Regulatory updates

Recently, the Expert Committee for facilitating ease of doing business and harmonisation of the provisions of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 (the ICDR Regulations) and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the LODR Regulations) issued its interim recommendations. The recommendations have been given on the following aspects:

A. LODR Regulations

• Applicability of the Regulations on the basis of market capitalisation
• Limit of membership and chairmanship of committees for a director
• Filling up of vacancies of key managerial personnel
• Timeline for prior intimation of board meetings
• Gap between meetings of the Risk Management Committee.

B. ICDR Regulations

• Inclusion of equity shares received on conversion or exchange of fully paid-up compulsory convertible securities and depository receipts for the purpose of minimum promoters’ contribution
• Non-individual shareholders to be permitted to contribute towards minimum promoters’ contribution without being identified as a promoter
• Thresholds for increase or decrease in issue size triggering re-filing of draft offer documents
• Flexibility to extend the bid/offer closing date on account of force majeure events minimum by one day instead of present requirement to extend by minimum three days.
• Review of requirement of one per cent security deposit in public/rights issue of equity shares.

The comment period ended on 9 February 2024.

To access the text of the recommendations in the consultation paper, please click here

To access the text of the addendum to the consultation paper, please click here

SEBI has issued a consultation paper to seek comments / views / suggestions from public on the proposal to introduce a requirement that every Alternative Investment Fund (AIF), Manager of the AIF and Key Management Personnel of the Manager and the AIF, should carry out specific due diligence, as may be specified by SEBI from time to time, with respect to their investors and investments, before each investment, to prevent facilitation of circumvention of extant regulations administered by any financial sector regulator.

SEBI would prescribe a framework to specify the objectives and the regulatory principles envisaged to address regulatory circumventions. Such principles would guide the framing of the specific and verifiable standards for due diligence that the stakeholders of the AIF will need to conduct for ascertaining as to whether the participation of an investor in a particular investment of the AIF facilitates circumvention of extant regulation.

Comments are invited up to 11 February 2024.

To access the text of the consultation paper, please click here

SEBI has issued the consultation paper to seek comments / views / suggestions from public on the proposals to provide flexibility to AIFs registered under the SEBI (AIF) Regulations, 2012 (‘AIF Regulations’), ‘VCFs’ registered under the erstwhile SEBI (VCF) Regulations, 1996 (‘VCF Regulations’) and their investors to deal with unliquidated investments of their schemes beyond expiry of tenure of the investment.

The comment period ended on 2 February 2024.

To access the text of the consultation paper, please click here

Recently, SEBI issued a consultation paper on the following additional proposals pertaining to the framework for issuance of subordinate units - REITs and InvITs:

• Specification of a ceiling on the extent of subordinate units that can be issued
• Bringing uniformity in the nature of rights conferred on subordinate units, and
• Dealing with changes in terms and conditions of the subordinate units post issuance

The comment period ended on 31 January 2024.

To access the text of the consultation paper, please click here

AIFs are required to submit quarterly reports to SEBI in the specified format with respect to the activities carried on by them. SEBI, on 1 January 2024, has amended the Quarterly Reporting format for AIFs.

To access the revised quarterly reporting format, please click here