New promoter classification norms recommended by Sebi
Sebi also put in place a new mechanism to allow one-time single registration for the depository participants.
The Securities and Exchange Board of India (Sebi) has proposed new rules on classification of promoters in order to plug several loopholes in the existing regulatory framework.
As per the Sebi’s draft paper, an entity belonging to promoter or promoter group of listed companies may re-classify its shareholding to public category under three scenarios — Open Offer, ‘Separation Agreement’ and promoter group shareholding less than 5 per cent in a company. However, these re-classifications is subject to certain restrictions.
Post reclassification, no shareholding agreement should exist and all past agreements should be made null and void, Sebi said in its draft paper, adding that “such outgoing entities shall have only such rights as any other public shareholder”.
After reclassification, the outgoing entities would not hold any key management position in the company and other group firms. However, they should not be debarred from accessing the capital market, Sebi said. In the case of reclassification under ‘separation agreement’ and the promoter group holding less than 5 per cent shares in a company, Sebi said that the promoter group entity/ company would have to give intimation to bourses for such re- classification along with all the relevant details including reason for such move and shareholding of the said promoter group among others.
Meanwhile, Sebi also put in place a new mechanism to allow one-time single registration for the depository participants.
New bond listing norms proposed for municipalities
MUMBAI: Market regulator Sebi has proposed a new set of norms for listing and trading of municipal bonds on stock exchanges.
Issuing draft regulations for municipal bonds, also known as ‘muni bonds’, Sebi said that that issuing authorities would need to contribute at least 20 per cent of the total project cost for which they wish to raise funds. Besides, these municipal authorities would need to have a strong financial track record and such bonds should have a minimum tenure of 3 years. ENS
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