Sebi tightens rules on
independent directors
AMCs have to infuse more into NFOs; minimum application
amount for REITs/InvITs slashed to benefit retail investors
SAMIE MODAK
Mumbai, 29 June
T
he Securities and
Exchange Board of
India (Sebi) on Tuesday
overhauled the norms
pertaining to the appointment,
removal, and remuneration of
independent directors in order
to curtail the sway of promoters
over them.
The regulator also reduced
the minimum application
amount for real estate invest-
ment trusts (REITs) and infras-
tructure investment trusts
(InvITs) to ~10,000-15,000 from
~55,000 at present, aligning
them with equity initial public
offerings (IPOs).
Sebi increased the minimum
amount asset management com-
panies (AMCs) have to put in
their new fund offerings (NFOs)
to ensure more skin in the game.
In another key decision, the
Sebi board allowed banks, other
than scheduled commercial
banks, to act as investment
bankers. To crack down on
insider trading, Sebi increased
the reward under the informant
mechanism by tenfold to ~10
crore. The regulator also intro-
duced the concept of accredited
investors to provide greater flex-
ibility to high networth individ-
uals and professional investors.
Sebi also merged the Issue
and Listing of Debt Securities
Regulations, 2008, and the Non- BETTING ON CHANGE
Convertible Redeemable
Preference Shares Regulations, >Minimum investment ticket size for
2013, into a single regulation REITs and InvITs lowered sharply
known as the Issue and Listing > Fund houses asked to invest
of Non-Convertible Securities more in new fund offerings
Regulations, 2021, in a bid to depending on risk level
deepen the bond market.
> Banks, other than scheduled banks,
Independent directors allowed to act as investment bankers
Based on a discussion paper > Reward for informants raised
issued in March, the Sebi board from ~1 crore to ~10 crore to curb
made a number of changes. The insider trading
regulator has said the appoint-
ment, re-appointment, and > Concept of accredited investors
removal of independent direc- introduced
tors shall be through a special > New regulation to deepen the
resolution, which requires 75 per debt market approved
cent votes in support instead of
51 per cent, as in the case of an
> Rules for Indian fund managers to
ordinary resolution. act as FPIs streamlined
Also, the nomination and
remuneration committee
(NRC), which selects candidates
for appointment as independ-
ent directors, will be required to
have two-thirds IDs, as against
the existing requirement of a
majority. Further, the NRC will
have to disclose and justify the
skill-sets while selecting a can-
didate. Key managerial person-
nel and their relatives or
employees of the promoter
group will have to observe a
three-year cooling-off period
before they get appointed as an
independent director.
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Sebi…
Sebi has also tightened rules
related to the resignation of
independent directors. The reg-
ulator has said the new frame-
work will come into play from
January 1. Sebi has said it will
initiate discussions with the
Ministry of Corporate Affairs
(MCA) for giving greater flexi-
bility to companies while decid-
ing the remuneration for direc-
tors, including IDs.
In a move that will boost the
appeal of REITs and InvITs,
Sebi has lowered the minimum
investment size and trading lot
to as low as ~10,000 from
~55,000. Experts said this would
improve retail participation
and encourage more compa-
nies to list these instruments.
Sebi has said AMCs will have to
subscribe to their NFOs based
on the risk associated with the
scheme.
Cipla…
This will be the first mRNA vac-
cine to get an emergency
approval in India. Unlike other
types of vaccines which put
inactivated germ into a body to
trigger an immune response,
mRNA teaches cells to make
protein for the purpose. US vac-
cine makers Pfizer and Mode-
rna had sought indemnity
against serious adverse events
following vaccination as a pre-
condition for India presence.
This is an immunity they have
secured in other countries
where they supply doses. This
matter is under consideration,
said V K Paul, member (health),