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Sunday, October 25, 2020

Sebi board meet: Stronger code of conduct for MFs, disclosure norms for listed cos cleared

Sebi also asked listed companies to disclose the initiation of any forensic audit to stock exchanges.

By: ENS Economic Bureau | Mumbai | September 30, 2020 3:14:40 am
Current mutual fund regulations mandate only AMCs and mutual fund Trustees to follow a code of conduct. (File)

The Securities and Exchange Board of India (Sebi), at a meeting of its board Tuesday, approved a stronger code of conduct for the mutual fund industry, which will have to be followed by asset management companies (AMCs), as well as their fund managers, chief investment officers and dealers.

Sebi also asked listed companies to disclose the initiation of any forensic audit to stock exchanges.

For the code of conduct, Sebi said the CEO of an AMC will be responsible to ensure that it is followed by executives to strengthen their accountability. Current mutual fund regulations mandate only AMCs and mutual fund Trustees to follow a code of conduct.

On the forensic audit by listed companies, the regulator said “the fact of initiation of forensic audit (by whatever name called) along with name of entity initiating the forensic audit and reasons for the same, if available,” should be disclosed to the bourses. Sebi also asked companies to also make public the final forensic audit report, along with management comments, if any, unless the forensic audit has been initiated by a regulatory or enforcement agency.

The Sebi board also tweaked inside trading regulations. It has given informants — a kind of whistle blower who reports alleged violations of insider trading laws to the regulator — up to three years to report violations under the insider trading laws. Further, such informants must now include specific information, such as details of securities, trades by suspects etc. when reporting such violations of insider trading laws.

Further, Sebi has strengthened the role of debenture trustees, i.e. are entities that safeguard the interests of debenture holders.

The Sebi board has said debenture trustees should exercise independent due diligence on the assets on which a charge is being created.

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