All you need to know
New Delhi: Market regulator SEBI on Tuesday approved a series of new measures, including frameworks for gold, social exchanges and the introduction of exchange-traded funds or ETFs for silver.
The Securities and Exchange Board of India has also decided to relax the eligibility conditions for shares with higher voting rights. SEBI’s board of directors also cleared a proposal to change the delisting framework after an open offer.
Here’s everything you need to know about the new decisions from SEBI:
Frame for gold exchange
* The instrument representing the gold will be called an âElectronic Gold Receipt (EGR)â and will be notified as âsecuritiesâ under the Securities Contracts (Regulation) Act, 1956.
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* EGRs will have trading, clearing and settlement functionality similar to any other security instrument. Any recognized exchange, existing or new, can initiate EGR trading in a separate segment.
* The denomination for trading of the EGR and the conversion of the EGR into gold may be decided by recognized exchanges, with the approval of the market regulator. The Clearing Corporation will settle transactions, executed on the stock exchange, by transferring the EGR and funds to the buyer and seller respectively.
* The holder of the EGR can continue to keep the EGR for as long as planned. The EGR holder, at its discretion, may also withdraw the underlying gold from the vaults, upon delivery of the EGR.
* To reduce the costs associated with removing gold from vaults, EGRs will be made “fungible” and “interoperability between vault managers” will be allowed.
* Incorporated in India, the safe deposit box manager is expected to have a net worth of at least Rs 50 crore. It was to be registered and regulated as a SEBI intermediary, to provide vault services for gold deposited to create EGRs.
* The vault manager’s obligations will include accepting deposits, storing and safekeeping the gold, setting up the EGR, withdrawing the gold, settling grievances and periodically reconciling the deposit. physical gold with the records of the depositary.
âThe gold exchange is expected to offer a multitude of benefits to value chain participants as well as the entire gold market ecosystem, such as efficient and transparent price discovery, liquidity of investments, quality assurance of gold, etc. â, SEBI indicated in its notification.
Framework for social stock exchange
* The Social Stock Exchange (SSE) will be a separate segment from the existing stock exchanges. ESS should be a Non-Profit Organization (NPO) and a For-Profit Social Enterprise (FPE) with social intent and impact. He will have to carry out a social activity among the list of the 15 major eligible social activities approved by the Council.
* Qualifying nonprofits can raise funds through equity, Principal Zero Coupon Bonds (ZCZP), mutual funds, social impact funds, and development impact bonds. NPOs wishing to raise funds on SSE must be registered with SSE.
* Social Venture Funds under SEBI (Alternative Investment Funds) regulations will be renamed as Social Impact Funds (SIF). Corpus requirements for these funds are to be reduced from Rs 20 crore to Rs 5 crore. In addition, the reference to âmuted feedbackâ should be deleted.
* Social impact audit, that is, the social audit will be mandated for social enterprises that raise funds / registered on the SSE.
SEBI’s board of directors also cleared a proposal to change the delisting framework after an open offer. “If the response to the public offer leads to the 90% delisting threshold being crossed, all the shareholders who tender their shares will receive the same delisting price and if the response to the offer leads to the delisting threshold of 90% is not reached, all the shareholders who will contribute their shares will receive the same purchase price â, indicated SEBI.
This will help ease the merger and acquisition (M&A) process.
Senior executive of shares with voting rights
The Board of Directors has decided to relax the eligibility criteria linked to the framework of shares with higher voting rights (SR). According to SEBI’s review, a shareholder of SR should not be part of a group of promoters with a net worth greater than Rs 1,000 crore.
Related Party Transactions (RPT)
TOR are now defined as “all persons or entities that are part of a promoter or group of promoters, regardless of their participation. Any person / entity holding shares in the listed entity, as below, either directly or for the previous financial year (from April 1, 2022): up to 20% or more; and up to 10% or more from April 1, 2023.
Investor Charter for the Securities Market
The Board reviewed and approved a SEBI Investors Charter for investors in the securities market. This will help investors in the securities markets get the relevant information in one place, SEBI said.
SEBI regulations (Alternative Investment Funds)
The Board of Directors also approved the modification of the SEBI (Alternative Investment Funds) Regulation of 2012 allowing Category III AIFs to calculate concentration standards based on the net asset value of the fund instead of investable funds for the investment in listed shares of issuing companies. Category III AIFs: those which employ diverse or complex trading strategies and can exercise leverage, in particular by investing in listed or unlisted derivatives.
Introduction of silver exchange-traded funds
The board further approved an amendment to the SEBI (Mutual Funds) Regulation of 1996 to allow the introduction of money exchange traded funds (ETFs) with certain guarantees in line with the existing regulatory mechanism for ETFs. gold.