Sebi plans to simplify draft offer documents, simplify regulatory framework for FPIs

New Delhi: Markets regulator Sebi plans to simplify the offer document preparation process by introducing a template-based approach for relevant sections as it aims to reduce repetitive information and streamline disclosures.

Also, Sebi intends to rationalise and optimise existing regulations, simplify the regulatory framework for foreign portfolio investors (FPIs), and expand the range of permissible investment strategies under Specialised Investment Funds (SIFs), according to its annual report for 2024-25, released on Tuesday.

Currently, SIFs allow asset management companies to offer a limited set of strategies across equity, debt, and hybrid categories.

SIF has been introduced to bridge the gap between mutual funds and portfolio management services (PMS) in terms of portfolio flexibility. Under the framework, investors are required to invest at least Rs 10 lakh across all SIF strategies.

In its annual report, Sebi said that offer documents are often large, complex, and repetitive, making them challenging to prepare.

Offer documents are typically large in size and contain a lot of detailed disclosures on several aspects of an issuer company.

Sebi's ICDR (Issue of Capital and Disclosure Requirements) Regulations, which specify disclosures for public and rights issues, were introduced in 2018 and contain seven parts. Although some rationalisation has been done since then, disclosure requirements have continued to grow. The regulator now aims to demystify draft offer documents.

"It is proposed to simplify the offer document preparation process by designing a template-based approach for relevant sections of an offer document," Sebi said.

For 2025-26, Sebi has proposed a comprehensive exercise to identify and remove regulatory redundancies, simplify procedural requirements, and leverage technology to ease compliance burdens.

Excessive or overlapping regulations, Sebi Chairman Tuhin Kanta Pandey said, can increase compliance costs and create operational rigidities.

Another priority will be simplifying the FPI framework to enhance operational ease and attract long-term foreign capital. This will involve streamlining processes, removing frictions, and strengthening engagement with FPIs and other stakeholders.

Sebi will also continue to focus on investor awareness and education, including measures to alert investors to cyber frauds.

"As we step into 2025-26, Sebi's regulatory outlook remains steadfast - anchored in trust, guided by resolve to protect investors, and driven by the goal to support India's Vision 2047," Pandey said in the report.

On the technology front, Sebi has proposed that stock brokers shift operations from their primary data centres to disaster recovery (DR) sites during mock trading sessions to strengthen business continuity plans. Brokers will be required to synchronise their DR drills with those of stock exchanges for better crisis preparedness.

A comprehensive framework is also proposed for software vendors serving stock brokers, aimed at addressing technology-based outsourcing risks. This will include due diligence requirements, enhanced supervision, de-empanelment provisions, audits, and assessments of system and software soundness.

Additionally, an online system is being developed for monitoring system audits of stock brokers, identifying trading terminals to prevent unauthorised trades, and safeguarding against misuse.

Under the "SEBI E-Drive" initiative, inspection data and off-site inspection alerts will be shared with stock brokers and depository participants via cloud platforms.