SEBI nod to changes in rules for large cos, unclaimed amount

Market regulator SEBI (Securities and Exchange Board of India), in its 202nd meeting, took decisions on three key matters pertaining to large corporates, unclaimed amounts, and investment advisers.

Framework for large corporates

The SEBI board approved flexibility in the framework for large corporates (LCs) to meet incremental financing needs via the issuance of debt securities.

Under the new framework, a higher “monetary threshold” has been specified for defining “large corporates”, which will automatically reduce the number of entities qualifying as LCs.

The board has also approved the removal of “penalty on LCs” that are not able to raise a certain percentage of incremental borrowing from the debt market; and has introduced “incentives and moderated disincentives”.

To facilitate ease of compliance and ease of doing business, the SEBI board has retained the requirement that compliance with the framework will be met over a contiguous block of three years. Also, the regulator has decided to dispense with the requirement on LCs for filing a statement.

Unclaimed amounts of investors

To streamline the credit of "unclaimed amounts" and provide for the claim of such unclaimed amounts, the SEBI Board also approved amendments to the IPEF (Investor Protection and Education Fund), LODR (Listing Obligations and Disclosure Requirements), REIT (Real Estate Investment Trusts), and InvIT (Infrastructure Investment Trust (InvITs) ) rules. This will prescribe a "uniform process of claim" for such amounts in a streamlined manner, which will facilitate investors.

The new rules will also create a regulatory framework for the segregation of "unclaimed amounts" of investors in the IPEF.

The SEBI board cleared a proposal for the transfer of unclaimed amounts lying in an escrow account for more than seven years to the IPEF for debt-listed entities other than companies under LODR rules in September 2022.

Similarly, the proposal to transfer the unclaimed or unpaid amounts to investors in REITs and InvITs to IPEF was also approved on December 20, 2022.

New rules for investment advisers

The regulator has also extended the timeline for compliance with enhanced qualification and experience requirements for investment advisers.

SEBI, as per SEBI (Investment Advisers) (Amendment) Regulations, 2020, so far required investment advisers to comply with enhanced qualification and experience requirements by September 30, 2023.

The investment investment advisers also include the principal officers of non-individual investment advisers and persons with the investment advisers associated with investment advice.

However, the deadline has been extended now. SEBI says that based on representations received from stakeholders and in view of the emerging landscape of the domain of investment advice, it has been decided to allow time up to September 30, 2025, to comply with these rules.

In separate news, SEBI today said Kamlesh Chandra Varshney has taken charge as Whole Time Member on September 20, 2023. Prior to this assignment, he was joint secretary (tax policy and legislation) in the government’s department of revenue. He will handle departments like market intermediaries regulation and supervision department, legal affairs department LAD1, integrated surveillance department, IT department, recovery and refund, and special enforcement cell.