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Govt tightens norms for removal of independent directors Independent directors appointed for a second term at corporates can now be removed only by a special resolution passed by shareholders, with the government tightening the rules.Before removal, such independent directors should also be given "reasonable opportunity of being heard", according to the corporate affairs ministry. The move comes against the backdrop of concerns in certain quarters about the independence of independent directors in carrying out their functions and instances of such people being removed from the boards of companies by promoter entities.A special resolution requires approval from at least 75 per cent shareholders present at a meeting whereas only a minimum of 50 per cent is needed in case of ordinary resolutions. Coming out with the new provision, the ministry said the decision is to ensure better corporate governance and balancing of powers of the boards.In this regard, the ministry has...

SEBI sets conditions on promoters selling holdings to achieve MPS norms The Securities and Exchange Board of India (Sebi) has set conditions on promoters selling their holdings in the open market to achieve minimum public shareholding (MPS) norms. The regulator has issued a list of disclosures that companies will have to make at least a day prior to such sale. These include the intention of the promoter to sell; details of promoters proposing to divest; total number of shares to be divested; and period within which the sale will be completed. In addition to existing methods such as offer for sale and institutional placement programme, Sebi has allowed two new avenues for companies to meet the MPS norms.These include open market sale and qualified institutional placements. Promoters, however, can dilute a maximum of 2 per cent under these new routes. The Business Standard, New Delhi, 23rd February 2018

Sebi may tighten AIF regulations to better monitor the source of funding The regulator may also conduct regulatory audits on the AIFs to examine the fund sourcing arrangements it has entered into with its investors to ensure that the present regulations are not violated The Securities and Exchange Board of India (Sebi) plans to tighten present Alternative Investment Funds (AIF) regulations to better monitor the source of funding and their end use. According to sources, Sebi may check the anti-money laundering policies implemented by AIFs and examine the sanctity of any back-end arrangements an AIF may have with its investors, whereby money raised in AIFs is invested back in entities owned by the investors. The regulator may also conduct regulatory audits on the AIFs to examine the fund sourcing arrangements it has entered into with its investors to ensure that the present regulations are not violated. AIFs can raise money from both domestic and overseas investors. Unlike mutual...

SEBI plans safeguards for overseas investors taking private bank route The Securities and Exchange Board of India (Sebi) is planning checks and balances on overseas investors taking the ‘private bank route’ to invest in domestic markets. The move comes after several industry players expressed concerns that the new route allowed by the Sebi could be misused by investors, such as participatory notes (p-notes). Last week, the Sebi – through a circular titled “Easing of access norms for investment by foreign portfolio investors – allowed clients of private banks to trade in the Indian equities without having to register with the market regulator. While the Sebi has only given an in-principle nod to the proposal, regulatory sources said a fine print of the framework will be released by Sebi in the next one month. “I want to assure that the Sebi will put enough safeguards so that the route is not exploited. Only the banks which are ready to forego their client confidentiality agreeme...

MSCI will continue to get data for ETFs: NSE The National Stock Exchange (NSE) plans to continue to provide data to global index providers, including the MSCI, to enable overseas investors to take exposure to the Indian market through their exchange-traded funds (ETFs). There were concerns among market participants on whether the domestic exchanges would provide data to index providers for creation of indices based on Indian securities or indices where Indian securities had weight of more than 25 per cent. “The MSCI will continue to get data as long as it is not used to trade Indian derivatives offshore,” said Vikram Limaye, chief executive officer, NSE. “There have been concerns on liquidity building offshore. Some of the arrangements were not in best interests of Indian markets in the long term.” Limaye delivered the opening remarks at a conference organised by the Asia Securities Industry & Financial Markets Association, an industry lobby for foreign investors. On Februa...