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Sebi overhauls norms for appointment, removal of independent directors


The Securities and Exchange Board of India (Sebi) on Tuesday overhauled norms pertaining for appointment, removal and remuneration of independent directors (ID) in order to reduce the sway of promoters on them.

The regulator also reduced the minimum application amount for REITs and InvITs to Rs 10,000-15,000, from Rs 55,000 at present, aligning them with equity IPOs.

Sebi increased the minimum amount asset management companies (AMCs) have to put in their new fund offerings (NFO) to ensure more skin-in-the-game.
ALSO READ: Sebi introduces framework for accredited investors in securities market

Other key decisions taken by Sebi include allowing banks, other than scheduled commercial banks, to act as investment bankers. To crackdown on insider trading, Sebi increased the reward under the informant mechanism 10-fold to Rs 10 crore.

The regulator also introduced the concept of accredited investors to provide greater flexibility to high networth individuals and professional investors.

Sebi also merged the merger of the Issue and Listing of Debt Securities Regulations, 2008 and Non-Convertible Redeemable Preference Shares) Regulations, 2013 into a single Regulation known as Issue and Listing of Non-Convertible Securities Regulations, 2021 in a bid to deepen the bond market.

“On independent directors, some of the amendments proposed in the consultation paper earlier this year have been done away with, such as the dual approval requirement. The nudge to the ministry of corporate affairs to relook at compensation flexibility including ESOPs, is much needed and very welcome,” said Shruti Rajan, Partner, Trilegal.

What Sebi decided:

Framework governing independent directors overhauled

Minimum investment ticket size for REITs and InvITs lowered sharply

Fund houses asked to invest more in their NFOs depending on risk level

Banks other than scheduled banks also allowed to act as investment bankers

Reward for informants raised from Rs 1 crore to Rs 10 crore to curb insider trading

Concept of accredited investors; new regulation to deepen the debt market

Rules for Indian fund managers to act as FPIs streamlined

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