SEBI’s board proposes top 500 listed Cos. to have mandatory dividend distribution policy

SEBI held its board meeting at Mumbai, on May 19, 2016 and approved of the following proposals:

1. Dividend distribution policy for top 500 listed Cos. SEBI proposed a new regulation that mandates listed firms to have a ‘dividend policy’. The new regulatory framework is likely to be applicable to top 500 listed companies initially based on their market value and then to other listed companies. SEBI said that dividend policy would help investors to get clear picture of return on investments and to make well informed decisions.

2. To amend Infrastructure Investment Trusts Regulations: In order to make the process of registration of Infrastructure Investment Trusts easier, the SEBI has approved for bringing out a consultation paper proposing certain changes/proving clarification in the SEBI (Infrastructure Investment Trust) Regulation, 2014. Further SEBI has proposed relaxation by way of reducing the mandatory sponsor holding to hold 10 % and allowing InvITs to invest in the 2 level special purpose vehicle.

3. Tighten norms for Offshore Derivative Instruments (ODIs): SEBI has proposed to tighten norms for offshore derivative instruments(ODI). Now Offshore derivative instruments issuers would need to adhere to the Indian know your client (KYC) norms and subscribers will have to take prior approval from ODI issuers in case of transfer of the instrument to another offshore investor. Further ODI issues will have to report all the transfers made among the instruments issued by them on a monthly basis to the SEBI.

4. Ease of compounding provisions to fast-track cases: SEBI has decided to simplify its settlement and compounding norms to ensure faster closure of cases where accused entities are ready for settlement by paying up penalty to make good the losses of investors. SEBI said that during 2015-16, the number of settlement cases came down putting pressure on the enforcement system. Consequently, a guidance note was issued clarifying the doubts so that more serious and substantial cases are only taken up for enforcement action. Now, the SEBI’s board has approved of for incorporation of the guidance note in the Settlement Regulations, the guidance note clears doubts on interpretational issues relating to Settlement regulations.

5. To ask Govt. to amend laws for clarity on penal provisions under SEBI Act: In order to have greater clarity on determining monetary penalty for violations in capital markets, SEBI decided to approach the Government seeking amendments in the laws governing the securities markets. SEBI said that, Pursuant to the Judgment of the Supreme Court in the matter of Roofit Industries Ltd, a need arose for clarifying the monetary penalty provisions in the securities laws, relating to cases prior to 2014.

6. To exempt stock exchanges from transferring 25% to Settlement Guarantee Fund(SGF): Taking note that SGFs have been built up in the clearing corporations, SEBI decided to do away with requirement of transfer of 25% of profits by stock exchanges to core SGF.