Mumbai: Sebi on Tuesday approved a slew of reforms and soothed the anxieties of some foreign investors by accepting most of the recommendations of the HR Khan panel.
At its board meeting held here on Tuesday, the market regulator reduced the timeline for the listing of shares to T+3 days from T+6 days to provide faster access to issuers to raise capital. Under the new process, there will be no physical movement of retail investor application forms from intermediaries to self-certified syndicate banks.
Moreover, beginning April 1, 2019, large listed companies will have to raise at least 25 per cent of their incremental long-term borrowings (maturity period of over one year) through corporate bonds.
Under a revised framework, companies, other than scheduled commercial banks, that meet certain criteria will be categorised as large corporate houses.
Sebi has set the criteria that they should have an outstanding borrowing of Rs 100 crore or above and credit rating of AA and above as on March 31 of a financial year.
Overseas investors
In a big relief to various foreign funds, including those owned and managed by the NRIs, the market regulator said it has accepted most of the suggestions given by the HR Khan panel and that a revised circular will be issued separately.
A Sebi circular in April had triggered fears that $75 billion will move out of the country.
The circular dealt with know-your-client (KYC) requirements for FPIs and one of the proposal was that NRIs/overseas citizens of India and resident Indians cannot be beneficial owners of FPIs.
The Khan panel had suggested that NRIs, overseas citizens and resident Indians be allowed to hold non-controlling stakes in FPIs and no restriction be imposed on them to manage non-investing FPIs or Sebi-registered offshore funds.
Promoter tag tweak
The Sebi board decided to revise the provisions relating to the re-classification of promoter/public in a listed company. The revised provisions enable one of the promoters and persons related to such promoters to seek reclassification as a public shareholder, subject to certain conditions and processes to be followed.
While they should not hold more than 10 per cent of the total voting power or exercise control over the listed entity or have special rights in the company, they should not be represented on the board of the listed entity or act as key managerial persons for a period of three years from such re-classification. These persons should also not be willful defaulters.
Sebi also finalised a common application form for FPIs obtaining registration with Sebi.
Commodity derivatives
The market regulator also took the first step of opening up the commodity derivatives markets to the foreign participants when it approved a framework to permit foreign entities with actual exposure to the domestic physical commodity markets, to participate in the commodity derivatives markets. Such entities, it said, will be classified as eligible foreign entities (EFEs).