Sebi strengthens the rules relating to transactions with related parties; authorizes a senior executive for shares with voting rights

1970-01-01T05: 30: 00 + 0530

(Eds: updates with expert commentary, adds details)

New Delhi, September 28 (PTI) Sebi on Tuesday approved a series of measures, including tightening standards for related party transactions, relaxing rules for issuing shares with higher voting rights in technology companies and radiation standards.

The board of directors also authorized the executives of the Gold Exchange and the Social Stock Exchange (SSE) for fundraising by social enterprises, Sebi said in a statement.

In an important move, Sebi’s board of directors approved changes to the standards to allow the introduction of the Silver Exchange Traded Fund (ETF) with certain guarantees in line with the existing regulatory mechanism for gold ETFs.

At its Tuesday meeting, the board broadened the definition of related party transactions. It has decided to make it easier for buyers to write off shares after a takeover bid.

Makarand Joshi, founding partner of MMJC and Associates, said that cases like Zee, DISH TV and a recent decision by NCLT in the Videocon case have likely sparked changes in the RPT framework, but it can create a lot of anxiety in the spirit of business. world.

“Simply put, any transaction benefiting a related party (even indirectly) would require the approval of the audit committee and shareholders of a listed company. Where the transaction is with the third party but can benefit a related party would be difficult to identify and can sometimes lead to unnecessary allegations of breach on companies, ”he added.

In addition, it was decided to refine the criteria for determining “the suitable and appropriate person”. The criteria will be based on principles or / and rules, as the case may be.

Regarding the gold exchange, Vijay Singhania, Chairman of TradeSmart, said that currently gold is only traded as a derivative on all major exchanges. In these exchanges, the percentage of physical delivery of gold (in electronic form) is practically zero.

“There is a strong need for nationwide spot gold trading with proper price discovery and standardization of quality standards. At present, gold is mainly traded in case and the spot gold price varies from state to state while GST rates remain consistent.Physical movement of yellow metal always remains risky and delivery of E-Gold or Demat form is not not very popular, ”he added.

Apart from this, the regulator has approved an investor charter for investors in the securities market. The Charter includes Sebi’s vision statement for investors, mission statement, rights and responsibilities of investors, dos and don’ts for investors in the securities market, among others.

It was decided to allow Indian residents, other than natural persons, to become members of Foreign Portfolio Investors (REITs) registered as AIF in IFSCs.

This is to facilitate investment in Indian securities markets via the REIT channel by AIFs established in International Financial Services Centers (IFSCs).

“These resident Indians will be sponsors / managers of the REIT and their contribution to the REIT will be subject to conditions specified by the board of directors,” the statement said.

Among other things, the regulator has given the green light to allow category III AIFs (alternative investment funds) to calculate concentration standards based on the net asset value of the fund instead of investable funds to invest in listed shares of companies. transmitters.

In addition, the regulator approved changes to the portfolio management rules to facilitate co-investment by AIF investors through portfolio management.

The portfolio manager providing co-investment services to AIF investors will invest 100 percent of the assets under their management in unlisted securities and will be exempt from certain requirements under the portfolio manager rules, including the amount minimum investment, minimum equity, etc., Sebi mentioned

The regulator also approved the authorization of practicing chartered accountants to carry out an audit of the reconciliation of the share capital of issuing companies. This would be in addition to qualified chartered accountants or practicing business secretaries. PTI AA SP


Disclaimer: – This story has not been edited by Outlook staff and is auto-generated from news agency feeds. Source: PTI

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