In an effort to provide a stricter regulatory framework for collective investment schemes, SEBI market monitors have decided to improve the net worth criteria and performance record requirements for entities managing such schemes.
The regulator has also approved changes to the listing obligations and disclosure requirements rules to simplify securities delivery procedures.
It also agreed to amend the rules to enable SEBI registered custodians to provide custody services in respect of silver or silver -related instruments held by mutual fund silver ETFs.
This decision was taken at the SEBI board meeting held on Tuesday.
In the event that investors are deceived by fraudulent fundraising schemes, the regulator will also restrict the Collective Investment Management Company (CIMC) and its group/affiliates/shareholders ’shareholding in the scheme at 10 per cent or representation on other CIMC boards to avoid conflicts of interest.
In addition, the mandatory investments of CIMC and its employees set out in the Collective Investment Scheme (CIS) need to align their interests with the interests of the CIS.
SEBI said the net worth criteria would be enhanced and the requirement to have a track record in related fields as a condition of eligibility for registration as a CIMC would be implemented.
Among others, there will be “mandatory requirements for a minimum number of investors, a maximum holdings of a single investor and a minimum number of subscriptions at the CIS level,” SEBI said.
The regulator said there would be a rationalization of fees and expenses to be charged to the scheme as well as a reduction in the timeline for the scheme’s offer period, unit allocation and refunds to investors.
The changes were proposed to “strengthen the regulatory framework for the CIS in line with Mutual Fund rules to eliminate regulatory arbitrage,” the release said.
To simplify the securities delivery procedure, the existing threshold limit for simplified documents will be revised to Rs 5 lakh from the current Rs 2 lakh for securities held in physical mode for each listed issuer.
Moreover, the threshold in this case for securities held in dematerial mode for each beneficiary account will be raised to Rs 15 lakh from the current level of Rs 5 lakh.
“A Certificate of Legal Heir or an equivalent certificate issued by a competent government authority will be an acceptable document for delivery of securities,” the regulator said.
According to SEBI, the objective is to ensure a uniform process is followed by the Registrar to Issue and Share Transfer Agents (RTAs) / listed companies, which will further facilitate the delivery process to investors.
The SEBI Board also approved a budget for regulators for the financial year 2022-23.