Market regulator to do away with mandatory IPO grading to boost the dormant primary market and reduce reliance on rating agencies
Sebi Chairman UK Sinha
Mumbai : Making it easier for companies to raise funds through genuine equity or debt offers, Sebi unveiled a slew of measures to bring to book those running illegal money-pooling schemes and indulging in other fraudulent activities.
At the same time, Sebi has also decided to ensure faster refund of money to investors and put in place necessary checks against any misuse of its newly granted powers with regard to conduct of search and seizure of fraudsters and manipulators.
Announcing several decisions after a board meeting here on Tuesday, the Securities and Exchange Board of India (Sebi) also said that the government has decided to provide tax treatment similar to FIIs to Foreign Portfolio Investors (FPIs), a newly created class of overseas investors.
The move is aimed at bringing in clarity for the new FPI regime, under which all foreign investors have been classified into three categories based on their risk profile from low to highest risk.
With regard to raising of funds through Initial Public Offer (IPO) of equity shares, Sebi board approved a proposal to do away with mandatory IPO grading, while a host of companies have been allowed to file shelf prospectus for debt offers that would be valid for multiple offers within a year.
To ensure greater efficacy in exercise of its new powers, Sebi's board cleared new norms for its search and seizure operations, settlement proceedings, refund to investors and crackdown on illicit money-pooling.
The new norms seek to ensure that sufficient safeguards are put in place to avoid any misuse of its new powers.
Insider trade out of consent mechanism
At the same time, detailed regulations have also been put in place for settlement of administrative and civil proceedings in a transparent manner, while ensuring that serious offences like insider trading are kept out of settlement window. All these new measures would come into force after being notified separately by Sebi in the coming days.
SEBI also said that to impart transparency to the process, the roles of the internal committees and high powered advisory committee–which decide on settlement and terms of settlement–have been specifically defined in the new regulations.
Many of these decisions are related to the promulgation of an ordinance by the government for grant of greater powers to Sebi to check mushrooming of illegal money-pooling schemes across the country and to take strict actions against fraudsters and market manipulators.
The board is also believed to have discussed matters like new Corporate Governance Code for listed companies, revision of insider trading norms and a new framework for Real Estate Investment Trusts (REITs). However, a final decision is yet to be taken on these matters.
The board also approved an amendment to Sebi's Investor Protection and Education Fund (IPEF) Regulations, enabling utilisation of such amounts primarily for restitution to investors and in case of failure of identification of investors, for the credit of disgorged amounts to this Fund. Besides, the board also approved an amendment to the Sebi Collective Investment Schemes (CIS) Regulations.
The government ordinance, promulgated in September for second time, provides for regulation of pooling of funds under any scheme or arrangement, involving a corpus amount of Rs 100 crore or more, to be deemed to be a CIS activity. Accordingly, a proposal to amend Sebi's CIS norms was been approved to provide for a framework for regulation of all activities deemed to be CIS schemes. The changes also provide for additional requirements for continuous compliance by a registered CIS entities.
Sebi has been given direct powers to search any premises where incriminating documents are lying and seize such documents for investigation purpose.
Allows bks, IDF, NBFCs to file NCD shelf prospectus
In another measure to prop up the capital markets, Sebi's board allowed shelf-prospectus for corporate bond issues. Domestic corporate bonds are a small portion of a market that is now dominated by government securities.
A shelf-prospectus enables companies to issue corporate bonds utilising the same documents more than once, which will help cut costs and save time. Sebi extended the facility to file shelf prospectus for issuing non-convertible debt securities for non-banking finance companies, including infrastructure debt funds (IDFCs), besides public sector financial institutions, public sector banks and scheduled banks.
The regulator has also suggested allowing issuers authorised by central board of direct taxes (CBDT) to make public issue tax free secured bonds to file shelf prospectus.
Slew of proposals
l Sebi approves norms to exercise new powers of search and seizure, investor refund and settlement proceedings.
l Prospectus to remain valid for multiple debt offers in one year.
l To provide similar tax treatment to Foreign Portfolio Investors, as available to FIIs presently
l Clears plan to amend collective investment scheme regulation
l Any scheme that involves fund pooling of over Rs 1 bln would be considered as collective investment scheme.
via Business - Google News http://news.google.com/news/url?sa=t&fd=R&usg=AFQjCNH7P8SicsvGzqhLTpa3rI7tKEl7Vw&url=http://freepressjournal.in/sebi-makes-fund-raising-easier-targets-fraudsters/
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