Sebi allows new DVR framework; bans mutual funds from standstill pacts

There is also a cap on the sectoral limit in liquid funds at 20 per cent. If royalty is more than 5 per cent than required, it would require shareholder nod.

Published: 27th June 2019 06:17 PM  |   Last Updated: 27th June 2019 06:17 PM   |  A+A-

SEBI

For representational purposes (File | Reuters)

By PTI

MUMBAI: The capital markets regulator Sebi Thursday approved a new framework for issuance of differential voting right (DVR) shares from July and banned mutual funds from entering into standstill agreements with any companies.

Sebi chairman Ajay Tyagi told reports after a board meeting that it has been decided to ban mutual funds from entering into standstill pacts with companies apart from making them hold at least 20 percent assets of liquid funds in cash equivalents.

There is also a cap on the sectoral limit in liquid funds at 20 percent. If royalty is more than 5 percent than required, it would require shareholder nod.

Coming down heavily on MF players who in recent past chose to use shareholders fund to buy out debt of bleeding invested companies, he said mutual funds can't have standstill agreements with companies. We have taken action against mutual funds which had standstill pact with companies.

Besides DVR, the regulator also discussed in-principal approval for changes in the method of calculation of net asset value, with a view to tackle the problem of concentration of asset under management with just 10 asset management companies and increasing the scope of the definition of encumbrance.

The board also approved guidelines for share pledging.

Tyagi also said Sebi has started the adjudication process against some credit rating agencies.

He said the regulator has completed its probe into the Whatsapp leaks last and the report will be put into the public domain shortly.

Stay up to date on all the latest Business news with The New Indian Express App. Download now
(Get the news that matters from New Indian Express on WhatsApp. Click this link and hit 'Click to Subscribe'. Follow the instructions after that.)

Comments

Disclaimer : We respect your thoughts and views! But we need to be judicious while moderating your comments. All the comments will be moderated by the newindianexpress.com editorial. Abstain from posting comments that are obscene, defamatory or inflammatory, and do not indulge in personal attacks. Try to avoid outside hyperlinks inside the comment. Help us delete comments that do not follow these guidelines.

The views expressed in comments published on newindianexpress.com are those of the comment writers alone. They do not represent the views or opinions of newindianexpress.com or its staff, nor do they represent the views or opinions of The New Indian Express Group, or any entity of, or affiliated with, The New Indian Express Group. newindianexpress.com reserves the right to take any or all comments down at any time.

flipboard facebook twitter whatsapp