Skip to main content

Sebi might leash wilful defaulters in markets

By
Market regulator Securities and Exchange Board of India ( Sebi) is likely to approve aproposal to bar wilful defaulters from making public issue of equity, debt, or hybrid securities. However, Sebi plans to allow a company declared wilful defaulter to raise capital through rights issue or qualified institutional placements to ensure minority shareholders are not put in adisadvantageous situation due to the wrongdoing of promoters.
The regulator will also provide more teeth to its takeover regulations by introducing bright lines to define change in control in a merger and acquisition.
"By taking a bright line stance, Sebi will try to send a clear signal that changes in control will not solely be linked to percentage. If an entity acquires only 20 per cent but gets some say in management of listed target company, it may result in control," said a legal expert.
The decisions are likely to be taken by the Sebi board at its meeting scheduled for Saturday in New Delhi, which will also be attended by Finance Minister Arun Jaitley.
According to sources, the board is likely to accept all recommendations made in a discussion paper on wilful defaulters floated a year ago. Under the current regulatory framework, a wilful defaulter is allowed to raise capital by issuing shares simply by making adequate disclosures.
Initial public offerings ( IPO) or a follow- on public offer (FPO), Sebi plans to plug this loophole, people in the know said. Another important topic of discussion for the Sebi board is introducing bright lines in the takeover regulations.
At present, an open offer is triggered when an entity buys minimum 25 per cent shares in a listed target. However, in some cases an entity acquires less than the threshold to avoid open offer obligation, yet gains a say in the management of the target company.
SEBI MEETING AGENDA
Key topics:
  • Imposing capital market access restrictions on wilful defaulters
  • 'Bright line' test to define change in control under the takeover regulations
Other points:
  • Leeway to exchanges on transferring 25% of profits to settlement guarantee fund
  • Discussing recent Budget announcements on securities market
  • Relaxing criteria to absorb 15 FMC employees in Sebi
  • Budget Estimates for new financial year
  • Status update on the campus of the Rs.400- crore National Institute of Securities Markets
Business Standard, New Delhi, 9th March 2016

Comments

Post a Comment

Popular posts from this blog

Household debt up, but India still lags emerging-market economies: RBI

By
  Although household debt in India is rising, driven by increased borrowing from the financial sector, it remains lower than in other emerging-market economies (EMEs), the Reserve Bank of India (RBI) said in its Financial Stability Report. It added that non-housing retail loans, largely taken for consumption, accounted for 55 per cent of total household debt.As of December 2024, India’s household debt-to-gross domestic product ratio stood at 41.9 per cent. “...Non-housing retail loans, which are mostly used for consumption purposes, formed 54.9 per cent of total household debt as of March 2025 and 25.7 per cent of disposable income as of March 2024. Moreover, the share of these loans has been growing consistently over the years, and their growth has outpaced that of both housing loans and agriculture and business loans,” the RBI said in its report.Housing loans, by contrast, made up 29 per cent of household debt, and their growth has remained steady. However, disaggregated data sho...
Post a Comment
Read more

External spillovers likely to hit India's financial system: RBI report

By
  While India’s growth remains insulated from global headwinds mainly due to buoyant domestic demand, the domestic financial system could, however, be impacted by external spillovers, the Reserve Bank of India (RBI) said in its half yearly Financial Stability Report published on Monday.Furthermore, the rising global trade disputes and intensifying geopolitical hostilities could negatively impact the domestic growth outlook and reduce the demand for bank credit, which has decelerated sharply. “Moreover, it could also lead to increased risk aversion among investors and further corrections in domestic equity markets, which despite the recent correction, remain at the high end of their historical range,” the report said.It noted that there is some build-up of stress, primarily in financial markets, on account of global spillovers, which is reflected in the marginal rise in the financial system stress indicator, an indicator of the stress level in the financial system, compared to its p...
Post a Comment
Read more

Healthy balance sheets augur well for economy: RBI Governor Sanjay Malhotra

By
  Large tariffs by the United States administration and elevated geopolitical risk have increased near-term global financial stability risks, and along with weather events pose downside risks to domestic growth, Reserve Bank of India(RBI) Governor Sanjay Malhotra said in the foreword to the Financial Stability Report released today.Noting that domestic growth momentum is buoyed by strong domestic drivers, sound macroeconomic fundamentals and prudent policies, Malhotra said: “External spillovers and weather-related events could pose downside risks to growth.”On the other hand, he said the outlook for inflation is benign, and there is greater confidence in the durable alignment of inflation with the Reserve Bank’s target.Commenting that the structural shifts reshaping the global economy are making policy intervention challenging, the Governor emphasised the need for central banks and financial sector regulators to remain vigilant, prudent and agile in safeguarding their economies and...
Post a Comment
Read more