The Capital market regulator Securities and Exchange Board of India (SEBI) plans to relax its norms for direct registration of foreign investors and also fast-track the listing process for companies, including start-ups, as part of efforts to make the Indian stock market more attractive for domestic and overseas investments. This strategic move has been made by the regulator to cater a less hassle process to be followed for listing.
The regulator is also looking to make the corporate governance norms more robust, including by encouraging greater say for independent directors and by making their removal from boards more inclusive in terms of shareholders’ approval.
Another area of concern is ‘favouritism’ and family connections in the appointment of independent and non-executive directors. These would be among several reform measures to be considered by the board of the capital market regulator in its meeting this week, a top official said.
The foreign portfolio investors from the jurisdictions complying with the global regulatory standards may get direct access to Indian markets without any procedural delay. The aim is also to discourage investments through participatory notes, which have been long considered to have been misused for laundering of black money.
The Sebi board is also likely to approve a proposed measure for making the P-Note route more expensive by levying a regulatory fee and fully stop fully stop such investments for speculative purposes.
Among other proposals to be considered by the Securities and Exchange Board of India, the listing time could be lowered to four days, from six days at present, post the Initial Public Offer (IPO). Some relaxations could be introduced for other forms of share sales also, while new norms may be unveiled for shortening the size of public offer documents.
Sebi is also considering allowing the alternative investment funds to invest in commodity derivatives, while startups may be allowed to list with relaxed norms for their existing shareholders
Sebi has already set up a high-level panel, under the chairmanship of veteran banker Uday Kotak, to suggest changes to corporate governance norms, including those pertaining to related party transactions, auditing and effectiveness of board evaluation practices.
Against the backdrop of recent instances of boardroom battles involving large corporates, Sebi is looking to revamp the norms and the matter is expected to be discussed at this week’s board meeting.
Strengthening corporate governance practice is a focus area for the regulator, with Sebi chairman Ajay Tyagi, recently, saying “independent directors are not independent”.
Earlier this year, the regulator came out with detailed corporate governance norms for listed companies that provide for stricter disclosures and protection of investor rights, including equitable treatment for minority and foreign shareholders.
The new rules, which would be effective from October 1, require companies to get shareholders’ approval for related party transactions, establish whistle-blower mechanism, elaborate disclosures on pay packages and have at least one woman director.
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