Sebi to tweak ICDR, MF and other rules

Move to rationalise existing rules in line with new FPI norms

The Securities and Exchange Board of India (Sebi) is set to tweak a number of existing regulations to bring those in line with the new Foreign Portfolio Investors (FPI) regime, the new unified framework for foreign portfolio investment into India.

There are at least five sets of regulations which will require changes to reflect the change from the foreign institutional investor (or FII) framework to the FPI one, according to the minutes of a board meeting on October 5 made available on the Sebi website.

The regulations which require change include ones that govern the activities of mutual funds, dictate norms on fund-raising by companies and regulation of the depositories which maintain securities in electronic format. The regulator will have to issue notifications tweaking the Sebi  Issue of Capital and Disclosure Requirements (ICDR), Sebi  Substantial Acquisition of Shares and Takeovers Regulations, 2011; Sebi  Depositories and Participants Regulations, 1996; Sebi  Intermediaries Regulations, 2008, and the Sebi  Mutual Funds Regulations 1996. The new FPI regime cannot take full effect till the term foreign institutional investor is replaced with foreign portfolio investor in all of these regulations.

The FPI norms would also require amendments to the income tax Act, according to taxation experts.

The foreign portfolio investment norms consolidated all the different avenues for portfolio investment in India into a single one. Earlier, regulations covering foreign institutional investors and qualified foreign investors were to be merged into a single FPI route. “Existing FIIs, sub-accounts and qualified foreign investors shall be  merged into a new investor class termed FPIs,” said the press statement issued following the meeting on October 5. Sebi is also looking to change the format for the statement of assets and liabilities under its ICDR regulations.

To bring it in line with the revised Companies Act, according to a separate item on the agenda of the board meeting. The changes under the new format include dividing assets and liabilities on a current and non current basis and removal of a specific section for stating the networth of the company. The changes were on the basis of recommendations by the SEBI Committee On Disclosures and Accounting Standards(SCODA), according to the agenda of the board meeting.

“The committee agreed with the need for the modification in existing format of Statement of Assets and Liabilities in SEBI (ICDR) Regulations, 2009 to bring it in line with the revised Schedule VI format,” said the agenda of the board meeting.

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