Key Highlights of SEBI’s Board Meeting | Taxmann Analysis

Key highlights of SEBI’s Board Meeting held on 28-09-2021

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The SEBI Board held its meeting in Mumbai on 28-09-2021 under the chairmanship of Shri Ajay Tyagi. This document summarises the key decisions taken by the Board.

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1. Framework for Gold Exchange The SEBI has approved the framework for establishing a Gold Exchange to trade the gold in the form of electronic gold receipts. The exchange would be a national platform for buying and selling Electronic Gold Receipt’ (EGR). EGRs will have the trading, clearing, and settlement features just like any other ‘security’. The denomination for the trading of EGR and conversion of EGR into gold can be decided by the recognized stock exchange with the approval of SEBI.

2. Framework for Vault Managers The SEBI has also approved the framework for Vault Managers as specified under the SEBI (Vault Managers) Regulations, 2021. SEBI has authorized that Vault Manager should be a body corporate incorporated in India having a net worth of at least Rs. 50 crores. The Vault Manager would be responsible for accepting deposits, storing and safekeeping gold, creating EGR, withdrawing gold, grievance redressal, and periodic reconciliation of physical gold

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3. Framework for Social Stock Exchange To help social and voluntary organizations which work for social causes to raise capital as equity or debt or a unit of a mutual fund, the SEBI has approved of the creation of the Social Stock Exchange (SSE), under the regulatory ambit of SEBI, for fundraising by social enterprises (SE).

4. Framework for Superior Voting Rights Shares The Board has agreed to relax the Superior Voting Rights Shares (SR) framework’s eligibility restrictions. As per the present rules, an SR shareholder with a net worth of more than Rs. 500 crores cannot be a member of a promoter group.

This limit has been increased to Rs. 1,000 crores. In addition, the minimum time between issuing of SR shares and timeline for filing of the Red Herring Prospectus has been lowered from 6 months to 3 months

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5. Introduction of Silver Exchange Traded Funds In line with the existing regulatory system for Gold ETFs, the SEBI has approved an amendment to the mutual fund’s norms to enable the introduction of the Silver Exchange Traded Funds with certain safeguards and riders. Silver (ETFs) would bring in another sanctioned commodity for retail investors looking for investment in the metal segment.

6. Resident Indians can become Constituents of FPIs in IFSCs The Board has approved a proposal to amend the SEBI (Foreign Portfolio Investors) Regulations, 2019 to allow Resident Indians to become constituents of FPIs, to facilitate investment in Indian securities markets through the FPI route

by Alternative Investment Funds (AIFs) set up in International Financial Services Centres (IFSCs). Such Resident Indians will be the FPI’s Sponsor/Manager, and their participation in the FPI will be subject to the Board’s restrictions.

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7. Inclusion of Cost Accountants for Share Reconciliation Audit To broaden the area of work for the Cost Accountant, the Board has approved an amendment to the SEBI (Depositories & Participants) Regulations, 2018. Now Practicing Cost Accountants would be able to conduct a share capital reconciliation audit of issuing businesses due to this change.

8. Investor Charter for the Securities Market The Board examined and adopted a ‘SEBI Investor Charter’ for securities market investors. The Investor Charter comprises, among other things, the Vision Statement, Mission Statement, Investor Rights and Responsibilities, Do’s and Don’ts for Securities Market Investors, and so on. The Investor Charters would assist investors in the securities markets to obtain pertinent information in one location, such as their rights, the various services provided by entities to investors, timelines related to various services provided to investors, and an investor grievance redress mechanism, among other things.

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9. Review of Regulatory Provisions on Related Party Transactions The Board considered and approved the amendments to SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, in relation to regulatory provisions on related party transactions (RPTs). The amendment includes expanding the scope of the definition of related party and related party transactions, the requirement of prior approval from shareholders if material RPTs have a threshold of Rs. 1,000 crores, approval of audit committee on the specified transaction, and enhanced disclosures.

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