Sebi to reduce listing time for shares in public issues; to mandate addl disclosures for FPIs

Markets watchdog SEBI has approved reducing the IPO-listing timeline to three days, mandating enhanced disclosure requirements for certain classes of foreign portfolio investors, and strengthening the investor grievance handling mechanism.

At its meeting held on Thursday Sebi's board also gave its nod for the introduction of special rights to unitholders of REITs and InvITs by providing the right to nominate representatives on the boards.

Further, approval has been given for amendments to norms pertaining to non-convertible securities and for steps to deepen the country's bond market. As many as seven proposals were cleared by the board on Wednesday.

The time period for the listing of shares in public issues will be reduced from the existing 6 days to 3 days from the date of issue closure (T Day).

The reduced timeline will be voluntary for all public issues opening on or after September 1 and mandatory for the issues on or after December 1.

Briefing reporters after the meeting, Sebi Chairperson Madhabi Puri Buch said the decision to reduce the listing time to three days is a "global first and I am sure it will also be glitchless as all market participants have tested its applicability".

To ensure greater transparency, Sebi has decided to mandate enhanced disclosures from certain classes of Foreign Portfolio Investors (FPIs), including furnishing granular level details about ownership and economic interests.

The new norms will be applicable for FPIs that concentrate holdings in a single corporate group.

Such FPIs would be required to provide granular level disclosures regarding ownership, economic interest, and control rights on a full look-through basis, the regulator said in a release.

The move is aimed at preventing possible circumvention of Minimum Public Shareholding (MPS) requirements and potential misuse of the FPI route to guard against the inherent risks of the opportunistic takeover of Indian companies.

It also comes against the backdrop of the recent Adani-Hindenburg saga.

Sebi Whole Time Member Anantha Narayan G said the new FPI norms are to come into effect in three months for those already here and for newcomers in six months.

When asked about the impact on the market in case some of those FPIs refuse to make more disclosures, he said those FPIs which will have to make more disclosures collectively own equities worth under 1% of the BSE market capitalisation.

Meanwhile, the Sebi board has approved amendments to rules to provide nomination rights to unitholders holding 10% or more of the total outstanding units of the InvIT/REIT, either individually or collectively, on the board of directors of the investment manager/ manager.

Over the years, retail investor interest in InvITs and REITs has been increasing. The current regulatory framework for InvITs or REITs does not explicitly provide for unitholders to have a say in the decisions made by the investment managers of these funds, Sebi said.

InvITs are Infrastructure Investment Trusts and REITs are Real Estate Investment Trusts.

A proposal to strengthen the investor grievance handling mechanism has also been approved. Among other steps, SCORES (Sebi Complaint Redress System) would be linked with Online Dispute Resolution (ODR) platform and that would provide an additional option for investors of all regulated entities.

To facilitate transparency in price discovery, Sebi has decided to amend the regulations pertaining to Non-Convertible Debt Securities (NCDs).

The revised norms will come into effect from January 1, 2024.

Also, as part of efforts to boost the corporate bond market, Sebi would enable direct participation by clients in the Limited Purpose Clearing Corporation (LPCC).

"Since timely availability of funds and securities is critical in a repo market, the direct participation of both borrowers and lenders can widen the market.

"Accordingly, the board has approved the proposal to additionally facilitate participation by entities desiring direct participation (not through a clearing member) in repo transactions in corporate bonds of the LPCC (Limited Purpose Clearing Corporation)," the release said.