So far in the month of September, the Securities and Exchange Boards of India (SEBI) has actively published multiple circulars pertaining to Alternative Investment Funds (AIFs), Real Estate Investment Trusts (REITs), Infrastructure Investment Trusts (InvTs), Non-Convertible Debt Securities (NCDs), etc. These updates, amendments, as well as inclusions, as introduced to the present mechanism for SEBI-listed companies, are intended to push for a transparent and effective market.
It is to be noted that some of these updates, are radical in nature, and it is foreseen that these will positively impact the market players as well as the listed entities. Through this news update, we have chronologically listed a few relevant circulars in a succinct manner to capture the nature of these developments and their implications, as follows:
September 04, 2023: New Format of Abridged Prospectus
- To simplify, clarify, and disclose additional information, and to ensure consistency, SEBI has introduced a new format of the abridged prospectus. As mandated, the new format of the abridged prospectus must accompany a public issue application form starting from October 1, 2023.
- The new format will be required to include a QR code on its front as well as the last page which shall bear the links to the full prospectus or the abridged prospectus, as applicable.
- The new format can be accessed under the “Legal Framework-Circulars” on SEBI’s website.
September 06, 2023: Investment in the Corporate Debt Market Development Fund (CDMDF)
- In a positive development for the Indian mutual fund industry, SEBI has now notified that investment in units of the CDMDF should not be included while calculating net assets for the calculation of asset allocation limits of mutual fund schemes.
- It will enable and encourage investors to invest in CDMDF units without restricting their investments in other asset classes. It is envisioned that this move will enable support and development of the corporate debt market in India.
- It immediately came into force on the date of the circular.
September 11, 2023: Right to Nominate Director in InvTs and REIT
- It has been notified vide two separate notifications published on the same date by SEBI that unitholders who hold not less than 10% of the total outstanding units of the REIT or InvTS (individually or collectively) shall be entitled to nominate one director on the board of director of the manager of REIT or Investment Manager, respectively.
- Further, a detailed framework for the exercise of the right to nominate a director has been provided under the respective circular by way of an annexure thereto.
- Further, the circulars mandate that the REIT’s manager in case of a REIT or the Investment Manager in case of InvTs shall ensure that it reviews the eligibility of unitholders who have exercised their board nomination rights.
- Notably, both of the circulars have come into force with immediate effect as of the date of the circular.
September 14, 2023: Regulatory Reporting by AIF
- In order to assert uniform, and simplified compliance standards, SEBI has introduced the revised reporting format for quarterly reporting by AIFs. As per the circular, the report shall be submitted online on the SEBI intermediary portal after the end of each quarter within fifteen (15) English calendar days.
- Its applicability is for the quarter ending in the month of June 2023, which will require AIFs to submit their quarterly reports in the revised format by October 15, 2023. As concerned the quarter ending in the month of September 2023, reports in revised format shall be filed by November 15, 2023. Going forward, for the quarter ending in December 2023 and thereon, AIFs will be mandated to file quarterly reports in the specified format.
- The new reporting format will be reviewed periodically by the designated authority in consultation with SEBI.
September 20, 2023: Online Investor Grievance Handling Mechanism
- SEBI issued a circular to link the SEBI Complaint Redressal (SCORES) platform with the Online Dispute Resolution (ODR) platform of the Ministry of Electronics and Information Technology (MeitY). This will enable investors to resolve their grievances online through a single platform.
- SEBI has further notified the Securities and Exchange Board of India (Facilitation of Grievance Redressal Mechanism) (Amendment) Regulations, 2023, it aims to introduce amendments to the present mechanism leading to a streamlined and expedited dispute resolution process.
As evident from the updates enunciated hereinabove, SEBI is actively simplifying and aiding the development of the securities markets by making these back-to-back reforms. Further, these reforms will ensure greater transparency and trust within the varied categories of market participants and functionaries, ensuring a promising future market.