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SEBI Watch:Tighter norms on related-party deals – clearer, the better

Informist, Tuesday, Dec 7, 2021

 

By Rajesh Gajra

 

Better informed is better armed, and the stock market regulator's latest enhancements to related-party norms do just that. The Securities and Exchange Board of India recently improved the quality and scope of disclosures on related-party transactions made by a listed company to its audit committee and shareholders while seeking their approvals.

 

The best part of the changes pertains to a clear direction to the listed companies to spell out in detail the justification on how any related-party transaction would be in the company's interest.

 

Further, when a listed company or its subsidiary provides loans to, or invests in debt of, a related party, then it will have to provide far more details than it previously had to.

 

The company will have to disclose not just the source of funds for making the loan or investment but also the purpose for which the funds will be utilised by the ultimate beneficiary pursuant to the related-party transaction.

 

Empowering the audit committee with much more information on related-party deals is also a good thing as it increases the onus on the committee to be more diligent.

 

Just a few weeks before the latest enhancements, SEBI had widened the gamut of related-party definition and bought in more transactions entered into by the companies or their subsidiaries within its scope.

 

Even though these changes will take effect from April next year, it is noteworthy that SEBI has kept the momentum going in tightening the related-party norms.

 

SEBI's message to listed companies is that they must not hop around the norms or dilute their essence as they show compliance in letter. There must be a genuine regard for the interests of the company and its public shareholders in all related-party deals.

 

LATEST ANNOUNCEMENTS

* SEBI relaxes promoter lock-in norms for Ujjivan Small Bank amalgamation

* SEBI details investor charter for brokers, orders disclosure by them

* SEBI asks merchant bankers to put up municipal debt, REIT, InvIT data

* SEBI delays onset of enhanced client margin collateral norms by 3 mos

 

ORDERS, ADJUDICATION PROCEEDINGS

* SEBI cracks down on Telegram front-running scam (BS)

* SEBI fines ARSS Infra Projects, directors, CFO for fudging financials

* SEBI fines 12 entities 10 mln rupees for fraudulent trading in shares

* SEBI levies 2.5-mln-rupee fine on individual for insider trading in L&T Finance Holdings scrip (PTI)

 

REGULATIONS (Announced in the past three months)

* SEBI issues norms for silver ETFs, permits exposure to silver F&O

* SEBI enhances related party deal disclosures by listed companies

* SEBI says alternative fund must rectify invest limit breach in 30 day

* SEBI paper for market makers to facilitate liquidity in corp bonds

 

DATA FROM SEBI     

 DateUnit LatestPrevious
FII/FPI net equity investmentDec 3US$ mln(-)394.11(-)40.21
FII/FPI net debt investmentDec 3US$ mln(-)35.1989.24
DIIs net equity investment#Dec 2bln rupees4.0225.21
DIIs net debt investment#Dec 2bln rupees1.81(-)14.22

 

IPO/FPO/NFO

* ESDS Software gets SEBI's nod for 3-bln-rupee fresh issue

* Sterlite Power gets SEBI's approval for public offer

* Navi MF seeks SEBI's OK for blockchain index fund of fund

* Gemini Edibles gets SEBI nod for initial public offer

 

SEBI IN NEWS

* SEBI-taxman fight over service tax dues reaches Supreme Court (ET)

* Crypto bill to let SEBI, RBI, taxman scan investors' KYC data (ET)

* Court sends notice to SEBI over handling of complaints (Mint)

* Disclosure by sustainability-themed funds unclear, says SEBI chairman

 

Sources – Television, Print, or Web Editions of: PTI–Press Trust of India, BS–Business Standard, ET–The Economic Times, Moneycontrol, CNBC TV-18, Mint, BL–The Hindu Business Line, TH–The Hindu, RTR—Reuters, BT–Business Today, IANS–Indo-Asian News Service, IE— The Indian Express, ToI–The Times of India, BB-Bloomberg Quint

 

Internet links: http://www.sebi.gov.in

 

# –- Data not available for Dec 3

 

End

            

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Compiled by Vijay Malkar

Edited by Vandana Hingorani

 

Cogencis news is now Informist. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

 

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