SEBI

CA. Bhavesh Vora, CA Jayant Thakur

Key Updates: -

  • Centralized Mechanism for reporting the demise of an investor through KRAs.

    • In order to smoothen the process of transmission in securities market in case of demise of an investor SEBI vide circular dated 3rd October 2023 introduced centralized mechanism for reporting and verification in case of demise of an investor.

    The circular mentions obligations of Intermediary for verification of death certificate, for updation of records in the KRA system, obligations of the KRA, Intimation on Transmission of assets of the deceased investor, transaction requests in accounts to be flagged of as “On Hold” and other obligations .

  • Revision in the framework for fund raising by issuance of debt securities by large corporates (LCs)

    • Large corporates (LCs) are required to raise a minimum 25% of their incremental borrowings in a financial year through issuance of debt securities which were to be met over a contiguous block of three years form Financial Year (FY) 2022 onwards. As per representations received from market participants SEBI has revised framework for fund raising by issuance or debt securities by LCs.

    Revised Framework as under:-

    1. The framework is applicable w.e.f 1st April 2024 for LCs following April-March as their Financial Year and w.e.f 1st January 2024 for LCs following January-December as their Financial Year.

    2. The framework shall be applicable for all listed entities (except for Scheduled Commercial Banks) which as on last day of financial year

      1. have their specified securities or debt securities or non-convertible redeemable preference shares listed on a recognised stock exchange.

        2. (Outstanding long term borrowing for the purpose of this framework shall mean any outstanding borrowing With an original maturity of more than one year but shall exclude the following:

        1. External Commercial Borrowing.
        2. Inter-Corporate Borrowings involving the holding company and / or subsidiary and / or associates companies.
        3. Grants, deposits or any funds received as per the guidelines or directions of government of India.
        4. Borrowing arising on account of interest capitalization.
        5. Borrowings for the purpose of schemes of arrangement involving mergers, acquisitions and takeovers.)

        And

      2. have outstanding long term borrowings of Rs. 1000 crore and above.

        3. And

      3. have a credit rating of “AA”/”AA+”/AAA” where the credit rating relates to the unsupported bank borrowing or plain vanilla bond of an entity, which have no structuring / support built in.

    3. An LC shall raise not less than 25% of its qualified borrowing by way of issuance of debt securities in the financial year subsequent to financial year in which it is identified as an LC.

      4. (Qualified borrowing for the purpose of this framework shall mean incremental borrowing between two balance sheet dates having original maturity of more than one year but shall exclude the following:

      1. External Commercial Borrowing.
      2. Inter-Corporate Borrowings involving the holding company and / or subsidiary and / or associates companies.
      3. Grants, deposits or any funds received as per the guidelines or directions of government of India.
      4. Borrowing arising on account of interest capitalization.

      Qualified Borrowings for FY shall be determined as per the audited accounts for the year filed with the Stock Exchanges)

    4. From FY 2025 onwards, the requirement of mandatory qualified borrowing by an LC in an FY shall be met over contiguous block of three years and at the end of third year if there is surplus in the requisite borrowing then the following incentives shall be available to LC.

      1. Reduction in annual listing fees pertaining to debt securities or non-convertible preference shares.

      2. Credit in the form of reduction in contribution to the Core Settlement Guarantee Fund.

      At the end of three years if there is shortfall in the requisite borrowings a dis-incentive in the form of additional contribution to the core settlement guarantee fund.

    • Simplified norms for processing investor’s service requests by RTAs and norms for furnishing PAN, KYC details and nomination

      • Based on representations received from the Registrars’ Association of India, feedback from investors, and to mitigate unintended challenges on account of freezing of folios and referring frozen folios to administering authority under the Benami Transactions (Prohibition) Act, 1988 and/or Prevention of Money Laundering Act, 2002, SEBI vide circular dated 17th November 2023 has decided to remove the above mentioned provisions.

    • Most Important Terms & Conditions of Broker – Client relationship

      • SEBI has prescribed various documents for formalizing broker-client relationship like Account Opening Form, Rights & Obligations, Risk Disclosure Documents etc. Typically these documents are voluminous and investor may lose focus on critical aspects of the relationship with the broker.

      In order to bring into the focus the critical aspects, SEBI on 13th November 2023 has decided that brokers shall inform a Standard Most Important Terms and Conditions which shall be acknowledgement by Client.

      • Based on the representations received from the Exchanges, Depositories, Brokers’ Associations and various other stakeholders, SEBI vide circular dated 26th September 2023 have extended last date for submission of “choice of nomination” for trading accounts and demat accounts from 30th September 2023 to 31st December 2023.