After its September 21, 2023, board meeting, the Securities and Exchanges Board of India announced several changes related to the bond market, processing unclaimed funds, and extending compliance timelines for investment advisers.
Let's delve into the details of each decision:
Flexibility for Large Corporates in Issuing Corporate Bonds
To enhance flexibility in debt financing for Large Corporates (LCs), Sebi introduced a higher monetary threshold for defining Large Corporates (LCs). LCs are mandated to raise a minimum of 25 per cent of their incremental borrowings over a contiguous block of three years through corporate bonds. The monetary threshold for LCs was raised likely because many companies needed help to increase the required per cent through debt securities.
Increasing the monetary threshold reduces the number of entities qualifying as LCs and will ease compliance for smaller entities. However, it may also lead to a decrease in corporate bond issuances. Also, penalties were removed for LCs unable to meet a certain percentage of incremental borrowing from the debt market.
Streamlining the Process of Receiving Unclaimed Funds
Sebi also approved amendments to simplify the process for investors to claim unclaimed funds from the Investor Protection and Education Fund (IPEF). Unclaimed funds in listed entities, REITs, and InvITs are transferred to the Investor Protection and Education Fund (IPEF) for easy processing and refunds. Sebi approved amendments to the IPEF, REIT, and InvIT Regulations to establish a uniform process for investors to claim unclaimed amounts from IPEF.
Investors can now approach the debt-listed entity/ REIT/ InvIT to claim their unclaimed amounts, thereby ensuring minimal disruptions in the claim process for investors, the release added.
Extension of Compliance Timeline for Investment Advisers
Sebi has extended the compliance timeline for enhanced qualification and experience requirements for Investment Advisers. Individual investment advisers, principal officers of non-individual investment advisers, and those associated with investment advice have until September 30, 2025, to comply with the enhanced qualification and experience requirements.
Qualification Requirements
They must possess professional qualifications, a post-graduate degree, or a post-graduate diploma in finance, accountancy, business management, or related topics. They should also have at least five years of experience in financial product advice, securities, or asset management. They must also have experience of at least five years in activities relating to advice in financial products or securities or fund or asset or portfolio management.
An individual investment adviser or principal officer of a non-individual investment adviser must hold certification in financial planning, fund management, or investment advisory services from NISM or any other organization or institution, including the Financial Planning Standards Board of India or any recognized stock exchange in India provided NISM accredits such certification.
