Context:
The Securities and Exchange Board of India (SEBI) is expected to introduce a set of regulatory relaxations and reforms during its upcoming board meeting on June 18, the second under the chairmanship of Tuhin Kanta Pandey.
Key Expected Announcements
New Category of FPIs for Government Bond Investments
SEBI may introduce a dedicated category of foreign portfolio investors (FPIs) called IGBFPIs, specifically for those investing in Indian government bonds (IGBs) through the Voluntary Retention Route (VRR) and Fully Accessible Route (FAR). The proposed changes include:
- Eased KYC norms, aligned with RBI guidelines.
- Unrestricted participation for NRIs, OCIs, and resident Indians in IGBFPI vehicles.
- Simplified disclosure requirements related to material changes and equity investment limits.
Simplification of Delisting Process for PSUs
The board is also expected to consider reforms for voluntary delisting of public sector undertakings (PSUs) where the government holds more than 90% equity. The changes may include:
- Waiver of minimum public shareholding (25%) compliance.
- Elimination of the two-thirds public shareholder approval requirement for delisting.
Currently, eight listed PSUs have over 90% government ownership, including Haryana Financial Corporation and KIOCL, making public stake dilution and fair price discovery challenging.
Co-investment Reforms in AIFs
SEBI will likely review recommendations from a working group on facilitating co-investments in Alternative Investment Funds (AIFs) via separate co-investment vehicles. Topics under consideration include:
- Eligibility norms for co-investment structures.
- Exit conditions for co-investors.
Relaxations for REITs and InvITs
The board may also ease disclosure norms for Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) by:
- Streamlining QIP documentation to include only relevant disclosures.
KRAs and Policy Updates
- The process for winding up KYC Registration Agencies (KRAs) could be simplified.
- The board will be briefed on policy work concerning conflict of interest norms and disclosure obligations for SEBI officials.
