SEBI board meeting eases compliance rules while tightening governance and investor safeguards
A key highlight was the introduction of a stronger conflict-of-interest framework for SEBI?s members and officials, based on recommendations from a high-level committee. The updated system brings stricter disclosure requirements, tighter trading rules, and clear recusal guidelines. It also includes a digital platform to monitor conflicts and the creation of an Office of Ethics and Compliance. Importantly, the Chairman and Whole-Time Members will now follow investment and disclosure norms similar to those applicable to SEBI employees.
For foreign investors, SEBI has proposed allowing Foreign Portfolio Investors (FPIs) to use a net settlement system in the cash market. This replaces the current gross settlement method, reducing the need to block large amounts of funds. The move is expected to lower costs and improve efficiency, especially during periods like index rebalancing when trading volumes are high.
The regulator also announced measures to make operations smoother for REITs and InvITs. These include allowing InvITs to hold assets even after project completion under certain conditions, expanding investment options into safer mutual funds, permitting limited exposure to new projects for privately listed InvITs, and offering more flexibility in borrowing for highly leveraged structures.
SEBI has also updated the ?fit and proper person? rules for intermediaries. It clarified that simply filing an FIR or chargesheet will not automatically lead to disqualification. Instead, each case will be assessed based on merit. At the same time, stricter provisions have been added, such as disqualifying individuals convicted of economic offences, while ensuring a fair hearing process.
To encourage wider participation in social investing, SEBI has significantly reduced the minimum investment amount for social impact funds from ₹2 lakh to ₹1,000. This step is expected to attract more retail investors and support the growth of the Social Stock Exchange.
In addition, SEBI has introduced greater flexibility for Alternative Investment Funds (AIFs). Funds will now be allowed to hold liquidation proceeds beyond their tenure in specific cases, such as pending legal or tax matters. A new category called ?inoperative funds? has also been created, with simpler compliance rules for funds that are no longer actively investing.
Overall, these reforms aim to improve efficiency, reduce compliance burdens, and strengthen governance standards across India?s financial markets.
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