Market regulator Sebi today relaxed investment norms by waiving the six-month lock-in period for insurance companies and mutual funds participating in preferential allotment of shares.
"It has been decided to exempt insurance companies and MFs which are broad-based investment vehicles representing the interests of the public at large from the provisions of SEBI (ICDR) Regulations relating to sale and lock-in of their pre-preferential shareholding in the issuer company," Sebi Chairman U K Sinha said after a board meeting here today.
"As a matter of liberalisation, we have taken this measure, if there is broad-based investor base, for example the mutual funds and insurance companies which do not represent the interest of one particular investor, they have group of investors backing them and they take their decisions on professional consideration... why should they be debarred from this facility.
"Even they have bought or sold in the last six months they will be permitted (to participate in another preferential allottment). So, they have been given this special exemption," Sinha added.
As per the SEBI regulations (Issue of Capital and Disclosure Requirements (ICDR), an insurance company or a MF cannot participate in preferential allottment transactions before the six-month cooling off period.
Also, allottees are required to lock in their entire holdings for six months under the present norms.
The board has decided to enhance the minimum investment amount of clients under the portfolio management schemes (PMS) to Rs 25 lakhs from Rs 5 lakhs at present. This would apply to new customers.
"PMS regulations are light touch regulation and SEBI was worried that retail investors are being drawn into it whereas their interest are not as tightly protected or guarded as it is in mutual fund regulation," Sinha said.
The changes would be brought about by amending the SEBI (Portfolio Managers) Regulations, 1993.
Further, the Securities and Exchange Board of India (SEBI) has said that Asset Management Companies (AMCs) would be responsible for accuracy and truthfulness of the advertisements.
"AMCs (which float MFs) shall be responsible for the accuracy, truthfulness, fairness of the advertisement", said a statement issued after the board meeting of the Securities and Exchange Board of India (Sebi) here.
