Sebi board meeting outcome: Markets regulator eases entry norms for foreign investors, relaxes IPO rules for large companies

“The Board approved the introduction of the Single Window Automatic & Generalised Access for Trusted Foreign Investors (SWAGAT-FI) framework for FPIs and Foreign Venture Capital Investors (FVCIs),” Sebi Chairman Tuhin Kanta Pandey told reporters after the board meeting.

This comes at a time when foreign investors are continuously pulling out money from the domestic equity market. Since July this year, FPIs have offloaded Rs 63,516 crore worth of shares.

The window will facilitate easier investment access and enable a unified registration process across multiple investment routes for foreign investors. The SWAGAT-FI framework aims to unify, streamline, and standardise access for select categories of foreign investors who meet specified eligibility criteria. It will reduce regulatory complexity, simplify compliance, and enhance the country’s global competitiveness as an investor-friendly destination.

Foreign investors which would be eligible for identification as SWAGAT-FIs include government and government-related investors and appropriately regulated Public Retail Funds (PRFs) such as mutual funds, insurance companies and pension funds.

The regulator said that existing FPIs meeting eligibility criteria may also convert to SWAGAT-FI status. The SWAGAT-FI framework will be implemented in a six-month timeframe.

For large companies with market cap of over Rs 1 lakh crore and up to Rs 5 lakh crore, Sebi has recommended the minimum public offer of 2.75 per cent. Pandey said that the final decision on the minimum public offer norms will be taken by the government.

In order to instill a culture that prioritises regulatory and operational excellence in public interest at both the governing board and operating levels of market infrastructure institutions (MIIs), the Sebi board reviewed the provisions related to the governance of these institutions.

It approved the appointment of two executive directors of appropriate stature and independence as heads of Vertical 1 and Vertical 2 who would also serve on the governing board of the MII. These appointments will strengthen the succession planning within MIIs.

The regulator also defined the roles and responsibilities of managing directors (MD), EDs, and specific key management persons (KMPs).

To enhance inclusive participation of institutional investors in the IPO process, Sebi increased the overall reservation for the anchor portion from one-third to 40 per cent. Of this, one-third will continue to be reserved for domestic mutual funds, while the remaining portion will be reserved for life insurance companies and pension funds.

The market regulator announced the introduction of scale-based thresholds based on annual consolidated turnover of the listed entity, for determining material related party transactions (RPTs).

The board approved a proposal on the introduction of a separate category of AIF schemes, limited exclusively to accredited investors only (AI-only schemes), and offering the scheme specific regulatory flexibilities in terms of less compliance around investor protection.

Further, to facilitate enhanced investor protection and financial inclusion in the mutual fund space, the board announced the reduction of maximum permissible exit load from 5 per cent to 3 per cent. It also revised the incentive structure for distributors for new inflows to the mutual fund industry from B-30 (beyond Top-30) cities.

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