Sebi approves key reforms giving more say to investors

New Delhi, Mar 29, 2023

The Securities and Exchange Board of India on Wednesday gave the green signal to several reforms with an aim to give more power to shareholders and creditors.

Here are the several reforms approved by SEBI ...

'No permanent board members'

The market regulator said in a press release that the current practice of having permanent board members for publicly listed companies will be stopped.

It said that board seats would come up for voting every five years, making shareholder approval mandatory for any director, starting April 2024.

Private equity firms can own mutual fund companies

Sebi has also decided to tweak rules governing its Rs 39.46 trillion mutual fund industry, allowing private equity firms to back Asset Management Companies(AMCs).

It said a private equity firm or its manager should have at least five years of experience managing funds and investing in the financial sector, and should have managed committed and drawn-down capital of not less than 50 billion rupees on the date of application.

Currently India only allows financial services firms and corporates to back an AMC.

Backstop fund for corporate debt market

Sebi has approved a fund to backstop the corporate debt market for buying ill-liquid and investment grade debt paper.

In February, news agency Reuters had reported that India is setting up a fund worth Rs 330 billion ($4 billion) to provide liquidity to its corporate debt market during bouts of stress, to help stem panic selling and ease redemption pressures.

Finance minister Nirmala Sitharaman announced last year that the government had taken up the Securities and Exchange Board of India's proposal for the fund, without giving details.

Other decisions
The regulator also cleared a proposal which will give bondholders a right to object to related party transactions proposed by companies which have listed high-value debt securities.

Sebi will also introduce a fund-blocking facility for secondary market transactions like being done for IPOs.

[The Times of India]