More relaxations on cards in Tuhin Kanta Pandey's second Sebi board meet

FPIs investing g-secs to get easier; voluntary delisting for low-float PSUs; facilitating co-investments in AIFs

The Securities and Exchange Board of India (Sebi) could announce a series of regulatory relaxations in its upcoming board meeting on June 18. This would be the second meeting under the chairmanship of Tuhin Kanta Pandey.

 

The likely changes include more leeway for foreign portfolio investors (FPIs) investing in India government bonds (IGBs), voluntary delisting of public sector undertakings (PSUs) with low public float and facilitating co-investments in alternative investment funds (AIFs) through a separate co-investment vehicle.

 

The regulator is expected to introduce a new category of FPIs, termed IGB-FPIs, specifically for those investing in domestic government securities (g-secs) through the voluntary retention route (VRR) and fully accessible route (FAR). The proposed relaxations include aligning Know Your Customer (KYC) norms for these FPIs with those of the Reserve Bank of India (RBI). Non-resident Indians (NRIs), overseas citizens of India (OCIs), and resident Indian individuals (RIs) would be allowed to invest in IGB-FPIs without restrictions. Furthermore, relief is likely on disclosure requirements for material changes and reporting related to equity investment limits.

 

Emailed queries to Sebi did not elicit any response till the press time. 

 

The Sebi board is also expected to consider proposals to simplify the delisting process for PSUs where the government holds more than 90 per cent of the shares.

 

The proposals include removing the requirement to comply with minimum public shareholding norms and eliminating the need for two-thirds shareholder approval for delisting.

 

At present, there are eight listed PSUs with government holding of more than 90 per cent. In some cases, such as Haryana Financial Corporation and KIOCL, the Centre holds over 99 per cent—hindering fair price discovery and making it challenging for the government to dilute stake in order to comply with the 25 per cent minimum public shareholding norms.

 

The board is also expected to review recommendations made by a working group on facilitating co-investments in AIFs through a separate co-investment vehicle. The conditions for exit by co-investors will also be discussed.

 

Other areas where norms could be relaxed are real estate investment trusts (Reits) and infrastructure investment trusts (InvITs). Sebi could ease the requirement for placement of documents for qualified institutional placements (QIPs) to include only relevant information. The regulator could also streamline the process for winding up KYC Registration Agencies or KRAs.

 

The board is also expected to receive updates on policy work aimed at addressing conflicts of interest and disclosure requirements of Sebi top brass. In March, Sebi had announced the formation of a special committee to review and update the norms on disclosures and code of conduct, which were last adopted in 2008. 

 

The committee, chaired by Pratyush Sinha, a retired IAS officer and former Chief Vigilance Commissioner (CVC), was constituted in April and given a three-month period to submit its recommendations. 

On the agenda 

• New category of FPIs for investments through VRR, FAR route
• Facilitating co-investments in AIFs through a separate co-investment vehicle
• Simplifying the delisting process for PSUs with 90% plus government holding
• Easier filings for fund raise by REIT, InVITs via QIPs
• Rules for winding up KRAs