Published by: Mohammad Haris
Latest version: November 26, 2023, 10:24 IST
Sebi on Saturday decided to promote investment through small and medium REITs, enhance investor protection in alternative investment funds (AIFs), provide flexibility for non-profit organizations to raise funds through social stock exchanges and also put in place regulatory frameworks. Framework for Index Providers. These decisions were approved at the board meeting of the Securities and Exchange Board of India (SEBI).
Briefing reporters after the meeting, Sebi Chairperson Madhavi Puri Buch said the objective of small and medium real estate investment trusts (SM REITs) is to help expand the market significantly so that more retail investors can acquire fractional ownership in REIT units. He also said that the regulator is open to developing more such products.
Meanwhile, the regulator has decided to provide more flexibility for non-profit organizations (NPOs) to raise funds through social stock exchanges. For public issuance of Zero Coupon Zero Principal Instruments (ZCZP) by NPOs on the exchange, the minimum issue size will be reduced from Rs 1 crore to Rs 50 lakh and the minimum application size will be reduced from Rs 2 lakh to Rs 10,000.
According to a release issued by SEBI after the board meeting, reducing the application size will enable wider participation by customers, including the retail segment. Also, the name of ‘Social Auditor’ will be changed to ‘Social Impact Evaluator’ to give comfort to NPOs and convey a positive outlook towards the social sector.
The regulator also said that NPOs will be allowed to disclose past social impact reports in fundraising documents as per their existing practice subject to disclosing key parameters such as number of beneficiaries, cost per beneficiary and administrative overhead. According to the release, more NPOs will be eligible for registration and fundraising by issuing and listing ZCZP on the SSE by allowing entities registered under a specific section of the Income Tax Act, 1961.
Among other decisions, a regulatory framework for index providers will be introduced to enhance transparency and accountability in the governance and administration of financial benchmarks in the securities market. Meanwhile, the regulations for index providers will provide a framework for registration of such firms that license ‘significant indices’ to be notified by SEBI based on objective criteria.
Buch said the decision to put in place regulations for index providers was largely driven by increased inflows into passive funds, which have taken off widely in the West. To facilitate compliance and strengthen protection of investors in alternative investment funds (AIFs), according to the regulator, all new investments made by AIFs after September 2024 should be held in demat form.
SEBI has approved amendments to the AIF rules with few exceptions. Also, the guardian appointment order will be extended to all AIFs. Currently, the requirement applies to schemes of Category III AIFs and schemes of Category I and II AIFs with a corpus of more than Rs 500 crore.
In the case of AIFs, the regulator said, “The order of appointment of guardian, currently applicable to schemes of Category III AIFs and schemes of Category I and II AIFs with a corpus of more than Rs 500 crore, will be extended to all AIFs.”
To a query, the SEBI chief said the changes in the listing rules were not taken up by the board as more information was required. “The board suggested seeking more data-driven inputs from the market as the inputs that have come so far have been fragmented. So, we are revisiting the same (proposal) and asking for more data,” Butch noted.
Under the delisting process, SEBI proposed to allow companies to list through a fixed price process instead of the existing reverse book-building process. Regarding the extension of trading hours, Buch said there have been several rounds of discussions with key market intermediaries, including exchanges and clearing corporations and investors.
“There has been no clear opinion as to why the time should be extended. More importantly, the opinion of the broking and investing community is not yet clearly formed,” he said.
(This story has not been edited by News18 staff and appears from a syndicated news agency feed – PTI)
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