SEBI Board Meeting Today: IPO Filing Norms, Insider Trading In Mutual Funds On Agenda
Based on discussion papers and commentary of the regulator, here's what is likely to be on SEBI's board meet agenda.
Trading backed by blocked amount, easier takeover guidelines for public sector enterprises, shorter timeline for open offers and buybacks, and changes to IPO filing norms are among the items that will be taken up for discussion at the market regulator's board on Sept. 30.
The board of Securities and Exchange Board of India will also discuss additional disclosure for new-age companies, regulatory framework for debt securities, bond trading platform rules, insider trading norms for mutual fund units, and execution-only platforms.
Based on discussion papers and commentary of the regulator, here's what is likely to be on SEBI's board meet agenda:
Trade Supported By Blocked Amount
The market regulator is looking to introduce a feature-like application supported by blocked amount in the secondary market as well. ASBA payment mechanism is followed for IPOs. SEBI's board could discuss expanding it to trading or issue a discussion paper.
The board is likely to approve pre-filing of offer document with SEBI and stock exchanges without making it available to the public for an initial scrutiny period. The document shall contain all disclosures as required currently under Issue of Capital and Disclosure Requirements.
The issuer will have to publicly disclose that it has pre-filed an offer document with the regulator and such a pre-filing does not necessarily mean that the company would go ahead with an IPO.
The issuer and the lead managers will also have to submit an undertaking to not launch a marketing or an advertising campaign referring to the intended IPO or showcasing key performance indicators to the public through any means, including social media.
On receiving SEBI observations, the issuer may decide to pursue the IPO after filing an updated DRHP, a public document incorporating all observations made by the regulator.
Tighter Disclosures For New-Age Companies
The board is also working on tighter regulations for new-age companies. The disclosures will seek greater information about the valuation of fundraise within a year prior to the IPO, and reasons for deviation in valuations between the two events.
Streamlining Open Offer, Buyback Timelines
SEBI's primary market advisory committee recommended a review of overall timelines for procedural activities, including the tendering period, to synchronise the timelines of all the tender offers—open offers, buybacks and delisting offers—to the extent possible.
The committee recommended reducing the timeline of processing for all open offers and buybacks from T+62 to T+42.
Easier Takeover Rules For PSUs
The board is likely to approve doing away with the requirement of 60-day volume weighted average market price-based parameter for calculation of offer price for divestment of public sector units. It also seeks to dispense with the requirement in case a PSU has a stake in another company and the selloff triggers an indirect acquisition. The acquirer shall disclose upfront the negotiated price for both direct and indirect acquisitions.
Regulatory Framework For Debt Securities
The board will consider a proposal to include in the listing regulations a framework for schemes of arrangement for only debt-listed entities. It will be on the lines of regulations for entities that have listed specified securities.
Insider Trading In Mutual Fund Units
The board will approve changes to insider trading guidelines to include mutual fund units. Currently, the units of mutual funds are excluded from the purview of such regulations.
The move follows misuse of sensitive non-public information pertaining to schemes of mutual funds, directly or indirectly, by persons having access to it by virtue of fiduciary capacity.
SEBI will consider including a separate chapter in the Prohibition of Insider Trading regulations, specifically to cover transactions in the units of mutual fund schemes, both close and open-ended.
Regulation Of Online Bond Trading Platforms
The board will consider guidelines to regulate bond trading platforms that largely tap into the non-institutional segment. At present, these platforms are not governed by any regulatory framework. As of now, there is no statutory obligation on these platforms to ensure completion of the entire chain of a transaction, including settlement. Moreover, in case of any infirmity, investors may not have any recourse.
Mutual Fund Execution-Only Platform
The board is likely to approve the recommendations of the Mutual Fund Advisory Committee to set up a separate framework for execution-platforms. The panel had proposed a legal structure and regulations, including revenue model as an agent of an asset management company.