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News updated at 11:07 PM IST

Sebi approves new search and seizure norms

Mumbai, December 24, 2013, DHNS: 23:03 IST

IPO grading mechanism to be voluntary

PTI file photo
Capital marget regulator Sebi on Tuesday approved new norms for its search and seizure operations, settlement proceedings, refund to investors and settlement proceedings, refund to investors and crackdown on illicit money-pooling schemes.

In effect, the new norms seek to ensure sufficient safeguards in place to avoid any misuse of its new powers and the required privacy of individuals is granted while conducting search and seizure operations, analysts maintained.

Sebi has also put in detailed regulations for settlement of administrative and civil proceedings in a transparent manner so as to ensure serious offences like insider trading are kept out of settlement window.

At the same time, the regulator at its Board meeting cleared the proposal to make IPO grading mechanism "voluntary" as against the current provision of the same being "mandatory". This decision was taken on the basis of requests received from market participants, investor associations and Association of Investment Bankers of India (AIBI) on reducing the reliance on credit rating agencies.

Contrary to market expectations, the Sebi board didn't take up corporate governance code in the day's meeting, while it also deferred the decision on Real Estate Investment Trusts (REITs).

It has also deferred discussion on insider trading since Sebi has sought public comments till December 31 before putting in place final regulations in this regard.

Among other proposals, the Board has approved amendment to Sebi (IPEF) Regulations, 2009 enabling utilization of such amounts primarily for restitution to investors and in case of failure of identification of investors, for the credit of amounts disgorged under the Sebi Act 1992 to the Investor Protection and Education Fund of Sebi.

Further, the regulator decided to allow filing Shelf Prospectus for public issuance of non-convertible debt securities by some class of entities meeting criteria like having a net worth of Rs 500 crore with a track record of three years of distributable profits and also having a credit rating of not less than "AA-", besides they must be free of default history or regulatory action pending with RBI, Sebi or National Housing Bank (NHB).

Those class of entities envisaged by Sebi are public financial institutions and scheduled banks, infrastructure debt funds, non banking financial companies (NBFCs) registered with RBI and housing finance companies registered with NHB.

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