Page 12 - Sebi Norms

Govt appoints Finance Secretary Tuhin Kanta Pandey as next Sebi chief

Pandey will be replacing present Sebi chief Madhabi Puri Buch

Market regulator Sebi sets 30-day deadline for NFO corpus deployment

Change comes amid criticism around surge in new offerings by asset managers

Sebi slaps Rs 50 lakh fine on three FPIs for flouting market norms

Capital markets regulator Sebi on Monday slapped penalties totalling Rs 50 lakh on three foreign portfolio investors for exceeding the prescribed limits on short-term investments in debt securities. In three separate orders, the regulator slapped a fine of Rs 20 lakh each on Nexpact Ltd and AIRD Investment Commercial LLC, while it imposed a penalty of Rs 10 lakh on Aviator Global Investment Fund. The orders came after Sebi had carried out inspections of the custodian, Orbis Financial Corporation, for FY22. The regulator observed that investments made by Aviator Global Investment Fund, Nexpact Ltd and AIRD Investment Commercial LLC were not in line with the permissible limits (related to residual maturity) for investment in debt securities applicable for FPIs as on March 31, 2022. Thereafter, Sebi carried out an examination from April 2018 to November 2023 to assess the compliance of the three entities with respect to the provisions of FPI (Foreign Portfolio Investors) rules as well

Sebi slaps Rs 10 lakh penalty on Axis Securities for violating stock rules

Capital markets regulator Sebi has imposed a penalty of Rs 10 lakh on Axis Securities for flouting stock brokers rules as well as other regulatory norms. The penalty has to be paid by the brokerage firm within 45 days, the regulator said in an order on Friday. In an 82-page order, Sebi found that Axis Securities failed to follow regulatory procedures in several areas, including reporting discrepancies and improper handling of client funds. The market regulator found that Axis Securities had inconsistencies in its enhanced supervision reporting to stock exchanges and in stock statements compared to actual holdings in depository accounts. The Securities and Exchange Board of India (Sebi) also observed that Axis Securities also did not settle clients' funds and securities as per preference obtained from the clients and also failed to provide retention statements with account details. Additionally, the brokerage firm passed on penalties imposed by stock exchanges on it for short ...

Monarch Networth Capital settles Sebi case over stock brokers' rule breach

Monarch Networth Capital Ltd on Friday settled with markets regulator Sebi a case pertaining to alleged violation of stock brokers' rule after paying Rs 11.37 lakh towards settlement amount. This came after the entity approached Sebi proposing to settle the pending proceedings "without admitting or denying the findings of fact and conclusions of law" through a settlement order. The stock broker remitted Rs 11.37 lakh and accordingly "the instant proceedings initiated against the applicant (Monarch Networth Capital) vide show cause notice (SCN) dated June 27, 2024, are disposed of ". The Securities and Exchange Board of India (Sebi) had conducted an investigation into the trading activities in the scrip of Atlantaa Ltd during the period August 1, 2022 to November 23, 2022. The investigation was conducted to ascertain whether or not there was any violation of the provisions of Sebi Act 1992 and the PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) rules. Following the ...

Small, midcaps' correction: No need for Sebi's statement, says Buch

Sebi Chairperson Madhabi Puri Buch on Friday said there is "no need" for the capital markets regulator to comment on the recent steep correction in small and midcap stocks. Drawing from her statement in March last year on the high valuations in the same stocks, Buch said Sebi had flagged its concerns on the high valuations when it saw a need for it. "On midcaps and small caps, I think that at a point in time when the regulator felt the need to make a statement about it, the statement was made. Today, the regulator feels no need to make an additional statement," she said speaking at an AMFI event here. It can be noted that the small and midcap stocks are in bear territory lately, with some scrips declining by over 20 per cent in quick succession. In March 2024, in what is a rare comment from the regulator, Buch had flagged concerns about the high valuations in the two segments. "There are pockets of froth in the market. Some people call it a bubble, some may call it froth. It may n

Data via depositories' apps to help curb fraud, says Sebi chief Buch

New features to enable voting on resolutions, inheritance tracking

Sebi amends mutual fund rules, sets time limit for NFO fund deployment

Markets regulator Sebi has amended mutual fund rules asking asset management companies (AMCs) to deploy the money collected from investors through New Fund Offers (NFOs) in a prescribed time limit. Additionally, the regulator has mandated disclosure of stress testing for mutual fund schemes to provide greater transparency to investors. These measures, to be implemented from April 1, 2025, are aimed at enhancing operational flexibility for mutual funds while ensuring greater accountability and trust among investors. Regarding deployment timelines, Sebi, in a notification dated February 14 said, "The scheme shall deploy the funds received in the new fund offer within the time period as may be specified by the Board from time to time." This came after the board of Sebi approved a proposal in December asking fund managers to deploy funds collected during an NFO as per the specified asset allocation of the scheme, typically within 30 days. If funds are not deployed within the specified

Sebi cancels registration of 19 foreign venture capital investors

Among the 14 entities whose strike-off dates were available, 11 had been defunct for more than five years, while three had been defunct for periods ranging from 10 months to three years

Sebi cancels registration of 19 FVCI cos for failing to meet eligibility

Capital markets regulator Sebi on Tuesday cancelled the registration of 19 defunct FVCI (Foreign Venture Capital Investors) after they failed to meet the eligibility criteria. The 19 entities include Axis Capital Mauritius, Axis India Infrastructure Holdings, Blackstone Capital Partners (Singapore) VI FVCI Pte Ltd, P6 Asia Holding Investments (Cyprus) Ltd, Pequot India Mauritius IV, Ltd and Omega FVCI Investments Pte Ltd. In its order, Sebi noted that these defunct FVCI companies are no longer in existence as incorporated entities in their respective jurisdictions and thereby no longer satisfy the condition of being an entity incorporated outside India as stipulated in the FVCI Regulations. The regulator observed from the website of the Business Registration Department of Mauritius, Cyprus and Singapore, that the status of 19 FVCIs in their parent jurisdictions was defunct. Additionally, the entities had not informed Sebi about the change in their regulatory status -- the entitie

Sebi revises timelines for issuance of consolidated account statements

Capital markets regulator Sebi has revised the timelines for the issuance of Consolidated Account Statements by depositories to enhance compliance ease. In a circular issued on Friday, the regulator said the asset management companies (AMCs) and mutual fund registrar and transfer agents (MF-RTAs) are required to provide common PAN data to the depositories within five days from the end of the month, instead of the earlier three-day deadline. After receiving the data, the depositories will then consolidate and dispatch the CAS to investors who opt for electronic delivery (e-CAS) by the 12th day of the month and to those preferring physical copies by the 15th day from the month-end, it noted. Under the revised framework, in respect of half yearly CAS, Sebi decided that "the AMCs/MF-RTAs shall provide the data with respect to the common PANs to the depositories on or before 8th day of April and October every year". Also, the depositories will then consolidate and dispatch the consolida

Sebi issues rules for disclosure on related party transaction approvals

Markets regulator Sebi has introduced industry standards for the minimum information that listed entities are required to provide to the audit committee and shareholders when seeking approval for the related party transactions (RPT). The Industry Standards Forum (ISF) comprising representatives from three industry associations -- ASSOCHAM, CII and FICCI -- have formulated these standards for minimum information to be provided for review of the audit committee and shareholders for approval of RPTs in consultation with Sebi under the aegis of the stock exchanges. The industry associations and stock exchanges will publish these standards on their websites to facilitate a uniform approach and assist listed entities in complying with the requirements, the Securities and Exchange Board of India (Sebi) said in a circular on Friday. The new disclosure requirements will come into effect from April 1, it added. Under Sebi's LODR (Listing Obligations and Disclosure Requirements) rules, relate

Sebi suggests new financial disclosures rules for Reits, InvITs' offer docs

Sebi on Friday floated a draft circular proposing REITs, InvITs to disclose financial information in their offer documents inline with public issue and listing norms. The proposed revisions focus on financial disclosures in offer documents and continuous compliance requirements post-listing. These changes are based on the recommendations from the Working Group on Ease of Doing Business for REITs and InvITs, inputs from the Indian REITs Association and Bharat InvITs Association, and internal deliberations, Sebi said. Additionally, the regulator proposed that Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) will be required to disclose combined financial statements for initial public offerings, irrespective of their operational tenure. Further, follow-on offers will need to present audited consolidated financial statements along with links to individual audited reports on their websites, it added. To enhance investor protection, the regulator inten

Sebi extends timeline for AIFs to hold their investments in demat form

Sebi on Friday said it has relaxed the timeline for alternative investment funds to hold their investments in dematerialised (demat) form. According to a circular, any investment made by an AIF on or after July 1, shall be held in dematerialised form only, irrespective of whether the investment is made directly in the investee company or is acquired from another entity. However, any investments made prior to July 1, are exempted from the requirement of being held in dematerialised form, except in specific cases, it added. Under the revised framework, the regulator stated that investments made before July 1, must be converted into dematerialised form before October 31. If, the investee company of the AIF has been mandated to facilitate dematerialisation or if the AIF exercises control over the company along with other Sebi-registered entities required to hold investments in demat form, the circular said. The markets watchdog has also granted exemptions to schemes of AIFs whose tenu

ICICI Securities settles broker rule breach case with Sebi for Rs 80.4 lakh

Brokerage firm ICICI Securities on Friday settled with markets regulator Sebi a case of alleged violation of stock brokers rules as well as other market norms after paying Rs 80.4 lakh towards settlement fee. The order came after ICICI Securities filed a settlement application in August last year, requesting the regulator for the settlement of the adjudication proceedings under the Sebi's (Settlement Proceedings) rules. "...the instant adjudication proceedings initiated against the applicant (ICICI Securities) vide show cause notice dated June 19, 2024, is disposed of in terms of the Settlement Regulations," Sebi's chief general manager and adjudicating officer N Hariharan said. The case stemmed from a joint inspection conducted by Sebi and NSE in September 2023, covering the period from April to May 2023. The inspection found multiple non-compliances related to margin trading facility (MTF), software issues, and reporting lapses allegedly flouting stock broker rules and other mark

Sebi seeks greater access to social media records to curb market violations

This is the second time since 2022 that the Securities and Exchange Board of India (Sebi) has sought such powers, with approval from the government still pending

Sebi issues manual to provide guidance on Industry Standards Fora

Sebi on Wednesday said it has released the Industry Standards Recognition Manual to provide guidance on the formation and functioning of Industry Standards Fora, which help in implementing regulatory instructions. The Securities and Exchange Board of India (Sebi) had launched a pilot programme for Industry Standards Fora (ISFs) in July 2023, to develop implementation standards for regulatory guidelines. Initially, the ISFs were set up for listed companies and stock brokers. Based on feedback from market participants and industry bodies, while similar fora were later introduced for other stakeholders, including portfolio managers, custodians, designated depository participants, and alternative investment funds, Sebi said in a release. The market participants found these ISFs useful in facilitating good governance and high quality compliance with regulatory directives but also ensuring ease of compliance, it added. However, the ISFs are operating as pilot programmes, as there are no

SC orders meeting between Sahara, Sebi over sale of Versova Land

The Supreme Court on Wednesday directed Sahara India Commercial Corporation Ltd (SICCL) and SEBI to hold a meeting along with two Mumbai-based property consultants to explore the terms and conditions on which Sahara Group's Versova land could be sold to get maximum value to return investors' money. A bench of Chief Justice Sanjiv Khanna and Justices M M Sundresh and Bela M Trivedi issued notices to the Ministry of Environment and Forests and Maharashtra's chief secretary and sought their responses on the status of Versova plot and clarify whether it was a forest land. "After the last date of hearing, we have had several bidders' proposals for the land at Versova. Mr Shekhar Naphade, who is amicus curiae, has submitted a note before us stating that the Versova plot is mangrove forest area either fully or partially. In these circumstances we deem it appropriate to issue notice to the Ministry of Forests and (Maharashtra) chief secretary who shall inform this court about status of the .

Sebi proposes changes in margin pledge system to prevent securities' misuse

Sebi on Wednesday issued a draft circular proposing amendments to its margin pledge system to prevent the possible misuse of clients' securities by brokers. These changes aim to enhance transparency and reduce systemic risks associated with clients' securities. The Securities and Exchange Board of India (Sebi) has invited public comments on the draft circular 'Margin obligations to be given by way of Pledge/re-pledge in the depository system' by March 4. The regulator noted that brokers have not been selling clients' securities invoked under the margin pledge system on the same day, resulting in the accumulation in brokers' demat accounts. This accumulation may lead to a potential misutilisation of clients' securities, prompting the need for regulatory intervention. Under the proposed changes, Sebi intends to introduce a mechanism where clients' securities, upon invocation, will be blocked for early pay-in within the client's demat account. This move will reduce the chances of brok

Sebi launches MITRA to help investors track unclaimed mutual funds folios

Sebi on Wednesday introduced a new digital platform, MITRA, to assist investors in tracking and reclaiming inactive or unclaimed mutual fund folios. The objective of the platform, Mutual Fund Investment Tracing and Retrieval Assistant, is to encourage investors to search for forgotten MF investments and update KYC as per the current norms. In a circular, Sebi said the platform addresses a growing concern wherein investors, over time, lose track of their mutual fund investments lack of updated contact information, or unawareness of investments made in their name. Such inactive folios may become susceptible to fraudulent redemptions, it added. "In order to address the concerns, MITRA platform is developed by the RTAs to provide investors with a searchable database of inactive and unclaimed mutual fund folios at an industry-level which will empower the investors," the regulator said. According to the circular, MITRA will allow investors to identify the overlooked investments or any