The Securities and Exchange Board of India (Sebi) on Tuesday announced a slew of measures to make fund-raising simpler, and to bring to book those indulging in illegal money-pooling schemes and other fraudulent activities.
The market regulator will also put in place necessary checks against any misuse of its powers with regard to conduct of search and seizure against fraudsters.
The amendments are part of the regulator’s approval of the Sebi (Procedures for Search and Seizure) Regulations 2013.
“The Securities Laws (Amendment) Second Ordinance, 2013, inter alia, confers direct powers on chairman, Sebi to authorise the investigating authority or any other officer of Sebi to search any premises where incriminating documents are lying and seize such documents for investigation,” Sebi said in a statement.
The government had promulgated Securities Laws (Amendment) Second Ordinance, 2013 in September and Sebi had proposed the new norms for search and seizure powers last month.
The Sebi board also approved the proposal to make the grading system for initial public offerings (Ipos) voluntary, in a bid to boost the dormant primary market and reduce the reliance on rating agencies, which have recently come under the scanner globally for their role in financial markets.
A host of companies — non-banking financial companies registered with RBI, housing finance companies and infrastructure debt funds — have been allowed to file shelf prospectus for issuance of non-convertible debt securities that would be valid for multiple offers within a year.
Companies that have listed their shares or debentures in stock exchanges for at least three years, will also be allowed to file such shelf prospectus, provided they have a net worth of Rs. 500 crore and a track record of three years of distributable profits.
So far, the Companies Act 1956 had only allowed banks and public financial institutions to file such prospectus.
The market regulator also said that the government has decided to provide foreign portfolio investors (FPIs), a newly created class of overseas investors, tax treatment similar to foreign institutional investors (FIIs). Overseas investors will be classified as FPIs as long as their equity stake in a company does not exceed 10%.
The board has also approved the proposal to amend Sebi’s collective investment schemes regulations based on the Securities Laws (Amendment) ordinance, which provides for regulation of pooling of funds under any scheme with a corpus of Rs. 100 crore or more.
Sebi, however, deferred clear ance of regulations on Real Estate Investment Trusts (REITs).