Category I Alternative Investment Funds in making investments; providing the start-up definition; allow Alternative Investment Funds including fund of Alternative Investment Funds to simultaneously invest in units of other Alternative Investment Funds; prescribe a code of conduct for Alternative Investment Fund, etc.

Review of the Regulatory Framework for reclassification of promoter/promoter group entities

The SEBI board approved proposal to rationalize the extant framework relating to the reclassification of promoter/promoter group entities. It has been decided, in the SEBI board meeting, to reduce the time gap between the board meeting date and shareholders meeting for consideration of reclassification request to minimum 1 month and maximum 3 months period from the existing requirement of minimum 3 months and maximum 6 months.

Purpose of the Decisions made by SEBI in the SEBI Board Meeting

The proposals of SEBI  basically aims to simplify operations and reporting in the capital market and also ease listing guidelines for budding start ups and improve transparency for decision making of the investors.

Further, amendment in the fund regime such as Alternative Investment Fund and Portfolio managers is expected to increase investor confidence and provide avenues to explore investments by those fund regime that are established with onerous conditions imposed for transparency and operations.  

Conclusion

The SEBI board has also approved the amendment to SEBI (Portfolio Managers) Regulations, 2020, mandating portfolio managers to get prior approval from SEBI for change in control. Moreover, in a bid to encourage digital payments, it has also approved proposal for intermediaries to pay fees only via online payment gateway and do away with physical mode of payment.  It may be noted that the aforementioned proposals are approved in the SEBI board meeting; however, it would be applicable when it is notified separately for each amendment by SEBI.

Read our article:SEBI Review on Independent Directors

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