MUMBAI: Amid growing uproar over its silence on allegation of stock manipulation by the Adani Group, capital market regulator Securities and Exchange Board of India (Sebi) on Wednesday announced a slew of corporate governance related and pro-investor measures.
Sebi has asked top listed companies on stock exchanges to confirm or deny market rumours that impact share prices, in a bid to bring more transparency and ensure timely disclosure of material events. The requirement will kick in from October 1, 2023, for top 100 firms by market capitalisation, and from April 1, 2024, for the top 250. It has prescribed strict timelines for disclosures of material events/information for which decision has been taken in the meeting of board of directors (within 30 minutes) and which are emanating from within the listed entity (within 12 hours). The regulator has decided to end the practice of individuals having permanent seats at boards of listed firms.
These decisions were by Sebi in its board meeting held on Wednesday. Addressing the media after the board meeting, Sebi Chairperson Madhabi Puri Buch said the regulator has decided to set up independent, government - sponsored backstop fund for corporate debt market.
The Rs 33,000 crore Corporate Debt Market Development Fund (CDMF) will be set up to bail out debt funds in case of crisis. “If a single fund house faces an illiquidity issue, this corpus will not be available to it. It is only when the issue is spread across market that we will press the button that will activate this corpus,” said Buch.
The backstop facility will be up and running in 3-6 months, she said. Aiming to safeguarding investors’ money from misuse by stock brokers, Sebi will put in place a framework for the Application Supported by Blocked Amount (ASBA) facility for investors in secondary market trading, similar to the existing system for IPO investors.
“Under the proposed framework, stock brokers will be allowed to either directly settle brokerage with the UPI clients or opt for Clearing Corporation’s facility to deduct the standard rate of brokerage from the UPI block of clients. The framework would be implemented in a phased manner to facilitate a smooth transition in the market,” she said.
Sebi has approved a regulatory framework to allow private equity funds to become sponsors of mutual funds, a move that will help deepen mutual fund industry. On Adani probe, she said she would not comment on it as the matter is sub-judice.
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