Making it easier for companies to raise funds through genuine equity or debt offers, Sebi unveiled a slew of measures to bring to book those running illegal money-pooling schemes and indulging in other fraudulent activities.
At the same time, Sebi has also decided to ensure faster refund of money to investors and put in place necessary checks against any misuse of its newly granted powers with regard to conduct of search and seizure of fraudsters and manipulators.
Announcing several decisions after a board meeting, the Securities and Exchange Board of India (Sebi) also said that the government has decided to provide tax treatment similar to FIIs to Foreign Portfolio Investors (FPIs), a newly created class of overseas investors.
The move is aimed at bringing in clarity for the new FPI regime, under which all foreign investors have been classified into three categories based on their risk profile from low to highest risk.
With regard to raising of funds through Initial Public Offer (IPO) of equity shares, Sebi board approved a proposal to do away with mandatory IPO grading, while a host of companies have been allowed to file shelf prospectus for debt offers that would be valid for multiple offers within a year.
To ensure greater efficacy in exercise of its new powers, Sebi's board cleared new norms for its search and seizure operations, settlement proceedings, refund to investors and crackdown on illicit money-pooling schemes.
The new norms seek to ensure that sufficient safeguards are put in place to avoid any misuse of its new powers and the required privacy is granted to concerned entities.
At the same time, detailed regulations have also been put in place for settlement of administrative and civil proceedings in a transparent manner, while ensuring that serious offences like insider trading are kept out of settlement window.
All these new measures would come into force after being notified separately by Sebi in the coming days.
Many of these decisions are related to the promulgation of an ordinance by the government for grant of greater powers to Sebi to check mushrooming of illegal money-pooling schemes across the country and to take strict actions against fraudsters and market manipulators.
The board is also believed to have discussed matters like new Corporate Governance Code for listed companies, revision of insider trading norms and a new framework for Real Estate Investment Trusts (REITs). However, a final decision is yet to be taken on these matters.
The board also approved an amendment to Sebi's Investor Protection and Education Fund (IPEF) Regulations, enabling utilisation of such amounts primarily for restitution to investors and in case of failure of identification of investors, for the credit of disgorged amounts to this Fund.
Besides, the board also approved an amendment to the Sebi Collective Investment Schemes (CIS) Regulations.
The government ordinance, promulgated in September for second time, provides for regulation of pooling of funds under any scheme or arrangement, involving a corpus amount of Rs 100 crore (Rs 1 billion) or more, to be deemed to be a CIS activity.
Accordingly, a proposal to amend Sebi's CIS norms was been approved to provide for a framework for regulation of all activities deemed to be CIS schemes. The changes also provide for additional requirements for continuous compliance by registered CIS entities.
Sebi has been given direct powers to search any premises where incriminating documents are lying and seize such documents for investigation purpose.
In this respect, the board approved Sebi (Procedure for Search and Seizure) Regulations, 2013, which is on the lines of the provisions in the Income Tax Act and provides detailed procedures for such search and seizures by the regulator.