Sebi partially accepts Kotak panel proposals
REVISED RULES Regulator clears suggestions on corporate governance, MFS
MUMBAI: The markets regulator has set new rules aimed at improving governance in publicly traded companies, made algorithmic trading accessible and cut mutual fund fees. The Securities and Exchange Board of India’s (Sebi’s) board approved the norms on Wednesday.
The board accepted about half of the 80-odd suggestions made by a panel led by banker Uday Kotak to improve corporate governance, Sebi chairman Ajay Tyagi said.
The sweeping changes in governance standards will span areas including composition of boards, the make-up of board committees, treatment of subsidiaries, disclosure for related-party transactions, audit evaluations and conduct of annual general meetings.
The board has approved an enhanced role for audit, nomination & remuneration and the risk management panels. It has also accepted a proposal to disclose auditor credentials, audit fees and reasons for auditors’ resignations.
“By and large, the regulator has accepted the recommendations of the Kotak panel,” said Sai Venkateshwaran, partner and head, accounting advisory services, KPMG in India. “Though
Exchanges to allow sharing of co-location racks Free tick-by-tick data feeds for all members
Additional expenses charged reduced to five basis points
these steps will increase compliance costs, it will also increase value of the company.”
The panel’s recommendation on increasing the oversight on auditors will be decided keeping in mind the norms proposed by the corporate affairs ministry for auditors and changes that may occur due to the setting up of National Financial Reporting Authority, the proposed independent regulator for auditors, said Tyagi.
The board also accepted the suggestion that firms disclose how they are using funds raised through preferential issues and placement to institutions. Moreover, the board said an individual
can serve as a director on the boards of only seven companies by April 2020, down from 10 now. It also mandated that the top 500 listed entities have at least one women director by April 2019.
Similarly, the board said that minority shareholder approval was mandatory for royalty/ brand payments to related parties exceeding 2% of revenue.
The regulator also cut the expenses charged to mutual funds in lieu of exit loads by 15 basis points to 5 basis points. A basis point is one-hundredth of a percentage point.
On Wednesday, that a Sebi internal study found that mutual fund schemes had levied unfair charges of around ₹1,500 crore owing to these fees.
Sebi has also proposed to ease compliance norms for companies undergoing resolution under the Insolvency and Bankruptcy Code (IBC) framework.
The regulator is going to release a discussion paper that will examine whether there should be trading restrictions on such companies. It will also examine whether to allow restructured companies to get their promoter shareholding to 75% within one year. Sebi norms for regular listed firms mandated that 25% of shares are held by the public.
“Since there is no board, all Sebi norm compliances will come to the Resolution Professional. And the question of whether the trading should be restricted or not. So consultation is needed. We are trying to be cautious,” said Sebi chairman Ajay Tyagi.
When a firm is admitted for bankruptcy, its board is superseded by a so-called resolution professional till the resolution process is complete.
However, experts do not agree to measures on trade restrictions for such firms. The regulator has also proposed to ease the delisting processes as the Insolvency Resolution Professional (IRP) and National Company Law Tribunal (NCLT) will now decide the delisting process instead of the current reverse book building exercise. NEW DELHI: India’s fiscal deficit soared to ₹7.15 lakh crore at the end of February, exceeding the revised target of ₹5.94 lakh crore for the entire 2017-18 fiscal.
As per data released by the Controller General of Accounts (CGA), fiscal deficit for AprilFebruary was 120% of the revised estimates on account of increased expenditure and subdued revenue receipts.
The monthly account till February-end revealed that the government has collected ₹12.83 lakh crore revenue, which is 79.09% of revised estimates. Of this, over ₹10.35 lakh crore is collected from taxes, while over ₹1.42 lakh crore and ₹1.05 lakh crore accrued on account of non-tax revenue and non-debt capital receipts, respectively.
Non-debt capital receipts consist of recovery of loans of ₹13,301 crore. Besides, ₹92,493 crore has been mopped up through PSU disinvestment till February-end.
In the revised estimates of 2017-18, the government had raised the disinvestment target to ₹1 lakh crore, up from ₹72,500 crore in the Budget estimates.
In 11 months till February, over ₹5.29 lakh crore has been transferred to state governments as devolution of share of taxes by the Centre, which is ₹66,039 crore higher than the corresponding period of last year 2016-17.