New SEBI Guidelines on Buyback, FIIs and SME Listing

SEBI has introduced some key changes in rules for share buyback by Indian Companies, SME listing and Foreign Institutional Investors (FIIs). Following are the highlights of changes introduced:

On buyback

  • Mandatory to buy back 50% of offer size; penalty of 2.5% on failing to do so
  • Buyback period reduced to six months from one year
  • Tender route compulsory if buyback size is over 15% of paid-up capital

On SME listing

  • Start-ups and SMEs allowed to list without IPO or fundraising
  • Separate ‘institutional trading platform’ for such companies only for informed investors
  • Minimum trading/ investment amount to be Rs 10 lakh

On FII routes

  • FIIs, sub-accounts & QFIs merged into a new class called the foreign portfolio investors
  • Direct registration of FIIs and sub-accounts with Sebi to be done away with
  • Risk-based KYC, depending on investor profile

Other announcements

  • Single SRO for MF product distributors
  • Green signal for AMCs to become prop trading members in debt segment
  • Limited-purpose membership for MF distributors
  • MFs not allowed to appoint a custodian belonging to the same group
  • More power to clearing corporations
  • New sub-category of ‘angel funds’ under AIFs

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