SEBI rolls out stewardship code for all mutual funds and AIFs

Under the Stewardship Code, the market regulator has asked fund houses and AIFs to formulate a comprehensive policy on the discharge of their stewardship responsibilities and how institutional investors should monitor their investments in listed companies. Sebi also said that institutional investors should have a clear policy on voting and disclosure of voting activity and they should report periodically on their stewardship activities.

The six principles laid down by Sebi are intended to strengthen the role of fund houses as stewards on behalf of the investors. Under stewardship responsibilities, institutional investors are expected to have greater responsibility towards their beneficiaries by enhancing monitoring and engagement with their investee companies. “Such increased engagement is also seen as an important step towards improved corporate governance in the investee companies and gives a greater fillip to the protection of the interest of investors in such companies,” said Sebi.

Sebi has implemented principles on voting for Mutual Funds through which prescribed detailed mandatory requirements for mutual funds to disclose their voting policies and actual voting by Mutual funds on different resolutions of investee firms. The Stewardship Code shall come into effect from the April 1, 2020.

Sebi said every institutional investor should formulate a policy on how it intends to fulfill the aforesaid stewardship responsibilities and disclose it publicly and have a clear policy on how they manage conflicts of interest in fulfilling their stewardship responsibilities and publicly disclose it. —FE

Uniform format for information on use of funds raised via IPOs

Mumbai: The Securities and Exchange Board of India (Sebi) on Tuesday prescribed a uniform format in which listed companies have to disclose deviations or variations in the use of funds they raised through initial public offerings (IPOs), qualified institutional placements (QIPs), preferential issues and rights issues.

Currently, while listed entities submit the statement of deviation or variation, there is no uniformity in the formats and hence it was a need to introduce a common format for such reporting. Sebi in a circular addressed to the stock exchanges and listed entities said that the entities had to disclose the deviation in usage of funds from the quarter that will be ending on December 31, 2019. —FE