Regulatory Roundup

Ease of investing

Change: Sebi issues a detailed guideline under its earlier order on the sale of shares to employees through stock exchanges, making it mandatory for promoters to divulge sale details to the exchange, including the number of shares and discounts offered, if any.

Impact: It will enhance efficiency and ease of compliance and reduce costs when promoters offer shares to employees through the stock exchange mechanism. Additionally, it will ensure the transaction takes place within T+1 day under a new retail category called “Employee” and help set up a system by the exchanges and the clearing corporations to implement the changes.

Change: Sebi extends the timeline to verify market rumours by listed entities, with the top 100 listed entities from February 1, 2024, and the top 250 listed entities from August 1, 2024.

Impact: It will ensure transparency for investors  and give companies more time to apply the changes before the new industry standards and amendments to LODR regulations come into force by June 1, 2024, by the top 100 listed entities by market capitalisation and by December 1, 2024, for top 250 listed entities by market capitalisation.

Change: Sebi mandates trading members to allow clients to voluntarily freeze and block trading accounts online if they notice any suspicious activity, as in the case of demat accounts.

Impact: Trading members will have a regulatory framework under the aegis of Sebi and stock exchanges for rolling out the facility, ensuring ease of business and safety of investments.

Compliance

Change: Sebi streamlines regulatory reporting by DDPs and custodians by specifying reports to submit, reporting formats, and timeline for submitting the reports as part of its broader efforts to establish a uniform compliance standard.

Impact: DDPs and custodians will need to submit annual audit reports on internal controls of DDPs, yearly review reports of the systems, procedures & controls of the custodian by an expert, audited annual report along with a net worth certificate, custodian quarterly report under, etc., to boost transparency and compliance.

Sebi: Securities and Exchange Board of India; T+1: Trading day plus another day; LODR: Listing Obligations and Disclosure Requirements;  DDPs: Designated Depository Participants.

Wider Cover

Change: Irdai asks insurers to modify products for differently-abled people, HIV and AIDS patients and those with mental illness and provide 100 per cent coverage for expenses on ayurveda, yoga, naturopathy, unani, siddha, and homoeopathy treatments in inpatient care for each policy year.

Impact: It will allow policyholders to choose allopathic or AYUSH (traditional medicine) treatments and obtain 100 per cent coverage for treatments under the  insurance policy, effective April 1, 2024.

Change: Irdai instructs insurers to get a board-approved policy for AYUSH coverage, with adequate controls and Standard Operating procedure (SOP) detailing quality parameters and procedures for enrolment in hospitals and medical centres and modify products with limitations for such treatments by April 1, 2024.

Impact: Health insurance policyholders will have more options for treatments at hospitals, medical and day-care centres, give access to cashless facilities and other standard services, enable them to receive the best treatment and prevent fraud and abuse of the system, if any.

Compliance

Change: Irdai issued a compliance notice to general insurers regarding MoRTH’s notification on February 25, 2022, instructing them to take necessary steps for the smooth implementation of the procedures following the amendment to the Motor Vehicles (Amendment) Act, 2019.

Impact: It will ensure that the general insurers comply with the MoRTH notification that provides guidelines for a motor vehicle accident fund, compensation to victims in hit-and-run cases, and procedures for investigating motor vehicle accidents.

Ease of Doing Business

Change: Irdai removes the requirement of “case-to-case” approval for insurers willing to invest in central government-backed IDFs, currently a prerequisite under the regulations.

Impact: Insurers will be able to invest in IDFs of NBFCs, and the investments will be considered as infrastructure investments, subject to certain conditions, like the IDF-NBFCs must be registered with RBI, with a tenure of at least five years and a minimum credit rating of AA. It will enable insurers and the industry to take advantage of the opportunities.

IRDAI: Insurance Regulatory and Development Authority of India; AYUSH: Ayurveda, Yoga and Naturopathy, Unani, Siddha and Homeopathy; SOP: Standard Operating Procedure; MoRTH: Ministry of Road Transport and Highways; IDF: Infrastructure Debt Funds; NBFC: Non-Banking Financial Company; RBI: Reserve Bank of India

*Lists are not exhaustive |  Compiled by Sanjeeb Baurah