Highlights from the latest SEBI Board meeting held on 30th September, 2022

SEBI in its board meeting held on 30th September introduced a slew of changes. Here are some of the key highlights from the board meeting:

Introduction of Regulatory Framework to facilitate Online Bond Platform Providers and reduction in the face value of listed privately placed debt securities

  • Online Bond Platform Providers shall be registered with SEBI as Stock Brokers under the debt segment of the Stock Exchanges.

  • SEBI to also issue a procedural circular detailing the specifics and mechanics of the operations of the online bond platform providers; and allow reducing the face value of listed privately placed debt securities

Disclosure of Key Performance Indicators (KPIs) and price per share of issuer, in Public Issues, based on past transactions and past fund raising from the investors

  • Presently, Issuer companies, in addition to the audited financial numbers, also disclose their key numbers on various key performance metrics/indicators in different sections of DRHP which are not covered in the financial statements in the offer documents.

  • Now, the issuers are mandated to make disclosure of Key Performance Indicators (KPIs) and price per share of issuer based on past transactions and past fund raising done by the issuer from the investors under ‘Basis for Issue Price’ section of the offer document, and in Price Band Advertisement.

Issuer shall disclose details of pricing of shares based on past transactions and past fund raising from investors by issuer prior to IPO as under:

  • The Issuer Company shall disclose Price per share based on primary / new issue of shares and based on secondary sale / acquisition of shares, during the 18 months period prior to IPO.

  • In case there are no such transactions during the 18 months period prior to IPO, then information shall be disclosed for price per share of Issuer Company based on the last five primary or secondary transactions, not older than three years prior to IPO.

  • Disclose weighted average cost of acquisition (WACA) based on primary/ secondary transaction(s) and IPO floor price and cap price being [●] times the WACA in the offer document and in the Price Band Advertisement.

  • Committee of Independent Directors shall recommend that the price band is justified based on quantitative factors / KPIs vis-à-vis the WACA of primary issuance / secondary transaction(s).

Amendment to Mutual Funds Regulations to facilitate faster payout of redemptions and dividends to unitholders

  • To facilitate faster payout of redemption and dividend to unitholders by AMCs from existing 10 working days and 15 days respectively to such period as may be specified by SEBI from time to time, proposed as 3 working days and 7 working days.

Net settlement of cash segment and F&O segment upon expiry of stock derivatives to facilitate efficient settlement

  • Currently, obligations of cash segment settlement and physical settlement of F&O segment, upon expiry of stock derivatives, are settled separately.

  • In the proposed net settlement framework, the obligations arising out of cash segment settlement and physical settlement of F&O segment, upon expiry of stock derivatives, shall be settled on a net basis.

  • The benefit of netting shall be available to all investors other than those required to mandatorily do delivery based transactions only.

  • The framework is aimed at strengthening the alignment of cash segment and F&O segment, bringing about netting efficiencies for participants, mitigation of price risk in certain cases and reduction of margin requirements after expiry.

Introduction of pre-filing of offer document as an optional alternative mechanism for the purpose of Initial Public Offer on the Main Board of Stock Exchanges

  • Introduction of pre-filing of offer documents as an optional alternative mechanism for the purpose of IPO as it allows issuers to carry out limited interaction without having to make any sensitive information public.

  • Further the document which incorporates SEBI’s initial observations would be available to investors for a period of at least 21 days, thereby assisting them better in their investment decision making process.

  • The existing mechanism of processing offer documents shall continue in addition to this alternative mechanism of pre-filing.

Inclusion of units of Mutual Funds under the SEBI (Prohibition of Insider Trading) Regulations, 2015

  • The Board approved the proposal for inclusion of trading in units of Mutual Funds through a separate chapter, which inter-alia provides for the following:

  • Definitions of Unpublished Price Sensitive Information, Generally Available Information and other related terms for mutual funds.

  • A separate Code of Conduct in line with the existing SEBI (Prohibition of Insider Trading) Regulations, 2015 for designated persons in respect of Mutual Funds.

  • Reporting and monitoring requirements with respect to transactions in mutual fund units by designated persons.

Review of the existing framework for Offer for Sale (OFS) of Shares through Stock Exchange Mechanism To facilitate greater flexibility in the process

  • Currently, non-promoter shareholders holding at least 10% of the share capital of eligible company and willing to offer shares of at least Rs.25 Cr. are eligible to offer their shares through OFS mechanism.

  • It has been decided to do away with the requirement of minimum 10% shareholding for the non-promoter shareholders for offering shares through OFS mechanism.

  • The existing cooling off period of +12 weeks for OFS has been reduced to a range of +2weeks to +12weeks based on the liquidity of securities of such eligible companies

  • Retail investors have been allowed to bid for the unsubscribed portion of the non-retail segment and OFS mechanism has been made available to unit holders/sellers of listed REITs / InvITs to offer their holdings.

  • These changes are aimed at bringing in more flexibility and efficiency to the OFS Framework.

Along with the above points, other changes including the below mentioned proposals were also made :

  • Flexibility in approval process for appointment and / or removal of Independent Directors -Amendments to the SEBI (LODR) Regulations
  • Amendments to SEBI (Real Estate Investment Trusts) Regulations, 2014to allow reduction in minimum holding by sponsors
  • Amendments to SEBI (Infrastructure Investment Trusts) Regulations, 2014relating to unlisted InvITs
  • Monitoring of utilization of issue proceeds raised through Preferential Issue and Qualified Institutions Placement (QIP) issue, in terms of SEBI (ICDR) Regulations, 2018
  • Amendment to SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 in the context of schemes of arrangement
  • Amendments to Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018for orderly winding down of Clearing Corporations

You can refer to the full report here :

SEBI | SEBI Board Meeting