SEBI sets stricter regulatory standards for collective investment plans



In its quest to put in place a stricter regulatory framework for collective investment schemes, market watchdog SEBI has decided to strengthen net wealth standards and track registry requirements for entities operating such schemes.


The regulator also approved changes to the Listing Obligations Regulations and Disclosure Requirements Regulations to simplify the procedures for transferring securities.

It also gave permission to amend the regulations to enable SEBI registered custodians to provide custodial services in connection with silver or silver-related instruments held by silver mutual fund ETFs.


These decisions were made at the SEBI board of directors meeting held on Tuesday.


In the midst of cases of defrauding investors through fraudulent fundraising schemes, the regulator also restricts the CIMC and its group/partners/shareholders to a scheme at 10 percent or representation on another CIMC board of directors to avoid conflicts of interest.


Besides, the mandatory investment of CIMC and its employees designated in Collective Investment Schemes (CIS) have to align their interests with those of the CIS.


Sebi said net wealth criteria will be enhanced and a requirement to have a proven track record in a related field will be put in place as an eligibility requirement for registration as a CIMC.


Among other things, there will be “a mandatory requirement for a minimum number of investors, a maximum ownership of one investor and a minimum subscription amount at the CIS level,” Sebi said.


The regulator said that there will be a rationalization of fees and expenses that will be charged to the system in addition to reducing the timelines for the period of presentation of the program, allocating units and returning funds to investors.


The statement said the changes were proposed in order to “strengthen the CIS regulatory framework in line with mutual fund regulations to remove regulatory arbitration.”


To simplify the procedures for transfer of securities, the current threshold for simplified documents will be adjusted to Rs 5 lakh from the presently Rs 2 lakh of securities held in the physical position of each listed issuer.


Also, the minimum in this respect for securities held in dematerialized status per beneficiary account will be raised to Rs 15 lakh from the current level of Rs 5,000.


The supervisory authority said that “the legal inheritance certificate or its equivalent issued by the competent government authority will be an acceptable document for the transfer of securities.”


According to Sebi, the goal is to ensure standardized processes are followed by registrars to Issue and Share Transfer Agents (RTAs)/listed companies, which will further facilitate the transfer process for investors.


SEBI’s board of directors also approved the regulator’s budget for the 2022-23 fiscal year.

(The title and image for this report may have been reformulated only by the Business Standard staff; the rest of the content is automatically generated from a shared feed.)


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