Sebi sets up three panels to push market reforms, ease of doing business

Experts to advise changes to framework around FPI, takeover code and social stock exchanges

The Securities and Exchange Board of India (Sebi) has set up three separate committees in a fresh push towards reforming the capital markets and improving ease of doing business. All three committees will be widely represented by various stakeholders and touch upon key areas such as foreign portfolio investors (FPIs), takeover code and the newly-introduced concept of social stock exchanges.

The 16-member FPI Advisory Committee (FAC) will be chaired by Hasmukh Adhia, Former Finance Secretary. It will also include H R Khan, former deputy governor, RBI and R Subramanian, Executive Director, RBI. The FAC will advise on issues pertaining to investments and operations of FPIs in the Indian financial markets. It will review investment avenues available for FPIs and advise on feasibility of new investment avenues, apart from suggesting measures to encourage FPI participation in the bond market. It will also suggest measures for simplification of FPI regulations and legal framework to enhance transparency.

FPI investments are pivotal for the development of the domestic capital markets.

The move to appoint an FPI committee comes at a time when the Indian markets have seen record outflows by overseas investors. Also, FPIs have been at odds with the regulator over the shift to a shorter T+1 trade settlement cycle.

The 20-member committee on Review of Takeover Regulations will be headed by retired Justice Shiavax Jal Vazifdar. It will have representation from industry bodies CII, Ficci and AIBI, along with stock exchanges and law firms.  

The committee will advise on issues related to substantial acquisition of shares and takeovers. "It will also review the extant provisions of takeover regulations in light of past judicial pronouncements and various informal guidance issued by Sebi till date,” the regulator said.

The expert group will advise Sebi on the legal framework for simplification and strengthening of the takeover regulations by adopting appropriate global practices.

Takeover regulations are crucial for boosting mergers and acquisitions in the country. The committee's review comes at a time when the Indian market has seen an advent of new-age companies without any ‘promoters'. Also, there is a need felt to look at what constitutes ‘control’ at listed firms.

Lastly, the social stock exchange (SSEs) advisory committee will be headed by R Balasubramaniam, Chairman, Grassroots Research and Advocacy Movement (Graam) and will have 17 other members, including Amit Chandra, Chairman, Bain Capital and Jyotsna Sitling, Principal Chief Conservator, Forests, Government of India.

The expert group will advise Sebi on issues pertaining to the regulatory framework for social enterprises. It will advise on the matters to be taken up for changes in the legal framework for simplification and transparency in systems governing social enterprises, and on the regulation of intermediaries for ensuring investor protection with respect to SSEs.

A social stock exchange provides an avenue for NGOs and other social enterprises to raise funds for a noble cause. The market regulator had notified the rules on SSEs only in July. Last month, BSE obtained approval to set up an SSE as a separate segment.